North Carolina | 56-1572719 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4600 Silicon Drive Durham, North Carolina | 27703 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer [X] | Accelerated filer [ ] | |||
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Description | Page No. | |
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Item 1A. | ||
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Item 5. | ||
Item 6. | ||
December 25, 2016 | June 26, 2016 | ||||||
(In thousands, except par value) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $137,093 | $166,154 | |||||
Short-term investments | 454,021 | 439,151 | |||||
Total cash, cash equivalents and short-term investments | 591,114 | 605,305 | |||||
Accounts receivable, net | 121,759 | 138,772 | |||||
Income tax receivable | 3,245 | 6,304 | |||||
Inventories | 281,677 | 281,671 | |||||
Prepaid expenses | 22,017 | 25,728 | |||||
Other current assets | 45,024 | 44,501 | |||||
Current assets held for sale | 434,859 | 54,426 | |||||
Total current assets | 1,499,695 | 1,156,707 | |||||
Property and equipment, net | 360,171 | 387,167 | |||||
Goodwill | 518,059 | 518,059 | |||||
Intangible assets, net | 246,246 | 259,400 | |||||
Other long-term investments | 34,315 | 40,179 | |||||
Deferred income taxes | 41,019 | 38,564 | |||||
Long-term assets held for sale | — | 356,735 | |||||
Other assets | 8,165 | 9,249 | |||||
Total assets | $2,707,670 | $2,766,060 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable, trade | $109,306 | $122,808 | |||||
Accrued salaries and wages | 41,955 | 40,128 | |||||
Other current liabilities | 42,107 | 45,101 | |||||
Current liabilities held for sale | 21,281 | 14,962 | |||||
Total current liabilities | 214,649 | 222,999 | |||||
Long-term liabilities: | |||||||
Long-term debt | 170,000 | 160,000 | |||||
Deferred income taxes | 945 | 943 | |||||
Long-term liabilities held for sale | — | 1,850 | |||||
Other long-term liabilities | 22,057 | 12,444 | |||||
Total long-term liabilities | 193,002 | 175,237 | |||||
Commitments and contingencies (Note 13) | |||||||
Shareholders’ equity: | |||||||
Preferred stock, par value $0.01; 3,000 shares authorized at December 25, 2016 and June 26, 2016; none issued and outstanding | — | — | |||||
Common stock, par value $0.00125; 200,000 shares authorized at December 25, 2016 and June 26, 2016; 97,399 and 100,829 shares issued and outstanding at December 25, 2016 and June 26, 2016, respectively | 121 | 125 | |||||
Additional paid-in-capital | 2,388,855 | 2,359,584 | |||||
Accumulated other comprehensive income, net of taxes | 3,299 | 8,728 | |||||
Accumulated deficit | (92,256 | ) | (613 | ) | |||
Total shareholders’ equity | 2,300,019 | 2,367,824 | |||||
Total liabilities and shareholders’ equity | $2,707,670 | $2,766,060 |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Revenue, net | $346,962 | $393,758 | $668,291 | $775,307 | |||||||||||
Cost of revenue, net | 236,071 | 282,624 | 471,059 | 556,981 | |||||||||||
Gross profit | 110,891 | 111,134 | 197,232 | 218,326 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 28,070 | 31,563 | 56,601 | 64,294 | |||||||||||
Sales, general and administrative | 67,671 | 67,877 | 129,042 | 138,049 | |||||||||||
Amortization or impairment of acquisition-related intangibles | 5,937 | 6,468 | 12,203 | 12,937 | |||||||||||
Loss on disposal or impairment of long-lived assets | 530 | 2,015 | 846 | 11,580 | |||||||||||
Total operating expenses | 102,208 | 107,923 | 198,692 | 226,860 | |||||||||||
Operating income (loss) | 8,683 | 3,211 | (1,460 | ) | (8,534 | ) | |||||||||
Non-operating (expense) income, net | (4,754 | ) | 8,016 | (4,912 | ) | (14,787 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 3,929 | 11,227 | (6,372 | ) | (23,321 | ) | |||||||||
Income tax expense (benefit) | 5,036 | 1,815 | (2,407 | ) | (6,997 | ) | |||||||||
(Loss) income from continuing operations | (1,107 | ) | 9,412 | (3,965 | ) | (16,324 | ) | ||||||||
Income from discontinued operations, net of tax | 7,326 | 4,030 | 10,750 | 5,277 | |||||||||||
Net income (loss) | $6,219 | $13,442 | $6,785 | ($11,047 | ) | ||||||||||
Earnings (loss) per share-basic | |||||||||||||||
Continuing operations | ($0.01 | ) | $0.09 | ($0.04 | ) | ($0.16 | ) | ||||||||
Discontinued operations | 0.07 | 0.04 | 0.11 | 0.05 | |||||||||||
Earnings (loss) per share-basic | $0.06 | $0.13 | $0.07 | ($0.11 | ) | ||||||||||
Earnings (loss) per share-diluted | |||||||||||||||
Continuing operations | ($0.01 | ) | $0.09 | ($0.04 | ) | ($0.16 | ) | ||||||||
Discontinued operations | 0.07 | 0.04 | 0.11 | 0.05 | |||||||||||
Earnings (loss) per share-diluted | $0.06 | $0.13 | $0.07 | ($0.11 | ) | ||||||||||
Weighted average shares used in per share calculation: | |||||||||||||||
Basic | 98,467 | 102,391 | 99,513 | 102,932 | |||||||||||
Diluted | 98,467 | 102,521 | 99,513 | 102,932 |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
(In thousands) | |||||||||||||||
Net income (loss) | $6,219 | $13,442 | $6,785 | ($11,047 | ) | ||||||||||
Other comprehensive loss: | |||||||||||||||
Currency translation loss | (1,343 | ) | (430 | ) | (1,314 | ) | (789 | ) | |||||||
Net unrealized (loss) gain on available-for-sale securities, net of tax benefit (expense) of $2,357 and $113, $2,556 and ($376), respectively | (3,795 | ) | (180 | ) | (4,115 | ) | 612 | ||||||||
Other comprehensive loss | (5,138 | ) | (610 | ) | (5,429 | ) | (177 | ) | |||||||
Comprehensive income (loss) | $1,081 | $12,832 | $1,356 | ($11,224 | ) |
Six Months Ended | |||||||
December 25, 2016 | December 27, 2015 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $6,785 | ($11,047 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 62,574 | 81,746 | |||||
Stock-based compensation | 26,856 | 29,462 | |||||
Excess tax benefit from stock-based payment arrangements | (1 | ) | (12 | ) | |||
Loss on disposal or impairment of long-lived assets | 845 | 16,587 | |||||
Amortization of premium/discount on investments | 2,749 | 2,747 | |||||
Loss on equity investment | 6,298 | 12,922 | |||||
Foreign exchange (gain) loss on equity investment | (434 | ) | 2,800 | ||||
Deferred income taxes | 44 | 60 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 13,647 | 3,883 | |||||
Inventories | 1,290 | 379 | |||||
Prepaid expenses and other assets | 2,735 | 12,025 | |||||
Accounts payable, trade | (13,836 | ) | (8,788 | ) | |||
Accrued salaries and wages and other liabilities | 10,164 | (18,968 | ) | ||||
Net cash provided by operating activities | 119,716 | 123,796 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (35,211 | ) | (81,804 | ) | |||
Purchases of patent and licensing rights | (5,836 | ) | (7,628 | ) | |||
Proceeds from sale of property and equipment | 236 | 2,376 | |||||
Purchases of short-term investments | (125,022 | ) | (169,197 | ) | |||
Proceeds from maturities of short-term investments | 93,312 | 194,406 | |||||
Proceeds from sale of short-term investments | 7,619 | 19,352 | |||||
Purchase of acquired business, net of cash acquired | (2,775 | ) | (12,513 | ) | |||
Net cash used in investing activities | (67,677 | ) | (55,008 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt borrowings | 245,000 | 368,000 | |||||
Payments on long-term debt borrowings | (235,000 | ) | (363,000 | ) | |||
Net proceeds from issuance of common stock | 8,021 | 9,939 | |||||
Excess tax benefit from stock-based payment arrangements | 1 | 12 | |||||
Repurchases of common stock | (98,431 | ) | (131,749 | ) | |||
Net cash used in financing activities | (80,409 | ) | (116,798 | ) | |||
Effects of foreign exchange changes on cash and cash equivalents | (691 | ) | (1,114 | ) | |||
Net decrease in cash and cash equivalents | (29,061 | ) | (49,124 | ) | |||
Cash and cash equivalents: | |||||||
Beginning of period | 166,154 | 139,710 | |||||
End of period | $137,093 | $90,586 | |||||
Supplemental disclosure of cash flow information: | |||||||
Significant non-cash transactions: | |||||||
Accrued property and equipment | $8,240 | $7,681 |
• | Lighting Products |
• | LED Products |
Three Months Ended December 27, 2015 | Six Months Ended December 27, 2015 | ||||||||||||||||||||||
As Reported | Revision Adjustments | As Revised | As Reported | Revision Adjustments | As Revised | ||||||||||||||||||
Cost of revenue, net | $281,992 | $632 | $282,624 | $555,248 | $1,733 | $556,981 | |||||||||||||||||
Gross profit | 111,766 | (632 | ) | 111,134 | 220,059 | (1,733 | ) | 218,326 | |||||||||||||||
Operating income (loss) | 3,843 | (632 | ) | 3,211 | (6,801 | ) | (1,733 | ) | (8,534 | ) | |||||||||||||
Income (loss) from continuing operations before income taxes | 11,859 | (632 | ) | 11,227 | (21,588 | ) | (1,733 | ) | (23,321 | ) | |||||||||||||
Income tax expense (benefit) | 1,985 | (170 | ) | 1,815 | (6,543 | ) | (454 | ) | (6,997 | ) | |||||||||||||
(Loss) income from continuing operations | 9,874 | (462 | ) | 9,412 | (15,045 | ) | (1,279 | ) | (16,324 | ) | |||||||||||||
Income (loss) from discontinued operations, net of tax | 4,084 | (54 | ) | 4,030 | 5,380 | (103 | ) | 5,277 | |||||||||||||||
Net income (loss) | $13,958 | ($516 | ) | $13,442 | ($9,665 | ) | ($1,382 | ) | ($11,047 | ) | |||||||||||||
Earnings (loss) per share-basic | |||||||||||||||||||||||
Continuing operations | $0.10 | ($0.01 | ) | $0.09 | ($0.14 | ) | ($0.02 | ) | ($0.16 | ) | |||||||||||||
Discontinued operations | 0.04 | — | 0.04 | 0.05 | — | 0.05 | |||||||||||||||||
Earnings (loss) per share-basic | $0.14 | ($0.01 | ) | $0.13 | ($0.09 | ) | ($0.02 | ) | ($0.11 | ) | |||||||||||||
Earnings (loss) per share-diluted | |||||||||||||||||||||||
Continuing operations | $0.10 | ($0.01 | ) | $0.09 | ($0.14 | ) | ($0.02 | ) | ($0.16 | ) | |||||||||||||
Discontinued operations | 0.04 | — | 0.04 | 0.05 | — | 0.05 | |||||||||||||||||
Earnings (loss) per share-diluted | $0.14 | ($0.01 | ) | $0.13 | ($0.09 | ) | ($0.02 | ) | ($0.11 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
Revenue, net | $54,363 | $42,048 | $104,265 | $85,987 | |||||||||||
Cost of revenue, net | 24,688 | 18,723 | 51,002 | 39,271 | |||||||||||
Gross profit | 29,675 | 23,325 | 53,263 | 46,716 | |||||||||||
Total operating expenses | 18,854 | 17,812 | 37,509 | 39,325 | |||||||||||
Income from discontinued operations before income taxes | 10,821 | 5,513 | 15,754 | 7,391 | |||||||||||
Income tax expense | 3,495 | 1,483 | 5,004 | 2,114 | |||||||||||
Income from discontinued operations, net of income taxes | $7,326 | $4,030 | $10,750 | $5,277 |
December 25, 2016 | June 26, 2016 | ||||||
Assets Held For Sale | |||||||
Accounts receivable, net | $30,020 | $26,839 | |||||
Prepaid and other Current Assets | 2,130 | 1,369 | |||||
Inventories | 19,435 | 21,871 | |||||
Property and equipment, net | 235,319 | 214,936 | |||||
Intangible assets, net | 45,273 | 43,409 | |||||
Goodwill | 100,769 | 100,769 | |||||
Total Assets Held for Sale* | $432,946 | $409,193 | |||||
Liabilities Held for Sale | |||||||
Accounts payable | $12,813 | $9,477 | |||||
Accrued salaries and wages | 5,473 | 4,514 | |||||
Other accrued liabilities | 2,995 | 971 | |||||
Other long term liabilities | — | 1,850 | |||||
Total Liabilities Held for Sale* | $21,281 | $16,812 |
Six Months Ended | |||||||
December 25, 2016 | December 27, 2015 | ||||||
Net cash provided by discontinued operating activities | $17,314 | $21,146 | |||||
Net cash used in discontinued investing activities | 22,699 | 68,221 |
Cash consideration paid to shareholders | $13,797 | ||
Post-closing adjustments | 181 | ||
Contingent consideration | 4,625 | ||
Total purchase price | $18,603 |
Tangible assets: | |||
Cash and cash equivalents | $1,284 | ||
Accounts receivable | 1,006 | ||
Inventories | 143 | ||
Property and equipment | 935 | ||
Other assets | 270 | ||
Total tangible assets | 3,638 | ||
Intangible assets: | |||
Patents | 40 | ||
Customer relationships | 4,500 | ||
Developed technology | 11,403 | ||
In-process research and development | 7,565 | ||
Non-compete agreements | 231 | ||
Goodwill | 2,483 | ||
Total intangible assets | 26,222 | ||
Liabilities assumed: | |||
Accounts payable | 55 | ||
Accrued expenses and liabilities | 1,911 | ||
Other long-term liabilities | 9,291 | ||
Total liabilities assumed | 11,257 | ||
Net assets acquired | $18,603 |
Asset Amount | Estimated Life in Years | ||||
Patents | $40 | 20 | |||
Customer relationships | 4,500 | 4 | |||
Developed technology | 11,403 | 10 | |||
In-process research and development1 | 7,565 | 7 | |||
Non-compete agreements | 231 | 3 | |||
Total identifiable intangible assets | $23,739 |
December 25, 2016 | June 26, 2016 | ||||||
Billed trade receivables | $173,645 | $188,672 | |||||
Unbilled contract receivables | 182 | 59 | |||||
173,827 | 188,731 | ||||||
Allowance for sales returns, discounts and other incentives | (46,235 | ) | (44,543 | ) | |||
Allowance for bad debts | (5,833 | ) | (5,416 | ) | |||
Accounts receivable, net | $121,759 | $138,772 |
December 25, 2016 | June 26, 2016 | ||||||
Raw material | $69,219 | $79,957 | |||||
Work-in-progress | 80,635 | 84,459 | |||||
Finished goods | 131,823 | 117,255 | |||||
Inventories | $281,677 | $281,671 |
December 25, 2016 | June 26, 2016 | ||||||
Accrued taxes | $12,033 | $12,023 | |||||
Accrued professional fees | 9,569 | 7,959 | |||||
Accrued warranty | 15,045 | 20,102 | |||||
Accrued other | 5,460 | 5,017 | |||||
Other current liabilities | $42,107 | $45,101 |
December 25, 2016 | June 26, 2016 | ||||||
Currency translation gain | $3,310 | $4,624 | |||||
Net unrealized (loss) gain on available-for-sale securities | (11 | ) | 4,104 | ||||
Accumulated other comprehensive income, net of taxes | $3,299 | $8,728 |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
Foreign currency loss, net | ($1,856 | ) | ($385 | ) | ($495 | ) | ($4,679 | ) | |||||||
Gain on sale of investments, net | — | 14 | 12 | 16 | |||||||||||
(Loss) gain on equity investment | (3,796 | ) | 7,026 | (6,283 | ) | (12,922 | ) | ||||||||
Interest income, net | 900 | 1,220 | 1,787 | 2,517 | |||||||||||
Other, net | (2 | ) | 141 | 67 | 281 | ||||||||||
Non-operating (expense) income, net | ($4,754 | ) | $8,016 | ($4,912 | ) | ($14,787 | ) |
Accumulated Other Comprehensive Income Component | Amount Reclassified Out of Accumulated Other Comprehensive Income | Affected Line Item in the Consolidated Statements of Income (Loss) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | |||||||||||||||
Net unrealized gain on available-for-sale securities, net of taxes | $— | $14 | $12 | $16 | Non-operating (expense) income, net | |||||||||||||
— | 14 | 12 | 16 | Income (loss) from continuing operations before income taxes | ||||||||||||||
— | 2 | 5 | 5 | Income tax expense (benefit) | ||||||||||||||
$— | $12 | $7 | $11 | (Loss) income from continuing operations |
December 25, 2016 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
Municipal bonds | $186,214 | $583 | ($767 | ) | $186,030 | |||||||||||
Corporate bonds | 165,016 | 874 | (813 | ) | 165,077 | |||||||||||
Non-U.S. certificates of deposit | 89,901 | — | — | 89,901 | ||||||||||||
U.S. certificates of deposit | 9,150 | — | — | 9,150 | ||||||||||||
Commercial paper | 3,863 | — | — | 3,863 | ||||||||||||
Total short-term investments | $454,144 | $1,457 | ($1,580 | ) | $454,021 | |||||||||||
June 26, 2016 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
Municipal bonds | $186,893 | $3,562 | ($15 | ) | $190,440 | |||||||||||
Corporate bonds | 165,766 | 3,074 | (73 | ) | 168,767 | |||||||||||
Non-U.S. certificates of deposit | 73,127 | — | — | 73,127 | ||||||||||||
U.S. certificates of deposit | 3,500 | — | — | 3,500 | ||||||||||||
Commercial paper | 3,317 | — | — | 3,317 | ||||||||||||
Total short-term investments | $432,603 | $6,636 | ($88 | ) | $439,151 |
December 25, 2016 | ||||||||||||||||||||||||
Less than 12 Months | Greater than 12 Months | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
Municipal bonds | $106,408 | ($767 | ) | $— | $— | $106,408 | ($767 | ) | ||||||||||||||||
Corporate bonds | 80,976 | (808 | ) | 2,495 | (5 | ) | 83,471 | (813 | ) | |||||||||||||||
Total | $187,384 | ($1,575 | ) | $2,495 | ($5 | ) | $189,879 | ($1,580 | ) | |||||||||||||||
Number of securities with an unrealized loss | 131 | 1 | 132 | |||||||||||||||||||||
June 26, 2016 | ||||||||||||||||||||||||
Less than 12 Months | Greater than 12 Months | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
Municipal bonds | $2,936 | ($9 | ) | $3,535 | ($6 | ) | $6,471 | ($15 | ) | |||||||||||||||
Corporate bonds | 27,578 | (73 | ) | — | — | 27,578 | (73 | ) | ||||||||||||||||
Total | $30,514 | ($82 | ) | $3,535 | ($6 | ) | $34,049 | ($88 | ) | |||||||||||||||
Number of securities with an unrealized loss | 22 | 3 | 25 |
Within One Year | After One, Within Five Years | After Five, Within Ten Years | After Ten Years | Total | |||||||||||||||
Municipal bonds | $44,551 | $112,725 | $28,755 | $— | $186,031 | ||||||||||||||
Corporate bonds | 32,559 | 96,042 | 36,476 | — | 165,077 | ||||||||||||||
Non-U.S. certificates of deposit | 89,901 | — | — | — | 89,901 | ||||||||||||||
U.S. certificates of deposit | 6,150 | 3,000 | — | — | 9,150 | ||||||||||||||
Commercial paper | 3,862 | — | — | — | 3,862 | ||||||||||||||
Total short-term investments | $177,023 | $211,767 | $65,231 | $— | $454,021 |
• | Level 1 - Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. |
• | Level 2 - Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
• | Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
December 25, 2016 | June 26, 2016 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||||||||||
U.S. agency securities | $— | $— | $— | $— | $— | $— | $— | $— | |||||||||||||||||||||||
Non-U.S. certificates of deposit | — | — | — | — | — | 137 | — | 137 | |||||||||||||||||||||||
Money market funds | 466 | — | — | 466 | 576 | — | — | 576 | |||||||||||||||||||||||
Total cash equivalents | 466 | — | — | 466 | 576 | 137 | — | 713 | |||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||
Municipal bonds | — | 186,030 | — | 186,030 | — | 190,440 | — | 190,440 | |||||||||||||||||||||||
Corporate bonds | — | 165,077 | — | 165,077 | — | 168,767 | — | 168,767 | |||||||||||||||||||||||
U.S. certificates of deposit | — | 9,150 | — | 9,150 | — | 3,500 | — | 3,500 | |||||||||||||||||||||||
Commercial paper | — | 3,862 | — | 3,862 | — | 3,317 | — | 3,317 | |||||||||||||||||||||||
Non-U.S. certificates of deposit | — | 89,901 | — | 89,901 | — | 73,127 | — | 73,127 | |||||||||||||||||||||||
Total short-term investments | — | 454,020 | — | 454,020 | — | 439,151 | — | 439,151 | |||||||||||||||||||||||
Other long-term investments: | |||||||||||||||||||||||||||||||
Common stock of non-U.S. corporations | — | 34,315 | — | 34,315 | — | 40,179 | — | 40,179 | |||||||||||||||||||||||
Total other long-term investments | — | 34,315 | — | 34,315 | — | 40,179 | — | 40,179 | |||||||||||||||||||||||
Total assets | $466 | $488,335 | $— | $488,801 | $576 | $479,467 | $— | $480,043 |
December 25, 2016 | June 26, 2016 | ||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Intangible assets with finite lives: | |||||||||||||||||||||||
Customer relationships | $136,920 | ($79,869 | ) | $57,051 | $136,920 | ($77,313 | ) | $59,607 | |||||||||||||||
Developed technology | 162,760 | (119,525 | ) | 43,235 | 162,760 | (110,204 | ) | 52,556 | |||||||||||||||
Non-compete agreements | 10,244 | (10,244 | ) | — | 10,244 | (9,917 | ) | 327 | |||||||||||||||
Trade names, finite-lived | 520 | (520 | ) | — | 520 | (520 | ) | — | |||||||||||||||
Patent and licensing rights | 107,656 | (41,376 | ) | 66,280 | 105,035 | (37,805 | ) | 67,230 | |||||||||||||||
Total intangible assets with finite lives | 418,100 | (251,534 | ) | 166,566 | 415,479 | (235,759 | ) | 179,720 | |||||||||||||||
Trade names, indefinite-lived | 79,680 | — | 79,680 | 79,680 | — | 79,680 | |||||||||||||||||
Total intangible assets | $497,780 | ($251,534 | ) | $246,246 | $495,159 | ($235,759 | ) | $259,400 |
Fiscal Year Ending | |||
June 25, 2017 (remainder of fiscal 2017) | $16,103 | ||
June 24, 2018 | 31,466 | ||
June 30, 2019 | 18,826 | ||
June 28, 2020 | 14,809 | ||
June 27, 2021 | 13,556 | ||
Thereafter | 71,806 | ||
Total future amortization expense | $166,566 |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
(Loss) income from continuing operations | ($1,107 | ) | $9,412 | ($3,965 | ) | ($16,324 | ) | ||||||||
Income from discontinued operations, net of tax | 7,326 | 4,030 | 10,750 | 5,277 | |||||||||||
Net income (loss) | $6,219 | $13,442 | $ | 6,785 | $ | (11,047 | ) | ||||||||
Weighted average common shares | 98,467 | 102,391 | 99,513 | 102,932 | |||||||||||
Basic (loss) income per share from continuing operations | ($0.01 | ) | $0.09 | ($0.04 | ) | ($0.16 | ) | ||||||||
Basic earnings per share from discontinued operations | 0.07 | 0.04 | $0.11 | 0.05 | |||||||||||
Earnings (loss) per share-basic | $0.06 | $0.13 | $0.07 | ($0.11 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
(Loss) income from continuing operations | ($1,107 | ) | $9,412 | ($3,965 | ) | ($16,324 | ) | ||||||||
Income from discontinued operations, net of tax | 7,326 | 4,030 | 10,750 | 5,277 | |||||||||||
Net income (loss) | $6,219 | $13,442 | $6,785 | ($11,047 | ) | ||||||||||
Weighted average common shares - basic | 98,467 | 102,391 | 99,513 | 102,932 | |||||||||||
Dilutive effect of stock options, nonvested shares and Employee Stock Purchase Plan purchase rights | — | 130 | — | — | |||||||||||
Weighted average common shares - diluted | 98,467 | 102,521 | 99,513 | 102,932 | |||||||||||
Diluted (loss) earnings per share from continuing operations | ($0.01 | ) | $0.09 | ($0.04 | ) | ($0.16 | ) | ||||||||
Diluted earnings per share from discontinued operations | 0.07 | 0.04 | 0.11 | 0.05 | |||||||||||
Earnings (loss) per share-diluted | $0.06 | $0.13 | $0.07 | ($0.11 | ) |
Number of Shares | Weighted Average Exercise Price | |||||
Outstanding at June 26, 2016 | 11,247 | $40.42 | ||||
Granted | 1,705 | $24.42 | ||||
Exercised | (39 | ) | $25.88 | |||
Forfeited or expired | (1,162 | ) | $37.24 | |||
Outstanding at December 25, 2016 | 11,751 | $38.46 |
Number of RSAs/RSUs | Weighted Average Grant-Date Fair Value | |||||
Nonvested at June 26, 2016 | 1,631 | 31.66 | ||||
Granted | 1,282 | $24.04 | ||||
Vested | (554 | ) | $34.23 | |||
Forfeited | (96 | ) | $29.94 | |||
Nonvested at December 25, 2016 | 2,263 | $26.79 |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
Income Statement Classification: | |||||||||||||||
Cost of revenue, net | $2,564 | $2,714 | $5,343 | $5,335 | |||||||||||
Research and development | 1,907 | 2,428 | 4,513 | 5,192 | |||||||||||
Sales, general and administrative | 6,184 | 7,140 | 13,819 | 14,988 | |||||||||||
Income from discontinued operations, net of tax | 1,551 | 2,108 | 3,181 | 3,947 | |||||||||||
Total stock-based compensation expense | $12,206 | $14,390 | $26,856 | $29,462 |
Balance at June 26, 2016 | $21,426 | ||
Warranties accrued in current period | 19,896 | ||
Expenditures | (13,032 | ) | |
Balance at December 25, 2016 | $28,290 |
• | Lighting Products |
• | LED Products |
Three Months Ended | Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||
Revenue: | |||||||||||||||
Lighting Products revenue | $208,924 | $254,970 | $392,760 | $503,001 | |||||||||||
LED Products revenue | 138,038 | 138,788 | 275,531 | 272,306 | |||||||||||
Total revenue | $346,962 | $393,758 | $668,291 | $775,307 | |||||||||||
Gross Profit and Gross Margin: | |||||||||||||||
Lighting Products gross profit | $74,770 | $72,642 | $124,060 | $141,723 | |||||||||||
Lighting Products gross margin | 35.8 | % | 28.5 | % | 31.6 | % | 28.2 | % | |||||||
LED Products gross profit | 40,314 | 42,931 | 82,084 | 84,800 | |||||||||||
LED Products gross margin | 29.2 | % | 30.9 | % | 29.8 | % | 31.1 | % | |||||||
Total segment gross profit | 115,084 | 115,573 | 206,144 | 226,523 | |||||||||||
Unallocated costs | (4,193 | ) | (4,439 | ) | (8,912 | ) | (8,197 | ) | |||||||
Consolidated gross profit | $110,891 | $111,134 | $197,232 | $218,326 | |||||||||||
Consolidated gross margin | 32.0 | % | 28.2 | % | 29.5 | % | 28.2 | % |
December 25, 2016 | June 26, 2016 | ||||||
Lighting Products | $170,326 | $172,261 | |||||
LED Products | 107,522 | 104,544 | |||||
Total segment inventories | 277,848 | 276,805 | |||||
Unallocated inventories | 3,829 | 4,866 | |||||
Consolidated inventories | $281,677 | $281,671 |
Capacity and Overhead Cost Reductions | Amounts incurred during the three months ended December 27, 2015 | Amounts incurred for the six months ended December 27, 2015 | Affected Line Item in the Consolidated Statements of Income (Loss) | |||||||
Loss on disposal or impairment of long-lived assets | $1,641 | $10,646 | Loss on disposal or impairment of long-lived assets | |||||||
Loss on disposal or impairment of long-lived assets | — | 4,873 | Income from discontinued operations, net of tax | |||||||
Severance expense | (36 | ) | 264 | Sales, general and administrative expenses | ||||||
Lease termination and facility consolidation costs | 1,198 | 2,933 | Sales, general and administrative expenses | |||||||
Total restructuring charges | $2,803 | $18,716 |
• | Lighting Products |
• | LED Products |
• | Overall Demand for Products and Applications using LEDs. Our potential for growth depends significantly on the continued adoption of LEDs within the general lighting market and our ability to affect this rate of adoption. Demand also fluctuates based on various market cycles, a continuously evolving LED industry supply chain, and evolving competitive dynamics in the market. These uncertainties make demand difficult to forecast for us and our customers. |
• | Intense and Constantly Evolving Competitive Environment. Competition in the LED and lighting industries is intense. Many companies have made significant investments in LED development and production equipment. Product pricing pressures exist as market participants often undertake pricing strategies to gain or protect market share, increase the utilization of their production capacity and open new applications to LED-based solutions. To remain competitive, market participants must continuously increase product performance and reduce costs. To address these competitive pressures, we have invested in research and development activities to support new product development and to deliver higher levels of performance and lower costs to differentiate our products in the market. |
• | Lighting Sales Channel Development. Commercial lighting is usually sold through lighting agents and distributors in the North American lighting market. The lighting agents typically have exclusive sales rights for a defined territory and are typically aligned with one large lighting company for a large percentage of their product sales. The size, quality and capability of the lighting agent has a significant effect on winning new projects and sales in a given geographic market. While these agents or distributors can sell other lighting products, the large traditional lighting companies have taken steps to prevent their channel partners from selling competing product lines. We are constantly working to improve the capabilities of our existing channel partners as well as develop new partners to improve our sales effectiveness in each geographic market. |
• | Technological Innovation and Advancement. Innovations and advancements in LEDs and lighting continue to expand the potential commercial application for our products. However, new technologies or standards could emerge or improvements could be made in existing technologies that could reduce or limit the demand for our products in certain markets. |
• | Intellectual Property Issues. Market participants rely on patented and non-patented proprietary information relating to product development, manufacturing capabilities and other core competencies of their business. Protection of intellectual property is critical. Therefore, steps such as additional patent applications, confidentiality and non-disclosure agreements, as well as other security measures are generally taken. To enforce or protect intellectual property rights, litigation or threatened litigation is common. |
• | Revenue decreased to $668 million for the six months ended December 25, 2016 from $775 million for the six months ended December 27, 2015. |
• | Gross profit decreased to $197 million for the six months ended December 25, 2016 from $218 million for the six months ended December 27, 2015. Gross margin increased to 30% for the six months ended December 25, 2016 from 28% for the six months ended December 27, 2015. |
• | Operating loss was $1 million for the six months ended December 25, 2016 compared to operating loss of $9 million for the six months ended December 27, 2015. Net income per diluted share was $0.07 for the six months ended December 25, 2016 compared to net loss per diluted share of $0.11 for the six months ended December 27, 2015. |
• | Cash, cash equivalents and short-term investments were $0.6 billion at December 25, 2016 and June 26, 2016. Cash provided by operating activities was $120 million for the six months ended December 25, 2016 compared to $124 million for the six months ended December 27, 2015. |
• | Inventories were $282 million at December 25, 2016 and June 26, 2016. |
• | Purchases of property and equipment were $35 million for the six months ended December 25, 2016 compared to $82 million for the six months ended December 27, 2015. |
• | Complete the sale of our Wolfspeed business to Infineon. |
• | Grow company revenue. |
◦ | Grow commercial lighting revenue with the market, potentially adding to that growth through product line expansion and/or strategic acquisitions, and maintain consumer lighting revenue in a similar range while transitioning to a new generation LED bulb family. |
◦ | Maintain LED revenue in a similar range through new product design wins to offset the competitive environment. |
• | Improve operating margin. |
◦ | Increase lighting margins through a combination of lower costs and higher value new products. |
◦ | Maintain LED margins in a similar range by reducing product costs and increasing performance levels. |
◦ | Manage company operating expenses to grow slower than revenue. |
• | Continue to innovate in all of our businesses to differentiate our products in the market. |
• | Improve the customer experience and service levels in all of our businesses. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | ||||||||||||||||||||||||
% of Revenue | % of Revenue | % of Revenue | % of Revenue | ||||||||||||||||||||||||
Revenue, net | $346,962 | 100 | % | $393,758 | 100 | % | $668,291 | 100 | % | $775,307 | 100 | % | |||||||||||||||
Cost of revenue, net | 236,071 | 68 | % | 282,624 | 72 | % | 471,059 | 70 | % | 556,981 | 72 | % | |||||||||||||||
Gross profit | 110,891 | 32 | % | 111,134 | 28 | % | 197,232 | 30 | % | 218,326 | 28 | % | |||||||||||||||
Research and development | 28,070 | 8 | % | 31,563 | 8 | % | 56,601 | 8 | % | 64,294 | 8 | % | |||||||||||||||
Sales, general and administrative | 67,671 | 20 | % | 67,877 | 17 | % | 129,042 | 19 | % | 138,049 | 18 | % | |||||||||||||||
Amortization or impairment of acquisition-related intangibles | 5,937 | 2 | % | 6,468 | 2 | % | 12,203 | 2 | % | 12,937 | 2 | % | |||||||||||||||
Loss on disposal or impairment of long-lived assets | 530 | — | % | 2,015 | 1 | % | 846 | — | % | 11,580 | 1 | % | |||||||||||||||
Operating income (loss) | 8,683 | 3 | % | 3,211 | 1 | % | (1,460 | ) | — | % | (8,534 | ) | (1 | )% | |||||||||||||
Non-operating (expense) income, net | (4,754 | ) | (1 | )% | 8,016 | 2 | % | (4,912 | ) | (1 | )% | (14,787 | ) | (2 | )% | ||||||||||||
Income (loss) from continuing operations before income taxes | 3,929 | 1 | % | 11,227 | 3 | % | (6,372 | ) | (1 | )% | (23,321 | ) | (3 | )% | |||||||||||||
Income tax expense (benefit) | 5,036 | 1 | % | 1,815 | — | % | (2,407 | ) | — | % | (6,997 | ) | (1 | )% | |||||||||||||
(Loss) income from continuing operations | ($1,107 | ) | — | % | $9,412 | 2 | % | ($3,965 | ) | (1 | )% | ($16,324 | ) | (2 | )% | ||||||||||||
Income from discontinued operations, net of tax | 7,326 | 2 | % | 4,030 | 1 | % | 10,750 | 2 | % | 5,277 | 1 | % | |||||||||||||||
Net income (loss) | $6,219 | 2 | % | $13,442 | 3 | % | $6,785 | 1 | % | ($11,047 | ) | (1 | )% | ||||||||||||||
Earnings (loss) per share-basic | |||||||||||||||||||||||||||
Continuing operations | ($0.01 | ) | $0.09 | ($0.04 | ) | ($0.16 | ) | ||||||||||||||||||||
Discontinued operations | 0.07 | 0.04 | $0.11 | $0.05 | |||||||||||||||||||||||
Earnings (loss) per share-basic | $0.06 | $0.13 | $0.07 | ($0.11 | ) | ||||||||||||||||||||||
Earnings (loss) per share-diluted | |||||||||||||||||||||||||||
Continuing operations | ($0.01 | ) | $0.09 | ($0.04 | ) | ($0.16 | ) | ||||||||||||||||||||
Discontinued operations | 0.07 | 0.04 | 0.11 | 0.05 | |||||||||||||||||||||||
Earnings (loss) per share-diluted | $0.06 | $0.13 | $0.07 | ($0.11 | ) |
Capacity and Overhead Cost Reductions | Amounts incurred during the three months ended December 27, 2015 | Amounts incurred for the six months ended December 27, 2015 | Affected Line Item in the Consolidated Statements of Income (Loss) | |||||||
Loss on disposal or impairment of long-lived assets | $1,641 | $10,646 | Loss on disposal or impairment of long-lived assets | |||||||
Loss on disposal or impairment of long-lived assets | — | 4,873 | Income from discontinued operations, net of tax | |||||||
Severance expense | (36 | ) | 264 | Sales, general and administrative expenses | ||||||
Lease termination and facility consolidation costs | 1,198 | 2,933 | Sales, general and administrative expenses | |||||||
Total restructuring charges | $2,803 | $18,716 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||
Lighting Products revenue | $208,924 | $254,970 | ($46,046 | ) | (18 | )% | $392,760 | $503,001 | ($110,241 | ) | (22 | )% | |||||||||||||||
Percent of revenue | 60 | % | 65 | % | 59% | 74 | % | ||||||||||||||||||||
LED Products revenue | 138,038 | 138,788 | (750 | ) | (1 | )% | 275,531 | 272,306 | 3,225 | 1 | % | ||||||||||||||||
Percent of revenue | 40 | % | 35 | % | 41% | 35 | % | ||||||||||||||||||||
Total revenue | $346,962 | $393,758 | ($46,796 | ) | (12 | )% | $668,291 | $775,307 | ($107,016 | ) | (14 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||
Lighting Products gross profit | $74,770 | $72,642 | $2,128 | 3 | % | $124,060 | $141,723 | ($17,663 | ) | (12 | )% | ||||||||||||||||
Lighting Products gross margin | 35.8 | % | 28.5 | % | 31.6% | 28.2 | % | ||||||||||||||||||||
LED Products gross profit | 40,314 | 42,931 | (2,617 | ) | (6 | )% | 82,084 | 84,800 | (2,716 | ) | (3 | )% | |||||||||||||||
LED Products gross margin | 29.2 | % | 30.9 | % | 29.8% | 31.1 | % | ||||||||||||||||||||
Unallocated costs | (4,193 | ) | (4,439 | ) | 246 | (6 | )% | (8,912) | (8,197 | ) | (715 | ) | 9 | % | |||||||||||||
Consolidated gross profit | $110,891 | $111,134 | ($243 | ) | — | % | $197,232 | $218,326 | ($21,094 | ) | (10 | )% | |||||||||||||||
Consolidated gross margin | 32.0 | % | 28.2 | % | 29.5% | 28.2 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||||
Research and development | $28,070 | $31,563 | ($3,493 | ) | (11 | )% | $56,601 | $64,294 | ($7,693 | ) | (12 | )% | |||||||||||||||||
Percent of revenue | 8 | % | 8 | % | 8 | % | 8 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||||
Sales, general and administrative | $67,671 | $67,877 | ($206 | ) | — | % | $129,042 | $138,049 | ($9,007 | ) | (7 | )% | |||||||||||||||||
Percent of revenue | 20 | % | 17 | % | 19 | % | 18 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||||
Customer relationships | $1,277 | $1,318 | ($41 | ) | (3 | )% | $2,556 | $2,636 | ($80 | ) | (3 | )% | |||||||||||||||||
Developed technology | 4,660 | 4,660 | — | — | % | 9,321 | 9,321 | — | — | % | |||||||||||||||||||
Non-compete agreements | — | 490 | (490 | ) | (100 | )% | 326 | 980 | (654 | ) | (67 | )% | |||||||||||||||||
Total amortization | $5,937 | $6,468 | ($531 | ) | (8 | )% | $12,203 | $12,937 | ($734 | ) | (6 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||||
Loss on disposal or impairment of long-lived assets | $530 | $2,015 | ($1,485 | ) | (74 | )% | $846 | $11,580 | ($10,734 | ) | (93 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||||
Gain on sale of investments, net | $— | $14 | ($14 | ) | (100 | )% | $12 | $16 | ($4 | ) | (25 | )% | |||||||||||||||||
(Loss) gain on equity investment | (3,796 | ) | 7,026 | (10,822 | ) | (154 | )% | (6,283 | ) | (12,922 | ) | 6,639 | (51 | )% | |||||||||||||||
Foreign currency loss, net | (1,856 | ) | (385 | ) | (1,471 | ) | 382 | % | (495 | ) | (4,679 | ) | 4,184 | (89 | )% | ||||||||||||||
Interest income, net | 900 | 1,220 | (320 | ) | (26 | )% | 1,787 | 2,517 | (730 | ) | (29 | )% | |||||||||||||||||
Other, net | (2 | ) | 141 | (143 | ) | (101 | )% | 67 | 281 | (214 | ) | (76 | )% | ||||||||||||||||
Non-operating (expense) income, net | ($4,754 | ) | $8,016 | ($12,770 | ) | (159 | )% | ($4,912 | ) | ($14,787 | ) | $9,875 | (67 | )% |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
December 25, 2016 | December 27, 2015 | Change | December 25, 2016 | December 27, 2015 | Change | ||||||||||||||||||||||||
Income tax expense (benefit) | $5,036 | $1,815 | $3,221 | 177 | % | ($2,407 | ) | ($6,997 | ) | $4,590 | (66 | )% | |||||||||||||||||
Effective tax rate | 128.2 | % | 16.2 | % | 37.8 | % | 30.0 | % |
Three Months Ended | ||||||
December 25, 2016 | June 26, 2016 | Change | ||||
Days of sales outstanding(a) | 32 | 37 | (5 | ) | ||
Days of supply in inventory(b) | 107 | 101 | 6 | |||
Days in accounts payable(c) | (42) | (44) | 2 | |||
Cash conversion cycle | 97 | 94 | 3 |
a) | Days of sales outstanding (DSO) measures the average collection period of our receivables. DSO is based on the ending net trade receivables and the revenue, net for the quarter then ended. DSO is calculated by dividing ending accounts receivable, net of applicable allowances and reserves, by the average net revenue per day for the respective 90 day period. |
b) | Days of supply in inventory (DSI) measures the average number of days from procurement to sale of our product. DSI is based on ending inventory and cost of revenue, net for the quarter then ended. DSI is calculated by dividing ending inventory by average cost of revenue, net per day for the respective 90 day period. |
c) | Days in accounts payable (DPO) measures the average number of days our payables remain outstanding before payment. DPO is based on ending accounts payable and cost of revenue, net for the quarter then ended. DPO is calculated by dividing ending accounts payable by the average cost of revenue, net per day for the respective 90 day period. |
Six Months Ended | ||||||||||||||
December 25, 2016 | December 27, 2015 | Change | ||||||||||||
Net cash provided by operating activities | $119,716 | $123,796 | ($4,080 | ) | (3 | )% | ||||||||
Net cash used in investing activities | (67,677 | ) | (55,008 | ) | (12,669 | ) | 23 | % | ||||||
Net cash used in financing activities | (80,409 | ) | (116,798 | ) | 36,389 | (31 | )% | |||||||
Effects of foreign exchange changes on cash and cash equivalents | (691 | ) | (1,114 | ) | 423 | (38 | )% | |||||||
Net decrease in cash and cash equivalents | ($29,061 | ) | ($49,124 | ) | $20,063 |
• | achievement of technology breakthroughs required to make commercially viable products; |
• | the accuracy of our predictions for market requirements; |
• | our ability to predict, influence and/or react to evolving standards; |
• | acceptance of our new product designs; |
• | acceptance of new technology in certain markets; |
• | the availability of qualified research and development personnel; |
• | our timely completion of product designs and development; |
• | our ability to develop repeatable processes to manufacture new products in sufficient quantities, with the desired specifications and at competitive costs; |
• | our ability to effectively transfer products and technology from development to manufacturing; |
• | our customers’ ability to develop competitive products incorporating our products; and |
• | market acceptance of our products and our customers’ products. |
• | expand the capability of information systems to support a more complex business; |
• | maintain, expand and purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, to meet customer demand; |
• | manage an increasingly complex supply chain that has the ability to supply an increasing number of raw materials, subsystems and finished products with the required specifications and quality, and deliver on time to our manufacturing facilities, our third party manufacturing facilities, or our logistics operations; |
• | expand research and development, sales and marketing, technical support, distribution capabilities, manufacturing planning and administrative functions; |
• | manage organizational complexity and communication; |
• | expand the skills and capabilities of our current management team; |
• | add experienced senior level managers; |
• | attract and retain qualified employees; and |
• | adequately maintain and adjust the operational and financial controls that support our business. |
• | the failure to obtain, on a timely basis or at all, the regulatory approvals required to complete the transaction without the imposition of conditions that may cause the parties to abandon the transaction, or the failure to satisfy, on a timely basis or at all, the other closing conditions set forth in the APA; |
• | the disruption to and uncertainty in our business and our relationships with our customers, including attempts by our customers to renegotiate their relationships with us or decisions by our customers to defer or delay purchases from us; |
• | the diversion of our management’s attention away from the operation of the businesses we are retaining; |
• | difficulties in hiring, retaining and motivating key personnel during this process or as a result of uncertainties generated by this process or any developments or actions relating to it; |
• | our incurrence of significant transaction costs in connection with the transaction, regardless of whether it is completed; |
• | the restrictions on and obligations with respect to our business set forth in the APA and, following closing, the transition services agreement and the wafer supply agreement; |
• | the separation of the Wolfspeed business from the businesses we are retaining and the operation of our retained businesses without the Wolfspeed business; |
• | any required payments of indemnification obligations under the APA for retained liabilities and breaches of representations, warranties or covenants; |
• | fluctuations in our market value, including the depreciation in our market value if the transaction is not completed or the failure of the transaction, even if completed, to increase our market value; and |
• | failure to realize the full purchase price anticipated under the APA. |
• | costs associated with the removal, collection and destruction of the product; |
• | payments made to replace product; |
• | costs associated with repairing the product; |
• | the write-down or destruction of existing inventory; |
• | insurance recoveries that fail to cover the full costs associated with product recalls; |
• | lost sales due to the unavailability of product for a period of time; |
• | delays, cancellations or rescheduling of orders for our products; or |
• | increased product returns. |
• | variability in our process repeatability and control; |
• | contamination of the manufacturing environment; |
• | equipment failure, power outages, fires, flooding, information or other system failures or variations in the manufacturing process; |
• | lack of consistency and adequate quality and quantity of piece parts, other raw materials and other bill of materials items; |
• | inventory shrinkage or human errors; |
• | defects in production processes (including system assembly) either within our facilities or at our suppliers; and |
• | any transitions or changes in our production process, planned or unplanned. |
• | the failure of an acquired business, investee or joint venture to meet our performance expectations; |
• | identification of additional liabilities relating to an acquired business; |
• | loss of existing customers of our current and acquired businesses due to concerns that new product lines may be in competition with the customers’ existing product lines; |
• | difficulty integrating an acquired business's operations, personnel and financial and operating systems into our current business; |
• | diversion of management attention; |
• | difficulty separating the operations, personnel and financial and operating systems of a spin-off or divestiture from our current business; |
• | uncertainty of the financial markets or circumstances that cause conditions that are less favorable and/or different than expected; and |
• | expenses incurred to complete a transaction may be significantly higher than anticipated. |
• | protection of intellectual property and trade secrets; |
• | tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost effective and timely manner, or changes in applicable tariffs or custom rules; |
• | the burden of complying with and changes in U.S. or international taxation policies; |
• | timing and availability of export licenses; |
• | rising labor costs; |
• | disruptions in or inadequate infrastructure of the countries where we operate; |
• | difficulties in collecting accounts receivable; |
• | difficulties in staffing and managing international operations; and |
• | the burden of complying with foreign and international laws and treaties. |
• | pay substantial damages; |
• | indemnify our customers; |
• | stop the manufacture, use and sale of products found to be infringing; |
• | incur asset impairment charges; |
• | discontinue the use of processes found to be infringing; |
• | expend significant resources to develop non-infringing products or processes; or |
• | obtain a license to use third party technology. |
• | the jurisdiction in which profits are determined to be earned and taxed; |
• | changes in government administrations, such as the new U.S. presidential administration and U.S. Congress, as well as in the states and countries in which we operate; |
• | changes in tax laws or interpretation of such tax laws and changes in generally accepted accounting principles; |
• | the resolution of issues arising from tax audits with various authorities; |
• | changes in the valuation of our deferred tax assets and liabilities; |
• | adjustments to estimated taxes upon finalization of various tax returns; |
• | increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions; |
• | changes in available tax credits; |
• | the recognition and measurement of uncertain tax positions; |
• | the lack of sufficient excess tax benefits (credits) in our additional paid-in-capital pool in situations where our realized tax deductions for certain stock-based compensation awards (such as non-qualified stock options and restricted stock) are less than those originally anticipated; and |
• | the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes or any changes in legislation that may result in these earnings being taxed within the U.S., regardless of our decision regarding repatriation of funds. |
• | regulatory penalties, fines, legal liabilities and the forfeiture of certain tax benefits; |
• | suspension of production; |
• | alteration of our fabrication, assembly and test processes; and |
• | curtailment of our operations or sales. |
• | increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions; |
• | requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures, research and development and stock repurchases; |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | placing us at a competitive disadvantage compared to our peers that may have less indebtedness than we have by limiting our ability to borrow additional funds needed to operate and grow our business; and |
• | increasing our interest expense if interest rates increase. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1 | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs1 | ||||||||||
Shares repurchased under our Stock Repurchase Program | ||||||||||||||
September 26, 2016 to October 23, 2016 | — | $— | 1,471 | $264,307 | ||||||||||
October 24, 2016 to November 20, 2016 | 2,375 | $22.51 | 3,846 | $210,830 | ||||||||||
November 21, 2016 to December 25, 2016 | 371 | $25.22 | 4,217 | $201,484 | ||||||||||
Total | 2,746 | $22.88 |
(1) | On August 24, 2016, our Board of Directors approved the extension of our stock repurchase program through June 25, 2017. Pursuant to the program, we are authorized to repurchase shares of our common stock having an aggregate purchase price not exceeding $300 million for all purchases from August 24, 2016 through the expiration of the program on June 25, 2017. |
Exhibit No. | Description | ||
10.1 | 2013 Long-Term Incentive Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated October 25, 2016, filed with the Securities and Exchange Commission on October 28, 2016) | ||
31.1 | Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
31.2 | Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
32.1 | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
32.2 | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101 | The following materials from Cree, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 25, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income (Loss); (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements |
CREE, INC. | |
January 25, 2017 | |
/s/ MICHAEL E. MCDEVITT | |
Michael E. McDevitt | |
Executive Vice President and Chief Financial Officer | |
(Authorized Officer and Principal Financial and Chief Accounting Officer) |
Exhibit No. | Description | ||
10.1 | 2013 Long-Term Incentive Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated October 25, 2016, filed with the Securities and Exchange Commission on October 28, 2016) | ||
31.1 | Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
31.2 | Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
32.1 | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
32.2 | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101 | The following materials from Cree, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 25, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income (Loss); (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements |
1. | I have reviewed this quarterly report on Form 10-Q of Cree, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ CHARLES M. SWOBODA |
Charles M. Swoboda |
Chairman, Chief Executive Officer and President |
1. | I have reviewed this quarterly report on Form 10-Q of Cree, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ MICHAEL E. MCDEVITT |
Michael E. McDevitt |
Executive Vice President and Chief Financial Officer |
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ CHARLES M. SWOBODA |
Charles M. Swoboda |
Chairman, Chief Executive Officer and President |
January 25, 2017 |
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ MICHAEL E. MCDEVITT |
Michael E. McDevitt |
Executive Vice President and Chief Financial Officer |
January 25, 2017 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Dec. 25, 2016 |
Jan. 20, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CREE INC | |
Entity Central Index Key | 0000895419 | |
Current Fiscal Year End Date | --06-25 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 25, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 97,404,938 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Balance Sheets Consolidation Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
Dec. 25, 2016 |
Jun. 26, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 3,000 | 3,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.00125 | $ 0.00125 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 97,399 | 100,829 |
Common stock, shares outstanding | 97,399 | 100,829 |
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Income Statement [Abstract] | ||||
Revenue, net | $ 346,962 | $ 393,758 | $ 668,291 | $ 775,307 |
Cost of revenue, net | 236,071 | 282,624 | 471,059 | 556,981 |
Gross profit | 110,891 | 111,134 | 197,232 | 218,326 |
Operating expenses: | ||||
Research and development | 28,070 | 31,563 | 56,601 | 64,294 |
Sales, general and administrative | 67,671 | 67,877 | 129,042 | 138,049 |
Amortization or impairment of acquisition-related intangibles | 5,937 | 6,468 | 12,203 | 12,937 |
Loss on disposal or impairment of long-lived assets | 530 | 2,015 | 846 | 11,580 |
Total operating expenses | 102,208 | 107,923 | 198,692 | 226,860 |
Operating income (loss) | 8,683 | 3,211 | (1,460) | (8,534) |
Non-operating (expense) income, net | (4,754) | 8,016 | (4,912) | (14,787) |
Income (loss) from continuing operations before income taxes | 3,929 | 11,227 | (6,372) | (23,321) |
Income tax expense (benefit) | 5,036 | 1,815 | (2,407) | (6,997) |
Loss from continuing operations | (1,107) | 9,412 | (3,965) | (16,324) |
Income from discontinued operations, net of tax | 7,326 | 4,030 | 10,750 | 5,277 |
Net income (loss) | $ 6,219 | $ 13,442 | $ 6,785 | $ (11,047) |
Earnings (loss) per share-basic | ||||
Continuing operations, basic | $ (0.01) | $ 0.09 | $ (0.04) | $ (0.16) |
Discontinued operations, basic | 0.07 | 0.04 | 0.11 | 0.05 |
Basic | 0.06 | 0.13 | 0.07 | (0.11) |
Continuing operations, diluted | (0.01) | 0.09 | (0.04) | (0.16) |
Discontinued operations, diluted | 0.07 | 0.04 | 0.11 | 0.05 |
Diluted | $ 0.06 | $ 0.13 | $ 0.07 | $ (0.11) |
Weighted average shares used in per share calculation: | ||||
Basic | 98,467 | 102,391 | 99,513 | 102,932 |
Diluted | 98,467 | 102,521 | 99,513 | 102,932 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 6,219 | $ 13,442 | $ 6,785 | $ (11,047) |
Currency translation loss | (1,343) | (430) | (1,314) | (789) |
Net unrealized (loss) gain on available-for-sale securities, net of tax benefit (expense) of $2,357 and $113, $2,556 and ($376), respectively | (3,795) | (180) | (4,115) | 612 |
Other comprehensive loss | (5,138) | (610) | (5,429) | (177) |
Comprehensive income (loss) | $ 1,081 | $ 12,832 | $ 1,356 | $ (11,224) |
Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax (expense) benefit on net unrealized gain (loss) on available-for-sale securities | $ 2,357 | $ 113 | $ 2,556 | $ (376) |
Basis of Presentation and New Accounting Standards |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and New Accounting Standards | Basis of Presentation and New Accounting Standards Overview Cree, Inc. (the Company) is a leading innovator of lighting-class light emitting diode (LED) products, lighting products and wide bandgap semiconductor products for power and radio-frequency (RF) applications. The Company's products are targeted for applications such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems. The Company's lighting products primarily consist of LED lighting systems and bulbs. The Company designs, manufactures and sells lighting fixtures and lamps for the commercial, industrial and consumer markets. The Company's LED products consist of LED components and LED chips. The Company's LED products enable its customers to develop and market LED-based products for lighting, video screens and other industrial applications. In addition, the Company develops, manufactures and sells silicon carbide (SiC) materials, power devices and RF devices based on wide bandgap semiconductor materials such as SiC and gallium nitride (GaN). The Company's SiC materials products are sold to customers developing power and RF products as well as gemstones. These SiC materials products had previously been included within the LED Products segment. The Company's power products are made from SiC and provide increased efficiency, faster switching speeds and reduced system size and weight over comparable silicon-based power devices. The Company's RF devices are made from GaN and provide improved efficiency, bandwidth and frequency of operation as compared to silicon or gallium arsenide (GaAs). Collectively, the Company refers to these product lines as the Wolfspeed business. As discussed more fully below in Note 2, “Discontinued Operations,” on July 13, 2016, the Company executed a definitive agreement to sell its Wolfspeed business to Infineon Technologies AG (Infineon). As a result, the Company has classified the results of the Wolfspeed business as discontinued operations in its consolidated statements of income (loss) for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale in the consolidated balance sheets. Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to the Company's continuing operations. The majority of the Company's products are manufactured at its production facilities located in North Carolina, Wisconsin and China. The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging. The Company operates research and development facilities in North Carolina, California, Wisconsin, India, Italy and China (including Hong Kong). Cree, Inc. is a North Carolina corporation established in 1987 and is headquartered in Durham, North Carolina. The Company's two reportable segments are:
For financial results by reportable segment, please refer to Note 14, "Reportable Segments." Basis of Presentation The consolidated balance sheet at December 25, 2016, the consolidated statements of income (loss) for the three and six months ended December 25, 2016 and December 27, 2015, the consolidated statements of comprehensive income (loss) for the three and six months ended December 25, 2016 and December 27, 2015, and the consolidated statements of cash flows for the six months ended December 25, 2016 and December 27, 2015 (collectively, the consolidated financial statements) have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive income and cash flows at December 25, 2016, and for all periods presented, have been made. All intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 26, 2016 has been derived from the audited financial statements as of that date. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 26, 2016 (fiscal 2016). The results of operations for the three and six months ended December 25, 2016 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 25, 2017 (fiscal 2017). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Actual amounts could differ materially from those estimates. Certain fiscal 2016 amounts in the accompanying consolidated financial statements have been reclassified to conform to the fiscal 2017 presentation. These reclassifications had no effect on previously reported consolidated net income or shareholders’ equity. Revision of Prior Period Financial Statements During the third quarter of fiscal 2016, the Company identified errors in its previously reported financial statements in which amortization expense was understated as certain patents were being amortized over a life longer than the life of the underlying patent right. The Company assessed the materiality of these errors on prior periods’ financial statements in accordance with the United States Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 99, Materiality, codified in the Accounting Standards Codification (ASC) 250, Presentation of Financial Statements, and concluded that they were not material individually or in the aggregate to any prior annual or interim periods. However, through the second quarter of fiscal 2016 the aggregate amount of the prior period errors of $6.8 million before income taxes would have been material to the Company's interim Consolidated Statements of Income (Loss) for the third quarter of fiscal 2016. Consequently, in accordance with ASC 250, the Company corrected these errors, and other immaterial errors, for all prior periods presented by revising the consolidated financial statements and other financial information included herein. The following table summarizes the effects of the revision on the consolidated statements of income (loss) (in thousands):
The revision had no net impact on the Company’s net cash provided by operating activities. Recently Issued Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09: Revenue from Contracts with Customers (Topic 606). The FASB has subsequently issued multiple ASUs which amend and clarify the guidance in Topic 606. The ASU establishes a principles-based approach for accounting for revenue arising from contracts with customers and supersedes existing revenue recognition guidance. The ASU provides that an entity should apply a five-step approach for recognizing revenue, including (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. Also, the entity must provide various disclosures concerning the nature, amount and timing of revenue and cash flows arising from contracts with customers. The effective date will be the first quarter of the Company's fiscal year ending June 30, 2019, using one of two retrospective application methods. The Company is currently analyzing the impact of this new pronouncement. Leases In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842). The ASU requires that a lessee recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. For income statement purposes, leases are still required to be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The effective date will be the first quarter of the Company's fiscal year ending June 28, 2020, using a modified retrospective approach. The Company is currently analyzing the impact of this new pronouncement. Stock Compensation In March 2016, the FASB issued ASU No. 2016-09: Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU simplifies the current stock compensation guidance for tax consequences. The ASU requires an entity to recognize all excess tax benefits and tax deficiencies as income tax expense or benefit in its income statement. The ASU also eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable. For cash flows statement purposes, excess tax benefits should be classified as an operating activity and cash payments made to taxing authorities on the employee’s behalf for withheld shares should be classified as financing activity. The ASU is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently analyzing the impact of this new pronouncement. |
Acquisition |
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Business Combination Disclosure [Text Block] | Acquisition On July 8, 2015, the Company closed on the acquisition of Arkansas Power Electronics International, Inc. (APEI), a global leader in power modules and power electronics applications, pursuant to a merger agreement with APEI and certain shareholders of APEI, whereby the Company acquired all of the outstanding share capital of APEI in exchange for a base purchase price of $13.8 million, subject to certain adjustments. In addition, if certain goals are achieved over the subsequent two years, additional cash payments totaling up to $4.6 million may be made to the former APEI shareholders. Payments totaling $2.8 million were made to the former APEI shareholders in July 2016 based on achievement of the first year goals. The Company expects that the second year goals will also be achieved. In connection with this acquisition, APEI became a wholly owned subsidiary of the Company, renamed Cree Fayetteville, Inc. (Cree Fayetteville). Cree Fayetteville is not considered a significant subsidiary of the Company and its results from operations were reported as part of the Company's former Power and RF Products segment prior to the classification of the Wolfspeed business as discontinued operations and is discussed more fully in Note 2, "Discontinued Operations." The total purchase price for this acquisition was as follows (in thousands):
The purchase price for this acquisition has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows (in thousands):
Prior to the classification of the Wolfspeed business as discontinued operations, the identifiable intangible assets acquired as a result of the acquisition were being amortized over their respective estimated useful lives as follows (in thousands, except for years):
(1) In-process research and development (IPR&D) is initially classified as indefinite-lived assets and tested for impairment at least annually or when indications of potential impairment exist. The IPR&D was completed in January 2016. Goodwill largely consists of expansion of product offerings of power modules and power electronics applications, manufacturing and other synergies of the combined companies, and the value of the assembled workforce. The assets, liabilities, and operating results of APEI have been included in the Company's consolidated financial statements from the date of acquisition and are not significant to the Company as a whole. |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Note 2 – Discontinued Operations On July 13, 2016, the Company executed an Asset Purchase Agreement (the APA) with Infineon. The transaction, which was approved by both the Company’s Board of Directors and Infineon’s Supervisory Board, is currently pending customary closing conditions and governmental approvals. The Company targets closing the transaction within its third quarter of fiscal year 2017. Pursuant to the APA, the Company will sell to Infineon, and Infineon will (i) purchase from the Company (a) the assets comprising the Company’s power and RF product lines (formerly the Company's Power and RF Products segment), including manufacturing facilities and equipment, inventory, intellectual property rights, contracts, real estate, and the outstanding equity interests of Cree Fayetteville, Inc, one of the Company’s wholly-owned subsidiaries, and (b) certain related portions of the Company’s SiC materials and gemstones business previously included within the LED Products segment and (ii) assume certain liabilities related to the Wolfspeed business. The Company will retain certain liabilities associated with the Wolfspeed business arising prior to the closing of the transaction. Infineon is expected to hire most of the Company’s approximately 594 Wolfspeed employees either at the closing of the transaction or following a transition period. The purchase price for the Wolfspeed business will be $850 million in cash, which is subject to certain adjustments. In connection with the transaction, the Company and Infineon will also enter into certain ancillary and related agreements, including (i) an intellectual property assignment and license agreement, which will assign to Infineon certain intellectual property owned by the Company and license to Infineon certain additional intellectual property owned by the Company, (ii) a transition services agreement, which is designed to ensure a smooth transition of the Wolfspeed business to Infineon, and (iii) a wafer supply agreement, pursuant to which the Company will supply Infineon with SiC wafers and SiC boules for a transitional period of time. The APA contains customary representations, warranties and covenants, including covenants to cooperate in seeking regulatory approvals, as well as the Company’s agreement to not compete with the Wolfspeed business for five years following the closing of the transaction and to indemnify Infineon for certain damages that Infineon may suffer following the closing of the transaction. Infineon's obligation to purchase the Wolfspeed business is subject to the satisfaction or waiver of a number of conditions set forth in the APA, including regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and certain similar non-U.S. regulations, the approval of the Committee on Foreign Investment in the United States and other customary closing conditions. The APA provides for customary termination rights of the parties and also provides that in the event the APA is terminated for certain specified regulatory-related circumstances, Infineon may be required to pay the Company a termination fee ranging from $12.5 million to $42.5 million. The Company has classified the results of the Wolfspeed business as discontinued operations in the Company’s consolidated statements of income (loss) for all periods presented. The Company ceased recording depreciation and amortization of long-lived assets of the Wolfspeed business upon classification as discontinued operations in July 2016. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale in the consolidated balance sheets. The assets and liabilities held for sale as of December 25, 2016 are classified as current in the consolidated balance sheet as the Company expects the transaction to close within one year. The following table presents the financial results of the Wolfspeed business as income from discontinued operations, net of income taxes in the Company's consolidated statements of income (loss) (in thousands):
The following table presents the assets and liabilities related to the Wolfspeed business held for sale (in thousands):
*Amounts in the June 26, 2016 column are classified as current and long-term in the consolidated balance sheet. The following table presents the cash flow of the Wolfspeed business (in thousands):
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Financial Statement Details |
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Financial Statement Details | Financial Statement Details Accounts Receivable, net The following table summarizes the components of accounts receivable, net (in thousands):
Inventories The following table summarizes the components of inventories (in thousands):
Other Current Liabilities The following table summarizes the components of other current liabilities (in thousands):
Accumulated Other Comprehensive Income, net of taxes The following table summarizes the components of accumulated other comprehensive income, net of taxes (in thousands):
Non-Operating Expense, net The following table summarizes the components of non-operating (expense) income, net (in thousands):
Reclassifications Out of Accumulated Other Comprehensive Income, net of taxes The following table summarizes the amounts reclassified out of accumulated other comprehensive income, net of taxes (in thousands):
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Investments consist of municipal bonds, corporate bonds, commercial paper and certificates of deposit. All short-term investments are classified as available-for-sale. Other long-term investments consist of the Company's ownership interest in Lextar Electronics Corporation. The following tables summarize short-term investments (in thousands):
The following tables present the gross unrealized losses and estimated fair value of the Company's short-term investments, aggregated by investment type and the length of time that individual securities have been in a continuous unrealized loss position (in thousands, except numbers of securities):
The Company utilizes specific identification in computing realized gains and losses on the sale of investments. Realized gains and losses from the sale of investments are included in Non-operating (expense) income, net in the consolidated statements of income (loss) and unrealized gains and losses are included as a separate component of equity, net of tax, unless the loss is determined to be other-than-temporary. The Company evaluates its investments for possible impairment or a decline in fair value below cost basis that is deemed to be other-than-temporary on a periodic basis. It considers such factors as the length of time and extent to which the fair value has been below the cost basis, the financial condition of the investee, and its ability and intent to hold the investment for a period of time that may be sufficient for an anticipated full recovery in market value. Accordingly, the Company considered declines in its investments to be temporary in nature, and did not consider its securities to be impaired as of December 25, 2016 and June 26, 2016. The contractual maturities of short-term investments as of December 25, 2016 were as follows (in thousands):
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Fair Value of Financial Instruments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is categorized into three levels based on the reliability of inputs as follows:
The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents, short-term investments and long-term investments. As of December 25, 2016, financial assets utilizing Level 1 inputs included money market funds, and financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, certificates of deposit, and common stock of non-U.S. corporations. Level 2 assets are valued based on quoted prices in active markets for instruments that are similar or using a third-party pricing service's consensus price, which is a weighted average price based on multiple sources. These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility. The Company did not have any financial assets requiring the use of Level 3 inputs as of December 25, 2016. There were no transfers between Level 1 and Level 2 during the six months ended December 25, 2016. The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy (in thousands):
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible Assets, net The following table presents the components of intangible assets, net (in thousands):
For the three and six months ended December 25, 2016, total amortization of finite-lived intangible assets was $8.5 million and $16.6 million, respectively. For the three and six months ended December 27, 2015, total amortization of finite-lived intangible assets was $8.4 million and $17.0 million, respectively. Total future amortization expense of finite-lived intangible assets is estimated to be as follows (in thousands):
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Long-term Debt |
6 Months Ended |
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Dec. 25, 2016 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term Debt | Long-term Debt As of December 25, 2016, the Company had a $500 million secured revolving line of credit under which the Company can borrow, repay and reborrow loans from time to time prior to its scheduled maturity date of January 9, 2020. The Company classifies balances outstanding under its line of credit as long-term debt in the consolidated balance sheets. At December 25, 2016, the Company had $170 million outstanding under the line of credit and $330 million available for borrowing. For the three and six months ended December 25, 2016, the average interest rate was 1.41% for each period. For the three and six months ended December 25, 2016 the average commitment fee percentage was 0.09%. The Company was in compliance with all covenants in the line of credit at December 25, 2016. |
Shareholders' Equity |
6 Months Ended |
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Dec. 25, 2016 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity As of December 25, 2016, pursuant to an approval by the Board of Directors, the Company is authorized to repurchase shares of its common stock having an aggregate purchase price not exceeding $300 million for all purchases from August 24, 2016 through the expiration of the program on June 25, 2017. During the six months ended December 25, 2016, the Company repurchased 4.2 million shares of common stock for $98.5 million under the stock repurchase program. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings (Loss) Per Share The following table presents the computation of basic earnings (loss) per share (in thousands, except per share amounts):
The following computation reconciles the differences between the basic and diluted earnings (loss) per share presentations (in thousands, except per share amounts):
Potential common shares that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted earnings per share. For the three and six months ended December 25, 2016, there were 12.1 million and 11.7 million, respectively, of potential common shares not included in the calculation of diluted earnings (loss) per share because their effect was anti-dilutive. For the three and six months ended December 27, 2015, there were 12.2 million and 11.5 million, respectively, of potential common shares not included in the calculation of diluted earnings (loss) per share because their effect was anti-dilutive. |
Stock-Based Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Overview of Employee Stock-Based Compensation Plans The Company currently has one equity-based compensation plan, the 2013 Long-Term Incentive Compensation Plan (2013 LTIP), from which stock-based compensation awards can be granted to employees and directors. The 2013 LTIP provides for awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other awards. The Company has other equity-based compensation plans that have been terminated so that no future grants can be made under those plans, but under which stock options, restricted stock and restricted stock units are currently outstanding. The Company’s stock-based awards can be either service-based or performance-based. Performance-based conditions are generally tied to future financial and/or operating performance of the Company. The compensation expense with respect to performance-based grants is recognized if the Company believes it is probable that the performance condition will be achieved. The Company reassesses the probability of the achievement of the performance condition at each reporting period, and adjusts the compensation expense for subsequent changes in the estimate or actual outcome. As with non-performance based awards, compensation expense is recognized over the vesting period. The vesting period runs from the date of grant to the expected date that the performance objective is likely to be achieved. The Company also has an Employee Stock Purchase Plan (ESPP) that provides employees with the opportunity to purchase common stock at a discount. The ESPP limits employee contributions to 15% of each employee’s compensation (as defined in the plan) and allows employees to purchase shares at a 15% discount to the fair market value of common stock on the purchase date two times per year. The ESPP provides for a twelve-month participation period, divided into two equal six-month purchase periods, and also provides for a look-back feature. At the end of each six-month period in April and October, participants purchase the Company’s common stock through the ESPP at a 15% discount to the fair market value of the common stock on the first day of the twelve-month participation period or the purchase date, whichever is lower. The plan also provides for an automatic reset feature to start participants on a new twelve-month participation period if the fair market value of common stock declines during the first six-month purchase period. Stock Option Awards The following table summarizes stock option awards outstanding as of December 25, 2016 and changes during the six months then ended (numbers of shares in thousands):
Restricted Stock Awards and Units A summary of nonvested restricted stock awards (RSAs) and restricted stock unit awards (RSUs) outstanding as of December 25, 2016, and changes during the six months then ended is as follows (numbers of awards and units in thousands):
Stock-Based Compensation Valuation and Expense The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s stock option and ESPP awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements. For RSAs and RSUs, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term. Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Total stock-based compensation expense was as follows (in thousands):
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Income Taxes |
6 Months Ended |
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Dec. 25, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The variation between the Company's effective income tax rate and the U.S. statutory rate of 35% is due to the impact of the Company’s pre-tax income or loss relative to favorable tax rate impacts associated predominantly with the Company’s: (i) projected income for the full year derived from international locations with lower tax rates than the U.S. and (ii) projected tax credits generated. Tax credits and other deductions have the impact of increasing the tax rate above the statutory rate of 35% in periods in which the Company reports pre-tax losses as they provide a benefit that is recoverable in future periods. U.S. GAAP requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement. As of June 26, 2016, the Company's liability for unrecognized tax benefits was $17.7 million. During the six months ended December 25, 2016, the Company did not record any material movement in its unrecognized tax benefits. As a result, the total liability for unrecognized tax benefits as of December 25, 2016 was $17.7 million. If any portion of this $17.7 million is recognized, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution and/or closure of audits is highly uncertain, the Company believes it is reasonably possible that $4.3 million of gross unrecognized tax benefits will change in the next 12 months as a result of audit closures and statute requirements. The Company files U.S. federal, U.S. state and foreign tax returns. For U.S. federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2013. For U.S. state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2012. For foreign purposes, the Company is generally no longer subject to tax examinations for tax periods 2006 and prior. Certain carryforward tax attributes generated in prior years remain subject to examination, adjustment and recapture. On January 20, 2017, the Company settled an ongoing audit by the Italian Revenue Agency for the fiscal year ended June 30, 2013. The Company will release the associated unrecognized tax benefit in the third quarter of fiscal 2017, with a resulting immaterial impact on tax expense. During the fourth quarter of fiscal 2016, the Company concluded it is likely that sufficient future taxable income needed to fully utilize net operating loss carryovers in Luxembourg will not be generated due to additional losses on the Company’s equity investment held there. As a result, the Company recorded a $9.5 million valuation allowance against the related deferred tax asset, representing the $32.4 million net operating loss carryover net of tax. During the six months ended December 25, 2016, the Company recorded an additional $2.8 million valuation allowance against the loss carryover deferred tax asset as a result of the $9.7 million year-to-date loss in Luxembourg. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Warranties The following table summarizes the changes in the Company's product warranty liabilities (in thousands):
Product warranties are estimated and recognized at the time the Company recognizes revenue. The warranty periods range from 90 days to 10 years. The Company accrues warranty liabilities at the time of sale, based on historical and projected incident rates and expected future warranty costs. The Company accrues estimated costs related to product recalls based on a formal campaign soliciting repair or return of that product when they are deemed probable and reasonably estimable. The warranty reserves, which are primarily related to Lighting Products, are evaluated quarterly based on various factors including historical warranty claims, assumptions about the frequency of warranty claims, and assumptions about the frequency of product failures derived from quality testing, field monitoring and the Company's reliability estimates. As of December 25, 2016, $13.2 million of the Company's product warranty liabilities were classified as long-term. The Company has voluntarily recalled its linear LED T8 replacement lamps due to the hazard of overheating and melting. The Company expects the majority of the costs of the recall to be recoverable from insurance proceeds resulting in an immaterial impact to the Company’s financial results. Litigation The Company is currently a party to various legal proceedings. While management presently believes that the ultimate outcome of such proceedings, individually and in the aggregate, will not materially harm the Company’s financial position, cash flows, or overall trends in results of operations, legal proceedings are subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include money damages or, in matters for which injunctive relief or other conduct remedies may be sought, an injunction prohibiting the Company from selling one or more products at all or in particular ways. Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on the Company’s business, results of operation, financial position and overall trends. The outcomes in these matters are not reasonably estimable. |
Reportable Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable Segments The Company's operating and reportable segments are:
As discussed more fully in Note 2, “Discontinued Operations,” on July 13, 2016, the Company executed a definitive agreement to sell the Wolfspeed business to Infineon. As a result, the Company has classified the results of the Wolfspeed business as discontinued operations in its consolidated statements of income (loss) for all periods presented. For comparative purposes, the prior segment results have been recast to conform to the current segment presentation. Reportable Segments Description The Company's Lighting Products segment primarily consists of LED lighting systems and bulbs. The Company's LED Products segment includes LED chips and LED components. Financial Results by Reportable Segment The table below reflects the results of the Company's reportable segments as reviewed by the Chief Operating Decision Maker (CODM) for the three and six months ended December 25, 2016 and December 27, 2015. The Company's CODM is the Chief Executive Officer. The Company used the same accounting policies to derive the segment results reported below as those used in the Company's consolidated financial statements. The Company's CODM does not review inter-segment transactions when evaluating segment performance and allocating resources to each segment, and inter-segment transactions are not included in the segment revenue presented in the table below. As such, total segment revenue in the table below is equal to the Company's consolidated revenue. The Company's CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the consolidated statements of income (loss) must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated loss from continuing operations before income taxes. In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment's cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated. Unallocated costs in the table below consisted primarily of manufacturing employees’ stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under the Company’s 401(k) plan. These costs were not allocated to the reportable segments’ gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources. Revenue, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):
The total revenue and Lighting Products segment revenue and gross profit for the three months ended December 25, 2016 include a benefit from the confidential Feit Electric Company Inc. license agreement which provided a patent license issuance fee to the Company. The gross profit benefit within the quarter was partially offset by additional lighting reserves related primarily to third party supplied drivers for commercial lighting products that were identified as defective within the fiscal second quarter. Excluding the impact of the license agreement, the Company’s total revenue would have been approximately in the middle of the Company’s revenue targets for the quarter, which were $310 million to $330 million. Assets by Reportable Segment Inventories are the only assets reviewed by the Company's CODM when evaluating segment performance and allocating resources to the segments. The CODM reviews all of the Company's assets other than inventories on a consolidated basis. Unallocated inventories in the table below were not allocated to the reportable segments because the Company’s CODM does not review them when evaluating performance and allocating resources to each segment. Unallocated inventories consisted primarily of manufacturing employees’ stock-based compensation, profit sharing and quarterly or annual incentive compensation and matching contributions under the Company’s 401(k) plan. Inventories for each of the Company's segments were as follows (in thousands):
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Costs Associated with LED Business Restructuring |
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Disclosure [Text Block] | Costs Associated with LED Business Restructuring In June 2015, the Company’s Board of Directors approved a plan to restructure the LED Products business. The restructuring reduced excess capacity and overhead in order to improve the cost structure moving forward. The primary components of the restructuring include the planned sale or abandonment of certain manufacturing equipment, facility consolidation and the elimination of certain positions. The restructuring activity ended in the second quarter of fiscal 2016. The Company incurred a total of $102.4 million, of which $4.9 million related to discontinued operations, pursuant to this restructuring plan. See Note 18, "Costs Associated with LED Business Restructuring" in Part II, Item 8 of the Company's Annual Report on Form 10K for the fiscal year ended June 26, 2016 for additional information. The following table summarizes the actual charges incurred for the three months and six months ended December 27, 2015 (in thousands):
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Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The consolidated balance sheet at December 25, 2016, the consolidated statements of income (loss) for the three and six months ended December 25, 2016 and December 27, 2015, the consolidated statements of comprehensive income (loss) for the three and six months ended December 25, 2016 and December 27, 2015, and the consolidated statements of cash flows for the six months ended December 25, 2016 and December 27, 2015 (collectively, the consolidated financial statements) have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive income and cash flows at December 25, 2016, and for all periods presented, have been made. All intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 26, 2016 has been derived from the audited financial statements as of that date. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 26, 2016 (fiscal 2016). The results of operations for the three and six months ended December 25, 2016 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 25, 2017 (fiscal 2017). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Actual amounts could differ materially from those estimates. Certain fiscal 2016 amounts in the accompanying consolidated financial statements have been reclassified to conform to the fiscal 2017 presentation. These reclassifications had no effect on previously reported consolidated net income or shareholders’ equity. |
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Comparability of Prior Period Financial Data | Revision of Prior Period Financial Statements During the third quarter of fiscal 2016, the Company identified errors in its previously reported financial statements in which amortization expense was understated as certain patents were being amortized over a life longer than the life of the underlying patent right. The Company assessed the materiality of these errors on prior periods’ financial statements in accordance with the United States Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 99, Materiality, codified in the Accounting Standards Codification (ASC) 250, Presentation of Financial Statements, and concluded that they were not material individually or in the aggregate to any prior annual or interim periods. However, through the second quarter of fiscal 2016 the aggregate amount of the prior period errors of $6.8 million before income taxes would have been material to the Company's interim Consolidated Statements of Income (Loss) for the third quarter of fiscal 2016. Consequently, in accordance with ASC 250, the Company corrected these errors, and other immaterial errors, for all prior periods presented by revising the consolidated financial statements and other financial information included herein. The following table summarizes the effects of the revision on the consolidated statements of income (loss) (in thousands):
The revision had no net impact on the Company’s net cash provided by operating activities. |
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New Accounting Standards | Recently Issued Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09: Revenue from Contracts with Customers (Topic 606). The FASB has subsequently issued multiple ASUs which amend and clarify the guidance in Topic 606. The ASU establishes a principles-based approach for accounting for revenue arising from contracts with customers and supersedes existing revenue recognition guidance. The ASU provides that an entity should apply a five-step approach for recognizing revenue, including (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. Also, the entity must provide various disclosures concerning the nature, amount and timing of revenue and cash flows arising from contracts with customers. The effective date will be the first quarter of the Company's fiscal year ending June 30, 2019, using one of two retrospective application methods. The Company is currently analyzing the impact of this new pronouncement. Leases In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842). The ASU requires that a lessee recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. For income statement purposes, leases are still required to be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The effective date will be the first quarter of the Company's fiscal year ending June 28, 2020, using a modified retrospective approach. The Company is currently analyzing the impact of this new pronouncement. Stock Compensation In March 2016, the FASB issued ASU No. 2016-09: Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU simplifies the current stock compensation guidance for tax consequences. The ASU requires an entity to recognize all excess tax benefits and tax deficiencies as income tax expense or benefit in its income statement. The ASU also eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable. For cash flows statement purposes, excess tax benefits should be classified as an operating activity and cash payments made to taxing authorities on the employee’s behalf for withheld shares should be classified as financing activity. The ASU is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently analyzing the impact of this new pronouncement. |
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Stock-Based Compensation Valuation and Expense | Stock-Based Compensation Valuation and Expense The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s stock option and ESPP awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements. For RSAs and RSUs, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term. Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. |
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Financial Results by Reportable Segment | Financial Results by Reportable Segment The table below reflects the results of the Company's reportable segments as reviewed by the Chief Operating Decision Maker (CODM) for the three and six months ended December 25, 2016 and December 27, 2015. The Company's CODM is the Chief Executive Officer. The Company used the same accounting policies to derive the segment results reported below as those used in the Company's consolidated financial statements. The Company's CODM does not review inter-segment transactions when evaluating segment performance and allocating resources to each segment, and inter-segment transactions are not included in the segment revenue presented in the table below. As such, total segment revenue in the table below is equal to the Company's consolidated revenue. The Company's CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the consolidated statements of income (loss) must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated loss from continuing operations before income taxes. In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment's cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated. Unallocated costs in the table below consisted primarily of manufacturing employees’ stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under the Company’s 401(k) plan. These costs were not allocated to the reportable segments’ gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources. |
Basis of Presentation and New Accounting Standards Revision of Prior Period Financial Statements (Tables) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of error corrections and prior period adjustments | The following table summarizes the effects of the revision on the consolidated statements of income (loss) (in thousands):
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Acquisition (Tables) |
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The total purchase price for this acquisition was as follows (in thousands):
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Purchase Price Allocation [Table Text Block] | The purchase price for this acquisition has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows (in thousands):
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | he identifiable intangible assets acquired as a result of the acquisition were being amortized over their respective estimated useful lives as follows (in thousands, except for years):
(1) In-process research and development (IPR&D) is initially classified as indefinite-lived assets and tested for impairment at least annually or when indications of potential impairment exist. |
Discontinued Operations Discontinued Operations (Tables) |
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Long Lived Assets Held-for-sale [Table Text Block] | The following table presents the assets and liabilities related to the Wolfspeed business held for sale (in thousands):
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Disposal Groups, Including Discontinued Operations [Table Text Block] | The following table presents the financial results of the Wolfspeed business as income from discontinued operations, net of income taxes in the Company's consolidated statements of income (loss) (in thousands):
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Financial Statement Details (Tables) |
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Financial Statement Details [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Components of Accounts Receivable, Net | The following table summarizes the components of accounts receivable, net (in thousands):
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Summary of the Components of Inventories | The following table summarizes the components of inventories (in thousands):
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Summary of the Components of Other Current Liabilities | The following table summarizes the components of other current liabilities (in thousands):
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Summary of the Components of Accumulated Other Comprehensive Income, Net of Taxes | The following table summarizes the components of accumulated other comprehensive income, net of taxes (in thousands):
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Summary of the Components of Non-operating Income, Net | The following table summarizes the components of non-operating (expense) income, net (in thousands):
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Summary of the Amounts Reclassified Out of Accumulated Other Comprehensive Income | The following table summarizes the amounts reclassified out of accumulated other comprehensive income, net of taxes (in thousands):
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Short-term Investments by Type | The following tables summarize short-term investments (in thousands):
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Summary of Gross Unrealized Losses and Estimated Fair Value of Short-term Investments, Aggregated by Investment Type and Length of Time | The following tables present the gross unrealized losses and estimated fair value of the Company's short-term investments, aggregated by investment type and the length of time that individual securities have been in a continuous unrealized loss position (in thousands, except numbers of securities):
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Contractual Maturities of Short-term Investments by Type | The contractual maturities of short-term investments as of December 25, 2016 were as follows (in thousands):
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Fair Value of Financial Instruments (Tables) |
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments Carried at Fair Value | The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy (in thousands):
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Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of intangible assets, net | The following table presents the components of intangible assets, net (in thousands):
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Schedule of future amortization expense of finite-lived intangible assets | Total future amortization expense of finite-lived intangible assets is estimated to be as follows (in thousands):
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic Earnings Per Share Computation | The following table presents the computation of basic earnings (loss) per share (in thousands, except per share amounts):
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Diluted Earnings Per Share Computation | The following computation reconciles the differences between the basic and diluted earnings (loss) per share presentations (in thousands, except per share amounts):
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Option Awards | The following table summarizes stock option awards outstanding as of December 25, 2016 and changes during the six months then ended (numbers of shares in thousands):
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Summary of Nonvested Shares of Restricted Stock Awards and Restricted Stock Unit Awards Outstanding | A summary of nonvested restricted stock awards (RSAs) and restricted stock unit awards (RSUs) outstanding as of December 25, 2016, and changes during the six months then ended is as follows (numbers of awards and units in thousands):
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Summary of Total Stock-Based Compensation Expense | Total stock-based compensation expense was as follows (in thousands):
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 25, 2016 | |||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||
Summary of changes in product warranty liabilities | The following table summarizes the changes in the Company's product warranty liabilities (in thousands):
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Reportable Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues, Gross Profit, Gross Margin, and Inventories by Segment | Revenue, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):
Inventories for each of the Company's segments were as follows (in thousands):
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Costs Associated with LED Business Restructuring Costs Associated with LED Business Restructuring (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 25, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs [Table Text Block] | The following table summarizes the actual charges incurred for the three months and six months ended December 27, 2015 (in thousands):
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Basis of Presentation and New Accounting Standards Narrative (Details) |
3 Months Ended |
---|---|
Dec. 25, 2016
reportable_segments
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of Reportable Segments | 2 |
Financial Statement Details (Summary of the Components of Accounts Receivable, Net) (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 25, 2016 |
Jun. 26, 2016 |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Document Period End Date | Dec. 25, 2016 | |
Accounts Receivable, Net, Current [Abstract] | ||
Accounts receivable, gross | $ 173,827 | $ 188,731 |
Allowance for bad debts | (5,833) | (5,416) |
Accounts receivable, net | 121,759 | 138,772 |
Allowance for sales returns, discounts and other incentives [Member] | ||
Accounts Receivable, Net, Current [Abstract] | ||
Allowance for sales returns, discounts and other incentives | (46,235) | (44,543) |
Billed trade receivables [Member] | ||
Accounts Receivable, Net, Current [Abstract] | ||
Accounts receivable, gross | 173,645 | 188,672 |
Unbilled contract receivables [Member] | ||
Accounts Receivable, Net, Current [Abstract] | ||
Accounts receivable, gross | $ 182 | $ 59 |
Financial Statement Details (Summary of the Components of Inventories) (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Dec. 25, 2016 |
Sep. 25, 2016 |
Jun. 26, 2016 |
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Financial Statement Details [Abstract] | |||
Document Period End Date | Dec. 25, 2016 | ||
Inventory, Net [Abstract] | |||
Raw material | $ 69,219 | $ 79,957 | |
Work-in-progress | 80,635 | 84,459 | |
Finished goods | 131,823 | 117,255 | |
Inventories | $ 281,677 | $ 281,671 | $ 281,671 |
Financial Statement Details (Summary of the Components of Other Current Liabilities) (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 25, 2016 |
Jun. 26, 2016 |
|
Financial Statement Details [Abstract] | ||
Document Period End Date | Dec. 25, 2016 | |
Accrued Liabilities, Current [Abstract] | ||
Accrued taxes | $ 12,033 | $ 12,023 |
Accrued professional fees | 9,569 | 7,959 |
Accrued warranty | 15,045 | 20,102 |
Accrued other | 5,460 | 5,017 |
Other current liabilities | $ 42,107 | $ 45,101 |
Financial Statement Details (Summary of the Components of Accumulated Other Comprehensive Income, Net of Taxes) (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 25, 2016 |
Jun. 26, 2016 |
|
Financial Statement Details [Abstract] | ||
Document Period End Date | Dec. 25, 2016 | |
Currency translation gain | $ 3,310 | $ 4,624 |
Net unrealized (loss) gain on available-for-sale securities | (11) | 4,104 |
Accumulated other comprehensive income, net of taxes | $ 3,299 | $ 8,728 |
Financial Statement Details (Summary of the Components of Non-operating Income, Net) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Other Income and Expenses [Abstract] | ||||
Foreign currency loss, net | $ (1,856) | $ (385) | $ (495) | $ (4,679) |
Gain on sale of investments, net | 0 | 14 | 12 | 16 |
Unrealized Gain (Loss) on Investments | (3,796) | 7,026 | (6,283) | (12,922) |
Interest income, net | 900 | 1,220 | 1,787 | 2,517 |
Other, net | (2) | 141 | 67 | 281 |
Non-operating (expense) income, net | $ (4,754) | $ 8,016 | $ (4,912) | $ (14,787) |
Financial Statement Details (Summary of the Amounts Reclassified Out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Document Period End Date | Dec. 25, 2016 | |||
Non-operating (expense) income, net | $ (4,754) | $ 8,016 | $ (4,912) | $ (14,787) |
Loss from continuing operations before income taxes | 3,929 | 11,227 | (6,372) | (23,321) |
Income tax expense (benefit) | 5,036 | 1,815 | (2,407) | (6,997) |
Net income (loss) | 6,219 | 13,442 | 6,785 | (11,047) |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Non-operating (expense) income, net | 0 | 14 | 12 | 16 |
Loss from continuing operations before income taxes | 0 | 14 | 12 | 16 |
Income tax expense (benefit) | 0 | 2 | 5 | 5 |
Net income (loss) | $ 0 | $ 12 | $ 7 | $ 11 |
Intangible Assets Intangible Assets (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of Intangible Assets | $ 8.5 | $ 8.4 | $ 16.6 | $ 17.0 |
Intangible Assets Intangible Assets (Schedule of future amortization expense of finite-lived intangible assets) (Details) - USD ($) $ in Thousands |
Dec. 25, 2016 |
Jun. 26, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
June 25, 2017 (remainder of fiscal 2017) | $ 16,103 | |
June 24, 2018 | 31,466 | |
June 30, 2019 | 18,826 | |
June 28, 2020 | 14,809 | |
June 27, 2021 | 13,556 | |
Thereafter | 71,806 | |
Finite-lived intangible assets, net | $ 166,566 | $ 179,720 |
Long-term Debt (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 25, 2016 |
Jun. 26, 2016 |
|
Long-term Debt, Unclassified [Abstract] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 500,000 | |
Long-term debt | 170,000 | $ 160,000 |
Line of Credit Facility, Remaining Borrowing Capacity | $ 330,000 | |
Long-term Debt, Average Interest Rate | 1.41% | |
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.09% |
Shareholders' Equity (Narrative) (Details) - Common Stock [Member] shares in Millions, $ in Millions |
6 Months Ended |
---|---|
Dec. 25, 2016
USD ($)
shares
| |
Class of Stock [Line Items] | |
Stock Repurchase Program, Authorized Amount | $ 300.0 |
Repurchased share number | shares | 4.2 |
Repurchased share value | $ 98.5 |
Earnings Per Share (Basic Earnings Per Share Computation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Earnings Per Share, Basic [Abstract] | ||||
Loss from continuing operations | $ (1,107) | $ 9,412 | $ (3,965) | $ (16,324) |
Income from discontinued operations, net of tax | 7,326 | 4,030 | 10,750 | 5,277 |
Net income (loss) | $ 6,219 | $ 13,442 | $ 6,785 | $ (11,047) |
Weighted average common shares - basic | 98,467 | 102,391 | 99,513 | 102,932 |
Continuing operations, basic | $ (0.01) | $ 0.09 | $ (0.04) | $ (0.16) |
Discontinued operations, basic | 0.07 | 0.04 | 0.11 | 0.05 |
Basic earnings (loss) per share | $ 0.06 | $ 0.13 | $ 0.07 | $ (0.11) |
Earnings Per Share (Diluted Earnings Per Share Computation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Earnings Per Share, Diluted [Abstract] | ||||
Loss from continuing operations | $ (1,107) | $ 9,412 | $ (3,965) | $ (16,324) |
Income from discontinued operations, net of tax | 7,326 | 4,030 | 10,750 | 5,277 |
Net income (loss) | $ 6,219 | $ 13,442 | $ 6,785 | $ (11,047) |
Weighted average common shares - basic | 98,467 | 102,391 | 99,513 | 102,932 |
Dilutive effect of stock options, nonvested shares and Employee Stock Purchase Plan purchase rights | 130 | 0 | ||
Weighted average common shares - diluted | 98,467 | 102,521 | 99,513 | 102,932 |
Diluted earnings (loss) per share from continuing operations | $ (0.01) | $ 0.09 | $ (0.04) | $ (0.16) |
Diluted earnings (loss) per share from discontinued operations | 0.07 | 0.04 | 0.11 | 0.05 |
Diluted earnings (loss) per share | $ 0.06 | $ 0.13 | $ 0.07 | $ (0.11) |
Earnings Per Share (Narrative) (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive potential common shares excluded from diluted earnings per share calculation | 11.7 | 12.2 |
Stock-Based Compensation (Summary of Outstanding Option Awards) (Details) - Stock Option [Member] shares in Thousands |
6 Months Ended |
---|---|
Dec. 25, 2016
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding number of shares at beginning of period | shares | 11,247 |
Granted, number of shares | shares | 1,705 |
Exercised, number of shares | shares | (39) |
Forfeited or expired, number of shares | shares | (1,162) |
Outstanding number of shares at end of period | shares | 11,751 |
Outstanding weighted-average exercise price at beginning of period | $ / shares | $ 40.42 |
Granted, weighted-average exercise price | $ / shares | 24.42 |
Exercised, weighted-average exercise price | $ / shares | 25.88 |
Forfeited or expired, weighted-average exercise price | $ / shares | 37.24 |
Outstanding weighted-average exercised price at end of period | $ / shares | $ 38.46 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 25, 2016 |
Dec. 25, 2016 |
Jun. 26, 2016 |
|
Operating Loss Carryforwards [Line Items] | |||
U.S. statutory tax rate | 35.00% | ||
Unrecognized tax benefits balance | $ 17.7 | $ 17.7 | |
Document Period End Date | Dec. 25, 2016 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 17.7 | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | 4.3 | ||
Foreign Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 9.5 | 2.8 | |
Net operating loss carryovers offset by valuation allowance, amount | $ 32.4 | $ 9.7 |
Commitments and Contingencies (Warranties) (Details) $ in Thousands |
6 Months Ended |
---|---|
Dec. 25, 2016
USD ($)
| |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |
Warranty accrual, beginning balance | $ 21,426 |
Warranties accrued in current period | 19,896 |
Expenditures | (13,032) |
Warranty accrual, ending balance | 28,290 |
Product Warranty Liability, Long-Term | $ 13,200 |
Minimum [Member] | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |
Product Warranty, Range Period | 90 days |
Maximum [Member] | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |
Product Warranty, Range Period | 10 years |
Reportable Segments (Revenues, Gross Profit and Gross Margin, by Segment) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 25, 2016 |
Dec. 27, 2015 |
Dec. 25, 2016 |
Dec. 27, 2015 |
|
Segment Reporting Information [Line Items] | ||||
Revenue, net | $ 346,962 | $ 393,758 | $ 668,291 | $ 775,307 |
Gross profit | $ 110,891 | $ 111,134 | $ 197,232 | $ 218,326 |
Gross margin | 32.00% | 28.20% | 29.50% | 28.20% |
Lighting Products [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, net | $ 208,924 | $ 254,970 | $ 392,760 | $ 503,001 |
Gross profit | $ 74,770 | $ 72,642 | $ 124,060 | $ 141,723 |
Gross margin | 35.80% | 28.50% | 31.60% | 28.20% |
LED Products [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, net | $ 138,038 | $ 138,788 | $ 275,531 | $ 272,306 |
Gross profit | $ 40,314 | $ 42,931 | $ 82,084 | $ 84,800 |
Gross margin | 29.20% | 30.90% | 29.80% | 31.10% |
Total segment gross profit [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross profit | $ 115,084 | $ 115,573 | $ 206,144 | $ 226,523 |
Unallocated Costs [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gross profit | $ (4,193) | $ (4,439) | $ (8,912) | $ (8,197) |
Reportable Segments Schedule of Inventory by Reportable Segment (Details) - USD ($) $ in Thousands |
Dec. 25, 2016 |
Sep. 25, 2016 |
Jun. 26, 2016 |
---|---|---|---|
Segment Reporting Information [Line Items] | |||
Inventories | $ 281,677 | $ 281,671 | $ 281,671 |
Lighting Products [Member] | |||
Segment Reporting Information [Line Items] | |||
Inventories | 170,326 | 172,261 | |
LED Products [Member] | |||
Segment Reporting Information [Line Items] | |||
Inventories | 107,522 | 104,544 | |
Total segment inventories [Member] | |||
Segment Reporting Information [Line Items] | |||
Inventories | 277,848 | 276,805 | |
Unallocated inventories [Member] | |||
Segment Reporting Information [Line Items] | |||
Inventories | $ 3,829 | $ 4,866 |
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