DURHAM, N.C., Aug. 11, 2009 (GLOBE NEWSWIRE) -- Cree, Inc. (Nasdaq:CREE), a market leader in LED lighting, today announced record revenue of $148.1 million for its fourth quarter of fiscal 2009, ended June 28, 2009. This represents a 9% increase compared to revenue of $135.9 million reported for the fourth fiscal quarter last year and a 13% increase compared to the fiscal third quarter of 2009. GAAP net income for the fourth quarter was $9.7 million, or $0.11 per diluted share, compared to GAAP net income of $8.4 million, or $0.09 per diluted share, for the fourth quarter of fiscal 2008. On a non-GAAP basis, net income for the fourth quarter of fiscal 2009 was $16.3 million, or $0.18 per diluted share, compared to non-GAAP net income for the fourth quarter of fiscal 2008 of $14.5 million or $0.16 per diluted share. Cree generated $43.0 million of operating cash flow and $28.3 million of free cash flow (cash flow from operations less capital expenditures) during the fourth quarter.
For fiscal year 2009, Cree reported revenue of $567.3 million, which represents a 15% increase compared to revenue of $493.3 million for fiscal 2008. GAAP net income was $30.3 million, or $0.34 per diluted share, compared to $33.4 million, or $0.38 per diluted share for fiscal 2008. GAAP net income for fiscal 2008 included a benefit of $0.12 per diluted share related to a gain on the sale of investments. On a non-GAAP basis, net income for fiscal year 2009 was $59.2 million, or $0.66 per diluted share, compared to $47.2 million, or $0.54 per diluted share, for fiscal 2008. Cree generated $177.9 million of operating cash flow and $122.6 million of free cash flow during fiscal 2009.
"Our strong Q4 results were an outstanding finish to a very good year and reflect the success of our strategy to drive growth in LEDs and LED lighting applications," stated Chuck Swoboda, Cree chairman and CEO. "Entering fiscal 2010, our Q1 backlog is very strong as we see growing demand across our LED product lines. We are well positioned to benefit from the worldwide growth in LED lighting. As such, we continue to invest in the new products, channels and technical support needed to accelerate the LED lighting revolution."
Recent Business Highlights:
* Introduced the LRP-38, the revolutionary PAR38 LED bulb that delivers the same vibrant color as halogen with 75 percent less energy. * Announced that Chuck Swoboda, Cree chairman and CEO, joined President Obama at the White House to discuss innovation and the latest developments in energy-efficient technologies. * Announced that North Carolina's first eco-friendly McDonald's is 97% lit with LEDs, and includes Cree's entire line of LED fixtures and lamps. * Welcomed Fairview, Texas, and Gwangju, South Korea, to the LED City(r) Program. * Demonstrated the XLamp(r) XP-G, the industry's brightest and highest-efficiency lighting-class LED.
Q4 2009 Financial Metrics:
---------------------------------------------------------------------
Fourth Quarter
(in thousands,
except per share
amounts)
2009 2008 Change
---------------------------------------------------------------------
Net revenue $148,110 $135,925 $12,185 9%
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GAAP
---------------------------------------------------------------------
Gross Margin 39.6% 33.7%
---------------------------------------------------------------------
Net Income $9,695 $8,446 $1,249 15%
---------------------------------------------------------------------
Earnings per diluted share $0.11 $0.09 $0.02 22%
---------------------------------------------------------------------
Non-GAAP
---------------------------------------------------------------------
Gross Margin 40.3% 34.2%
---------------------------------------------------------------------
Net Income $16,336 $14,501 $1,835 13%
---------------------------------------------------------------------
Earnings per diluted share $0.18 $0.16 $0.02 13%
---------------------------------------------------------------------
* Cash and investments increased $42.3 million to $447.2 million,
with cash flow from operations of $43.0 million and free cash flow
of $28.3 million.
* Accounts receivable (net) increased $0.1 million from Q3 of fiscal
2009 to $103.0 million, resulting in days sales outstanding of 63,
a decrease of 8 days from Q3 of fiscal 2009.
* Inventory (net) increased $1.3 million from Q3 of fiscal 2009 to
$78.8 million and represents 79 days of inventory, a decrease of 4
days from Q3 of fiscal 2009.
Business Outlook:
For its first quarter of fiscal 2010 ending September 27, 2009, Cree targets revenue in a range of $160 million to $166 million with GAAP earnings of $0.14 to $0.16 per diluted share and non-GAAP earnings of $0.21 to $0.23 per diluted share, based on an estimated 91 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.02 per diluted share, and stock-based compensation expense of $0.05 per diluted share.
Quarterly Conference Call:
Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the fiscal fourth quarter 2009 results and the fiscal first quarter 2010 business outlook, including significant factors and assumptions underlying the targets noted above. The conference call will be available to the public through a live audio web broadcast via the Internet. Log on to Cree's website at www.cree.com and go to "Investor Relations - Overview" for webcast details. The call will be archived and available on the website through August 25, 2009.
Supplemental financial information, including the non-GAAP reconciliation attached to this press release, is available in the "Investor Relations" section of Cree's website, under "Financial Metrics," "Quarter ending June 28, 2009," at www.cree.com.
About Cree, Inc.
Cree is leading the LED lighting revolution and setting the stage to obsolete the incandescent light bulb through the use of energy-efficient, environmentally friendly LED lighting. Cree is a market-leading innovator of lighting-class LEDs, LED lighting solutions, and semiconductor solutions for wireless and power applications.
Cree's product families include recessed LED down lights, lighting-class power LEDs, high-brightness LEDs, blue and green LED chips, power-switching devices and radio-frequency/wireless devices. Cree solutions are driving improvements in applications such as general illumination, backlighting, electronic signs and signals, variable-speed motors, and wireless communications.
For additional product and company information, please refer to www.cree.com.
The Cree, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3529
Non-GAAP Financial Measures:
This press release highlights the company's financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain costs, charges, gains and losses that are excluded from non-GAAP results. By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the company's performance, core results and underlying trends. Cree's management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release. Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.
Forward Looking Statements:
The schedules attached to this release are an integral part of the release. This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially from those indicated. Actual results, including with respect to our targets and prospects, could differ materially due to a number of factors, including current uncertainty in global economic conditions that could negatively affect product demand, collectability of receivables and other related matters as consumers and businesses may defer purchases or payments, or default on payments, in response to tighter credit and negative financial news; our ability to complete development and commercialization of products under development, such as our pipeline of brighter LED chips, LED components and LED lighting retrofit solutions; our ability to lower costs; increasing price competition in key markets; the risk that, due to the complexity of our manufacturing processes and transition of production to larger wafers, we may experience production delays that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; risks associated with the ramp-up of our production for our new products, as well as production at our Huizhou facility and subcontractors; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; risks associated with our recent acquisitions; risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 29, 2008, and subsequent reports filed with the SEC. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Cree disclaims any obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.
Cree, the Cree logo, XLamp and LED City are registered trademarks of Cree, Inc.
CREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Year Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
(Unaudited) (Unaudited)
Product revenue $143,672 $129,443 $542,837 $464,907
Contract revenue 4,438 6,482 18,836 28,389
Up-front license fees -- -- 5,582 --
-------- -------- -------- --------
Total revenue 148,110 135,925 567,255 493,296
Cost of product revenue 85,362 84,897 339,038 304,663
Cost of contract revenue 4,052 5,286 15,805 22,806
Up-front license fees -- -- 506 --
-------- -------- -------- --------
Total cost of revenue 89,414 90,183 355,349 327,469
Gross profit 58,696 45,742 211,906 165,827
Gross margin percentage 39.6% 33.7% 37.4% 33.6%
Operating expenses:
Research and development 18,576 15,763 71,363 58,846
Sales, general and
administrative 21,125 19,158 86,929 76,607
Amortization of
acquisition-related
intangibles 4,062 4,806 16,248 17,127
Loss on disposal or impairment
of long-lived assets 3,471 719 6,776 1,206
-------- -------- -------- --------
Total operating expenses 47,234 40,446 181,316 153,786
Operating income 11,462 5,296 30,590 12,041
Operating income percentage 7.7% 3.9% 5.4% 2.4%
Non-operating income:
Gain on sale of investments,
net -- -- 78 14,117
Interest and other
non-operating income, net 1,650 2,699 8,999 14,891
-------- -------- -------- --------
Income from continuing
operations before income
taxes 13,112 7,995 39,667 41,049
Income tax expense 3,277 1,352 9,017 9,237
-------- -------- -------- --------
Income from continuing
operations 9,835 6,643 30,650 31,812
(Loss) income from discontinued
operations, net of related
tax effect (140) 1,803 (325) 1,627
-------- -------- -------- --------
Net income $ 9,695 $ 8,446 $ 30,325 $ 33,439
======== ======== ======== ========
Diluted earnings per share:
Income from continuing
operations $ 0.11 $ 0.07 $ 0.34 $ 0.36
(Loss) income from
discontinued operations $ (0.00) $ 0.02 $ (0.00) $ 0.02
-------- -------- -------- --------
Net income $ 0.11 $ 0.09 $ 0.34 $ 0.38
======== ======== ======== ========
Weighted average shares of
common stock outstanding,
diluted 89,983 89,615 89,081 88,077
======== ======== ======== ========
CREE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 28, June 29,
2009 2008
---------- ----------
(Unaudited)
Assets:
Current assets:
Cash, cash equivalents and short-term
investments $ 417,653 $ 312,428
Accounts receivable, net 103,035 110,376
Inventory, net 78,841 80,161
Income taxes receivable 1,526 9,825
Deferred income taxes 10,022 4,578
Prepaid expenses and other current assets 18,359 13,000
Assets of discontinued operations -- 2,600
---------- ----------
Total current assets 629,436 532,968
Property and equipment, net 320,110 348,013
Long-term investments 29,557 58,604
Intangible assets, net 113,328 125,037
Goodwill 304,791 244,003
Other assets 7,345 4,782
---------- ----------
Total assets $1,404,567 $1,313,407
========== ==========
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable, trade $ 38,770 $ 37,402
Accrued salaries and wages 16,732 13,471
Income taxes payable 8,139 5,314
Deferred income taxes 122 --
Other current liabilities 7,868 7,938
Contingent payment due related to COTCO
acquisition 57,050 60,000
Liabilities of discontinued operations -- 550
---------- ----------
Total current liabilities 128,681 124,675
Long-term liabilities:
Deferred income taxes 42,752 38,048
Other long-term liabilities 8,386 4,199
Long-term liabilities of discontinued
operations -- 745
---------- ----------
Total long-term liabilities 51,138 42,992
Shareholders' Equity:
Common stock 112 110
Additional paid-in-capital 857,383 811,015
Accumulated other comprehensive income, net of
taxes 11,236 8,923
Retained earnings 356,017 325,692
---------- ----------
Total shareholders' equity 1,224,748 1,145,740
---------- ----------
Total liabilities and shareholders' equity $1,404,567 $1,313,407
========== ==========
Cree, Inc.
Non-GAAP Measures of Financial Performance
To supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, Cree uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP gross margin, and free cash flow.
Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the tables included with this press release.
These non-GAAP measures are not in accordance with or an alternative to measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cree's results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate Cree's results of operations in conjunction with the corresponding GAAP measures.
Cree believes that these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, enhance investors' and management's overall understanding of the company's current financial performance and the company's prospects for the future, including cash flows available to pursue opportunities to enhance shareholder value. In addition, because Cree has historically reported certain non-GAAP results to investors, the company believes the inclusion of non-GAAP measures provides consistency in the company's financial reporting.
For its internal budgeting process, and as discussed further below, Cree's management uses financial statements that do not include stock-based compensation expense, amortization or impairment of acquired intangible assets, impairment of goodwill, gain on the sale of Color Kinetics Inc.'s common stock, personal property tax adjustments related to prior years and the income taxes associated with the foregoing. Cree's management also uses non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the company's financial results.
As described above, Cree excludes the following items from one or more of its non-GAAP measures when applicable:
Stock-based compensation expense. This expense consists of expenses for stock options, restricted stock and employee stock purchases under Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment." Cree excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Cree does not believe are reflective of ongoing operating results.
Amortization or impairment of acquired intangible assets and impairment of goodwill. Cree incurs amortization or impairments of acquired intangible assets and goodwill in connection with acquisitions. Cree excludes these items because they arise from Cree's prior acquisitions and have no direct correlation to the current operating results of Cree's business.
Gain on the sale of 500,000 shares of Color Kinetics Inc. common stock. Cree excludes this item because it arose from Cree's prior investments and has no direct correlation to the current operating results of Cree's business.
Personal property assessment of $1.0 million related to the audit of our 2002 through 2007 property tax returns. Cree excludes this item because it arose from prior investments and has no direct correlation to the current operating results of Cree's business.
Income tax effects of the foregoing non-GAAP items. This amount is used to present each of the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.
Cree expects to incur stock-based compensation expense, amortization of acquired intangible assets and may also incur impairments of acquired intangible assets, impairments of goodwill, gains or losses on the sale of investments in certain companies and significant non-income tax adjustments in future periods, including income taxes associated with all of the foregoing.
In addition to the non-GAAP measures discussed above, Cree also uses free cash flow as a measure of operating performance. Free cash flow represents operating cash flows less net purchases of property and equipment. Cree considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment, which can then be used to, among other things, invest in Cree's business, make strategic acquisitions, strengthen the balance sheet and repurchase stock. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company's cash balance for the period.
CREE, INC.
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
GAAP Gross Profit $ 58,696 $ 45,742 $211,906 $165,827
GAAP Gross Margin 39.6% 33.7% 37.4% 33.6%
Adjustment:
Stock-based compensation
expense 1,052 703 4,250 2,913
-------- -------- -------- --------
Non-GAAP Gross Profit $ 59,748 $ 46,445 $216,156 $168,740
Non-GAAP Gross Margin 40.3% 34.2% 38.1% 34.2%
Three Months Ended Year Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
GAAP net income $ 9,695 $ 8,446 $ 30,325 $ 33,439
Adjustments:
Stock-based compensation
expense 5,320 4,672 21,112 15,985
Amortization of
acquisition-related
intangible assets 4,062 4,806 16,248 17,127
Net gain on sale of certain
patents related to the
discontinued Cree Microwave
segment -- (1,820) -- (1,820)
Personal property assessment
related to finalizing the
audits of the Company's 2002
through 2007 property tax
returns -- -- -- 1,048
Gain on sale of 500,000
shares of Color Kinetics
Incorporated common stock -- -- -- (14,117)
-------- -------- -------- --------
Total adjustments to GAAP
income before provision
for income taxes 9,382 7,658 37,360 18,223
-------- -------- -------- --------
Income tax effect (2,741) (1,603) (8,493) (4,510)
-------- -------- -------- --------
Non-GAAP net income 16,336 14,501 59,192 47,152
Diluted net income per share:
GAAP net income $ 0.11 $ 0.09 $ 0.34 $ 0.38
-------- -------- -------- --------
Non-GAAP $ 0.18 $ 0.16 $ 0.66 $ 0.54
-------- -------- -------- --------
Shares used in diluted net
income per share calculation:
GAAP net income 89,983 89,615 89,081 88,077
-------- -------- -------- --------
Non-GAAP 89,983 89,615 89,081 88,077
-------- -------- -------- --------
Three Months Ended Year Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
Free Cash Flows
Cash flow from operations $ 43,010 $ 36,682 $177,919 $102,807
Less: PP&E CapEx spending 14,689 18,199 55,283 55,741
-------- -------- -------- --------
Total Free Cash Flows $ 28,321 $ 18,483 $122,636 $ 47,066
-------- -------- -------- --------
Additional Financial Information
(in thousands)
(Unaudited)
Three Months Ended Year Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
Stock-Based Compensation
Expense
Cost of sales $ 1,052 $ 703 $ 4,250 $ 2,913
Research and development 1,172 1,331 5,267 4,362
Sales, general and
administrative 3,096 2,638 11,595 8,710
-------- -------- -------- --------
Total stock-based
compensation in operating
expense 4,268 3,969 16,862 13,072
-------- -------- -------- --------
Total Stock-Based Compensation
Expense $ 5,320 $ 4,672 $ 21,112 $ 15,985
-------- -------- -------- --------
-------- -------- -------- --------
June 28, March 29, Sept. 28, June 29,
2009 2009 2008 2008
-------- -------- -------- --------
Cash, Cash Equivalents and
Investments
Cash and cash equivalents $290,154 $244,667 $177,444 $261,633
Short-term investments 127,499 122,051 109,054 50,795
Long-term investments 29,557 38,159 52,566 58,604
-------- -------- -------- --------
Total Cash, Cash Equivalents
and Investments $447,210 $404,877 $339,064 $371,032
-------- -------- -------- --------