Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting,
today announced consolidated revenue of $321 million from
continuing operations, and $50 million from discontinued
operations, for a combined revenue of $371 million for its first
quarter of fiscal 2017. This represents a 13% decrease compared to
combined revenue of $425 million ($381 million from continuing
operations and $44 million from discontinued operations) for the
first quarter of fiscal 2016 and a 4% decrease compared to the
fourth quarter of fiscal 2016. Combined GAAP net income for the
first quarter of fiscal 2017 was $0.6 million, or $0.00 per diluted
share, compared to combined GAAP net loss of $24 million, or $0.24
per diluted share, for the first quarter of fiscal 2016. On a
non-GAAP basis, combined net income for the first quarter of fiscal
2017 was $15 million, or $0.15 per diluted share, compared to
combined non-GAAP net income for the first quarter of fiscal 2016
of $21 million, or $0.21 per diluted share.
Revenue from continuing operations was $321 million in the first
quarter of 2017 compared to revenue from continuing operations of
$381 million in the first quarter of fiscal 2016. Loss from
continuing operations for the first quarter of fiscal 2017 was $3
million, or $0.03 per diluted share, compared to loss from
continuing operations of $26 million or $0.25 per diluted share for
the first quarter of 2016. On a non-GAAP basis, income from
continuing operations for the first quarter of fiscal 2017 was $9
million, or $0.09 per diluted share, compared to non-GAAP income
from continuing operations of $15 million or $0.14 per diluted
share, for the first quarter of 2016.
Revenue from discontinued operations was $50 million in the
first quarter of 2017 compared to revenue from discontinued
operations of $44 million in the first quarter of 2016. Income from
discontinued operations, net of tax for the first quarter of fiscal
2017 was $3 million, or $0.03 per diluted share, compared to income
from discontinued operations, net of tax of $1 million, or $0.01
per diluted share for the first quarter of 2016. On a non-GAAP
basis, income from discontinued operations, net of tax for the
first quarter of fiscal 2017 was $6 million, or $0.06 per diluted
share, compared to non-GAAP income from discontinued operations,
net of tax of $7 million, or $0.07 per diluted share, for the first
quarter of 2016.
“We delivered solid results in fiscal Q1, as Lighting, LED
Products and Wolfspeed all achieved revenue and gross margins that
were in line with our targets,” stated Chuck Swoboda, Cree Chairman
and CEO. “We continue to make progress with our transition to a
more focused LED lighting company and building a more valuable
business by bringing better light to our customers.”
Q1 2017 Financial Metrics
(in thousands, except per share amounts
and percentages)
First Quarter 2017
2016 Change (unaudited) (unaudited)
Revenue, net $321,329 $381,549 ($60,220 ) (16 )%
GAAP Gross
margin 26.9 % 28.1 % Operating margin (3.2 )% (3.1 )% Loss from
continuing operations ($2,858 ) ($25,736 ) $22,878 89 % Income from
discontinued operations, net of tax $3,424 $1,247 $2,177 175 % Net
income (loss) $566 ($24,489 ) $25,055 102 %
Per share
information:
Loss from continuing operations ($0.03 ) ($0.25 ) $0.22 88 % Income
from discontinued operations, net of tax $0.03 $0.01 $0.02 200 %
Earnings (loss) per diluted share $0.00 ($0.24 ) $0.24 100 %
Non-GAAP Gross margin 27.7 % 28.8 % Operating margin 2.8 %
4.9 % Income from continuing operations $9,500 $14,744 ($5,244 )
(36 )% Income from discontinued operations, net of tax $5,709
$6,590 ($881 ) (13 )% Net income $15,209 $21,334 ($6,125 ) (29 )%
Per share
information:
Income from continuing operations $0.09 $0.14 ($0.05 ) (36 )%
Income from discontinued operations, net of tax $0.06 $0.07 ($0.01
) (14 )% Earnings per diluted share $0.15 $0.21 ($0.06 ) (29 )%
- Gross margin from continuing operations
increased from 26.4% in Q4 of fiscal 2016 to 26.9% on a GAAP basis
and decreased from 28.2% to 27.7% on a non-GAAP basis.
- Consolidated cash and investments
decreased by $16 million from Q4 of fiscal 2016 to $589
million.
- Accounts receivable from continuing
operations, net increased by $7 million from Q4 of fiscal 2016 to
$146 million, with days sales outstanding of 41.
- Inventory from continuing operations
increased by $10 million from Q4 of fiscal 2016 to $292 million and
represents 112 days of inventory.
- Consolidated cash from operations was
$18 million for Q1 of fiscal 2017.
- We repurchased $36 million of shares
during Q1 of fiscal 2017.
Recent Business Highlights:
- Announced the appointment of Danny
Castillo as President, Lighting, effective November 7, 2016
- Released the following new Lighting
products:
- Essentia® by Cree LED Surface Wrap
- A completely new portfolio of next
generation LED bulbs
- Launched the following new LED
products:
- XLamp® XP-L2 LED
- XLamp XQ-E and XP-E High Efficiency
(HE) Photo Red LEDs
- QLS6A and QLSB6 LEDs
Business Outlook:
For its second quarter of fiscal 2017 ending December 25,
2016, Cree targets combined revenue, which includes both continued
and discontinued operations, in a range of $360 million to $380
million. Combined GAAP net income is targeted at $10 million to $11
million, or $0.10 to $0.11 per diluted share. Combined non-GAAP net
income is targeted in a range of $13 million to $19 million, or
$0.13 to $0.19 per diluted share. Targeted combined non-GAAP
earnings exclude $21 million of expenses related to stock-based
compensation expense, the amortization or impairment of
acquisition-related intangibles and transaction costs associated
with the sale of the Wolfspeed business. The GAAP and non-GAAP
targets do not include any estimated change in the fair value of
Cree’s Lextar investment.
For continuing operations, revenue is targeted in a range of
$310 million to $330 million. GAAP income from continuing
operations is targeted at $2 million to $5 million, or $0.02 to
$0.05 per diluted share. Non-GAAP income from continuing operations
is targeted in a range of $4 million to $10 million, or $0.04 to
$0.10 per diluted share. Targeted non-GAAP income from continuing
operations exclude $18 million of expenses related to stock-based
compensation expense and the amortization or impairment of
acquisition-related intangibles. The GAAP and non-GAAP targets do
not include any estimated change in the fair value of Cree’s Lextar
investment.
For discontinued operations, revenue is targeted at +/- $50
million. GAAP income from discontinued operations, net of tax is
targeted at +/- $7 million, or +/- $0.07 per diluted share.
Non-GAAP income from discontinued operations, net of tax is
targeted at +/- $9 million, or +/- $0.09 per diluted share.
Targeted non-GAAP income from discontinued operations, net of tax
excludes $3 million of expenses related to stock-based compensation
expense, the amortization or impairment of acquisition-related
intangibles and transaction costs associated with the sale of the
Wolfspeed business.
Quarterly Conference Call:
Cree will host a conference call at 5:00 p.m. Eastern time today
to review the highlights of the fiscal 2017 first quarter results
and the fiscal 2017 second quarter 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. For webcast details,
visit Cree's website at investor.cree.com/events.cfm.
Supplemental financial information, including the non-GAAP
reconciliation attached to this press release, is available on
Cree's website at investor.cree.com/results.cfm.
About Cree, Inc.
Cree is a market-leading innovator of lighting-class LEDs,
lighting products and semiconductor products for power and radio
frequency (RF) applications. Cree believes in better light
experiences and is delivering new innovative LED technology that
transforms the way people experience light through high-quality
interior and exterior LED lighting solutions.
Cree’s product families include LED lighting systems and bulbs,
blue and green LED chips, high-brightness LEDs, lighting-class
power LEDs, power-switching devices and RF devices. Cree’s products
are driving improvements in applications such as general
illumination, electronic signs and signals, power supplies and
inverters.
For additional product and Company information, please refer to
www.cree.com.
Sale of Wolfspeed to Infineon Update
As previously announced, Cree reached an agreement to sell the
Wolfspeed business to Infineon Technologies AG. The parties are
continuing to work together to obtain the customarily required
regulatory approvals in various jurisdictions, including foreign
and domestic antitrust approvals, as well as CFIUS approval. The
parties received a second request for additional information from
the United States Federal Trade Commission in late September. Cree
and Infineon continue to target closing the transaction around the
end of calendar 2016.
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 and expenses which 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 in
the forward-looking statements. Actual results, including with
respect to our targets and prospects, could differ materially due
to a number of factors, including the risk that we may not obtain
sufficient orders to achieve our targeted revenues; price
competition in key markets; the risk that we or our channel
partners are not able to develop and expand customer bases and
accurately anticipate demand from end customers, which can result
in increased inventory and reduced orders as we experience wide
fluctuations in supply and demand; the risk that our commercial
Lighting results will continue to suffer if new issues arise
regarding the new ERP system we implemented in the third quarter of
fiscal 2016 for this business; the risk that we may experience
production difficulties that preclude us from shipping sufficient
quantities to meet customer orders or that result in higher
production costs and lower margins; our ability to lower costs; the
risk that our results will suffer if we are unable to balance
fluctuations in customer demand and capacity; product mix; risks
associated with the ramp-up of production of our new products, and
our entry into new business channels different from those in which
we have historically operated; the risk that customers do not
maintain their favorable perception of our brand and products,
resulting in lower demand for our products; the risk that our
products fail to perform or fail to meet customer requirements or
expectations, resulting in significant additional costs, including
costs associated with the potential recall of our products; the
risk that retail customers may alter promotional pricing, increase
promotion of a competitor's products over our products or reduce
their inventory levels, all of which could negatively affect
product demand; the risk that the sale of our Wolfspeed business to
Infineon may be delayed or may not occur; the ability to obtain
regulatory approval or the possibility that such regulatory
approval may result in the imposition of conditions that could
cause the parties to abandon the Wolfspeed transaction; the risk
that one or more of the conditions to closing of the Wolfspeed
transaction may not be satisfied; the possibility that anticipated
benefits of the proposed Wolfspeed transaction will not be
realized, including the amount of cash to be realized by Cree from
the transaction or our resulting ability to pursue select strategic
transactions and stock repurchases; potential business uncertainty,
including changes to existing business relationships during the
pendency before closing that could affect our financial
performance; the risk that our investments may experience periods
of significant stock price volatility causing us to recognize fair
value losses on our investment; the risk that we have an
increasingly complex supply chain and its ability to scale to
enable maintaining a sufficient supply of raw materials, subsystems
and finished products with the required specifications and quality;
ongoing uncertainty in global economic conditions, infrastructure
development or customer demand 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; the risk we may be required to record a
significant charge to earnings if our goodwill or amortizable
assets become impaired; our ability to complete development and
commercialization of products under development, such as our
pipeline of improved LED chips, LED components and LED lighting
products; risks resulting from the concentration of our business
among few customers, including the risk that customers may reduce
or cancel orders or fail to honor purchase commitments; risks
related to our multi-year warranty periods for LED lighting
products; risks associated with acquisitions, divestitures or
investments generally; 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 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 26, 2016, and subsequent reports filed with
the SEC. These forward-looking statements represent Cree's judgment
as of the date of this release. Except as required under the U.S.
federal securities laws and the rules and regulations of the SEC,
Cree disclaims any intent or 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®, Essentia®, and XLamp® are registered trademarks and
Wolfspeed™ is a trademark of Cree, Inc.
CREE, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
(in thousands, except per share amounts
and percentages)
Three Months Ended September 25, 2016
September 27, 2015
Revenue, net $321,329 $381,549 Cost of revenue, net 234,988
274,357 Gross profit 86,341 107,192 Gross margin percentage
26.9 % 28.1 % Operating expenses: Research and development
28,531 32,731 Sales, general and administrative 61,371 70,172
Amortization or impairment of acquisition-related intangibles 6,266
6,469 Loss on disposal or impairment of long-lived assets 316
9,565 Total operating expenses 96,484 118,937
Operating loss (10,143 ) (11,745 ) Operating income percentage (3.2
)% (3.1 )% Non-operating expense (158 ) (22,803 ) Loss from
continuing operations before income taxes (10,301 ) (34,548 )
Income tax benefit (7,443 ) (8,812 ) Loss from continuing
operations (2,858 ) (25,736 ) Income from discontinued operations,
net of tax 3,424 1,247 Net income (loss) $566
($24,489 )
Earnings (loss) per share-diluted
Continuing operations ($0.03 ) ($0.25 ) Discontinued operations
0.03 0.01
Earnings (loss) per share-diluted $—
($0.24 ) Shares used in diluted per share calculation
100,559 103,473
These unaudited condensed consolidated statements of income
(loss) reflect the Wolfspeed business as discontinued
operations.
CREE, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(in thousands)
September 25, 2016 June 26, 2016
ASSETS Current assets: Cash, cash equivalents, and
short-term investments $589,048 $605,305 Accounts receivable, net
146,067 138,772 Income tax receivable 9,855 6,304 Inventories
291,533 281,671 Prepaid expenses 23,344 25,728 Other current assets
41,584 44,501 Current assets held for sale 421,094 54,426
Total current assets 1,522,525 1,156,707 Property and
equipment, net 373,211 387,167 Goodwill 518,059 518,059 Intangible
assets, net 252,568 259,400 Other long-term investments 39,049
40,179 Deferred income taxes 38,708 38,564 Long-term assets held
for sale — 356,735 Other assets 8,635 9,249 Total
assets $2,752,755 $2,766,060
LIABILITIES
AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable,
trade $114,302 $122,808 Accrued salaries and wages 36,250 40,128
Other current liabilities 41,940 45,101 Current liabilities held
for sale 18,383 14,962 Total current liabilities
210,875 222,999 Long-term liabilities: Long-term debt
187,000 160,000 Deferred income taxes 945 943 Long-term liabilities
held for sale — 1,850 Other long-term liabilities 11,676
12,444 Total long-term liabilities 199,621 175,237
Shareholders’ equity: Common stock 124 125 Additional
paid-in-capital 2,369,408 2,359,584 Accumulated other comprehensive
income, net of taxes 8,437 8,728 Accumulated deficit (35,710 ) (613
) Total shareholders’ equity 2,342,259 2,367,824
Total liabilities and shareholders’ equity $2,752,755
$2,766,060
These unaudited condensed consolidated balance sheets reflect
the Wolfspeed business as discontinued operations. The assets and
liabilities of the Wolfspeed business are therefore classified as
held for sale and are reflected as current in nature as of
September 25, 2016.
CREE, INC. UNAUDITED FINANCIAL RESULTS BY OPERATING
SEGMENT (in thousands, except percentages)
The following table reflects the results
of the Company's reportable segments as reviewed by the Company's
Chief Executive Officer, its Chief Operating Decision Maker or
CODM, for the three months ended September 25, 2016 and the three
months ended September 27, 2015. The CODM does not review
inter-segment transactions when evaluating segment performance and
allocating resources to each segment. As such, total segment
revenue is equal to the Company's consolidated revenue.
Three Months Ended September 25,
2016 September 27, 2015 Change
Lighting Products revenue $183,836 $248,031 ($64,195 ) (26 )%
Percent of revenue 57 % 65 % LED Products revenue 137,493 133,518
3,975 3
%
Percent of revenue 43 % 35 % Total revenue $321,329
$381,549 ($60,220 ) (16 )%
Three Months Ended
September 25, 2016 September 27, 2015
Change Lighting Products gross profit $49,290 $69,081
($19,791 ) (29 )% Lighting Products gross margin 26.8 % 27.9 % LED
Products gross profit 41,770 41,869 (99 ) —
%
LED Products gross margin 30.4 % 31.4 % Unallocated costs (4,719 )
(3,758 ) (961 ) 26
%
Consolidated gross profit $86,341 $107,192 ($20,851 )
(19 )% Consolidated gross margin 26.9 % 28.1 %
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 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 preceding
table to the Company's consolidated income before taxes.
The Company allocates direct costs and indirect costs to each
segment's cost of revenue. The allocation methodology is based on a
reasonable measure of utilization considering the specific facts
and circumstances of the cost being allocated.
Certain costs are not allocated when evaluating segment
performance. These unallocated costs consist 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.
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 gross margin, non-GAAP operating income, non-GAAP
non-operating income, net, non-GAAP net income, non-GAAP earnings
per diluted share and free cash flow.
Reconciliation to the nearest GAAP measure of all historical
non-GAAP measures included in this press release can be found in
the tables included with this press release. In this press release,
Cree also presents its target for non-GAAP expenses, which are
expenses less expenses in the various categories described below.
Both our GAAP targets and non-GAAP targets do not include any
estimated changes in the fair value of our Lextar investment.
Non-GAAP measures presented in this press release 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 the items listed below and the income tax effects
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.
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, performance stock
awards and employee stock purchases through its ESPP. Cree excludes
stock-based compensation expenses from its non-GAAP measures
because they are non-cash expenses that Cree does not believe are
reflective of ongoing operating results.
Amortization or impairment of acquisition-related intangibles.
Cree incurs amortization or impairment of acquisition-related
intangibles in connection with acquisitions. Cree excludes these
items because they arise from Cree's prior acquisitions and have no
direct correlation to the ongoing operating results of Cree's
business.
LED business restructuring charges or gains. In June 2015,
Cree’s board of directors approved a plan to restructure the LED
business. The restructuring, which was completed during fiscal
2016, reduced excess capacity and overhead in order to improve the
cost structure moving forward. The components of the restructuring
include the planned sale or abandonment of certain manufacturing
equipment, facility consolidation and the elimination of certain
positions. Because these charges relate to assets which have been
retired prior to the end of their estimated useful lives and
severance costs for eliminated positions, Cree does not consider
these charges to be reflective of ongoing operating results.
Similarly, Cree does not consider realized gains or losses on the
sale of assets relating to the restructuring to be reflective of
ongoing operating results.
Changes in the fair value of our Lextar investment. The
Company's common stock ownership investment in Lextar Electronics
Corporation is accounted for utilizing the fair value option. As
such, changes in fair value are recognized in income, including
fluctuations due to the exchange rate between the New Taiwan Dollar
and the United States Dollar. Cree excludes the impact of these
gains or losses from its non-GAAP measures because they are
non-cash impacts that Cree does not believe are reflective of
ongoing operating results. Additionally, Cree excludes the impact
of dividends received on its Lextar investment as Cree does not
believe it is reflective of ongoing operating results.
Transaction costs associated with the sale of the Wolfspeed
business. The Company has incurred transaction costs in conjunction
with the proposed sale of its Wolfspeed business to Infineon.
Because these costs were incurred relative to a portion of the
business which is reported as discontinued operations in fiscal
2017, Cree does not consider these charges to be reflective on
ongoing operating results.
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. Non-GAAP net income is presented using a non-GAAP tax
rate. The Company’s non-GAAP tax rate represents a
recalculation of the GAAP tax rate reflecting the exclusion of the
non-GAAP items.
Cree expects to incur many of these same expenses, including
income taxes associated with these expenses, in future periods. In
addition to the non-GAAP measures discussed above, Cree also uses
free cash flow as a measure of operating performance and liquidity.
Free cash flow represents operating cash flows less net purchases
of property and equipment and patent and licensing rights. Cree
considers free cash flow to be an operating performance and 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, a portion of 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 operating performance and liquidity is that it does
not represent the residual cash flow available to the company for
discretionary expenditures, as it is excludes certain mandatory
expenditures such as debt service.
CREE, INC.
Unaudited Reconciliation of GAAP to
Non-GAAP Measures
(in thousands, except per share amounts
and percentages)
Non-GAAP Gross Margin
Three Months Ended September 25, 2016
September 27, 2015 GAAP gross profit $86,341 $107,192
GAAP gross margin percentage 26.9 % 28.1 % Adjustment: Stock-based
compensation expense 2,778 2,620 Non-GAAP gross
profit $89,119 $109,814 Non-GAAP gross margin
percentage 27.7 % 28.8 %
Non-GAAP Operating Income
Three Months Ended September 25, 2016
September 27,2015*
GAAP operating loss ($10,143 ) ($11,745 ) GAAP operating income
percentage (3.2 )% (3.1 )% Adjustments: Stock-based compensation
expense: Cost of revenue, net 2,778 2,620 Research and development
2,606 2,630 Sales, general and administrative 7,635 7,712
Total stock-based compensation expense 13,019 12,962
Amortization or impairment of acquisition-related intangibles 6,266
6,469 LED business restructuring charges 8 11,039
Total adjustments to GAAP operating income 19,293 30,470
Non-GAAP operating income $9,150 $18,725
Non-GAAP operating income percentage 2.8 % 4.9 %
Non-GAAP Income From Continued
Operations
Three Months Ended September 25, 2016
September 27, 2015 GAAP loss from continuing
operations ($2,858 ) ($25,736 ) Adjustments Stock-based
compensation expense 13,019 12,962 Amortization or impairment of
acquisition-related intangibles 6,266 6,469 Net changes associated
with equity investments 1,114 22,944 LED business restructuring
charges 8 11,039 Total adjustments to GAAP net income
before provision for income taxes 20,407 53,414 Income tax effect
(8,049 ) (12,934 ) Non-GAAP income from continuing operations
$9,500 $14,744 Earnings per share Non-GAAP
diluted earnings per share from continuing operations $0.09 $0.14
Shares used in diluted earnings per share from continuing
operations calculation Non-GAAP shares used 100,559 103,473
Non-GAAP Net Income
Three Months Ended September 25, 2016
September 27, 2015 GAAP net income (loss) $566
($24,489 ) Adjustments Stock-based compensation expense 14,648
15,070 Amortization or impairment of acquisition-related
intangibles 6,409 7,063 Net changes associated with equity
investments 1,114 22,944 LED business restructuring charges 8
15,913 Transaction costs related to the sale of the Wolfspeed
business 1,997 125 Total adjustments to GAAP net
income before provision for income taxes 24,176 61,115 Income tax
effect (9,533 ) (15,292 ) Non-GAAP net income $15,209
$21,334 Earnings per share Non-GAAP diluted earnings
per share $0.15 $0.21 Shares used in diluted earnings per
share calculation Non-GAAP shares used 100,559 103,473
GAAP Income From Discontinued
Operations
Three Months Ended September 25, 2016 September
27, 2015 Revenue, net $49,902 $43,939 Cost of revenue, net
26,314 20,548 Gross profit 23,588 23,391 Total
operating expenses 18,654 21,514 Income from discontinued
operations before income taxes 4,934 1,877 Income tax expense 1,510
630 Income from discontinued operations, net of tax
$3,424 $1,247
Non-GAAP Income From Discontinued
Operations
Three Months Ended September 25, 2016
September 27, 2015 GAAP Income from discontinued
operations $3,424 $1,246 Adjustments Stock-based compensation
expense 1,629 2,109 Amortization or impairment of
acquisition-related intangibles 143 594 LED business restructuring
charges — 4,874 Transaction costs related to the sale of the
Wolfspeed business 1,997 125 Total adjustments to
GAAP income from continuing operations before provision for income
taxes 3,769 7,702 Income tax effect (1,484 ) (2,358 ) Non-GAAP
income from discontinued operations, net of tax $5,709
$6,590
Free Cash Flow
Three Months Ended September 25, 2016
September 27, 2015 Cash flows from operations $18,098
$46,834 Less: PP&E spending (19,337 ) (49,883 ) Less: Patents
spending (2,252 ) (4,314 ) Total free cash flow ($3,491 ) ($7,363 )
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version on businesswire.com: http://www.businesswire.com/news/home/20161018006685/en/
Cree, Inc.Raiford GarrabrantDirector, Investor
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