Cree Reports Q3

DURHAM, N.C. -- Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced revenue of $219.2 million for its third quarter of fiscal 2011, ended March 27, 2011. This represents a 6% decrease compared to revenue of $234.1 million reported for the third fiscal quarter last year and a 15% decrease compared to the second quarter of fiscal 2011. GAAP net income for the third quarter of $18.9 million, or $0.17 per diluted share, decreased 58% year-over-year compared to GAAP net income of $44.6 million, or $0.41 per diluted share, for the third quarter of fiscal 2010. On a non-GAAP basis, net income for the third quarter of fiscal 2011 of $30.1 million, or $0.27 per diluted share, decreased 41% year-over-year compared to non-GAAP net income for the third quarter of fiscal 2010 of $51.3 million, or $0.47 per diluted share.

“Q3 results were in-line with our revised lower targets for the quarter,” stated Chuck Swoboda, Cree chairman and CEO. “The results reflect both our continued success in LED lighting and the challenges of managing the LED chip and components business through a business cycle with short lead-times and low order visibility. We continue to be a leader in LED lighting and remain confident we are on the right track as we look forward to further disrupting the market and leading the LED lighting revolution in the years ahead.”

Recent Business Highlights:

Signed a comprehensive, worldwide patent cross-license agreement with Osram GmbH designed to further accelerate the growth of the LED lighting market.

Announced a two-year extension of the strategic agreement signed with Zumtobel Lighting GmbH in 2008.

Introduced the Cree XLamp® MT-G LED, which is the first LED to deliver the performance required for high-output halogen retrofit applications such as 35 to 50 watt MR16 replacement bulbs.

Released the Cree XLamp XM-L EasyWhiteTM LED, which delivers a lower cost solution for 25 watt replacement lamps by combining the benefits of our unique color mixing technology in a single high output, small footprint package.

Set a new industry benchmark for color rendering with the commercial release of the Cree LBR-30TM LED lamp.

Business Outlook:
For its fourth quarter of fiscal 2011 ending June 26, 2011, Cree targets revenue in a range of $225 million to $245 million with GAAP and non-GAAP gross margin targeted at 40% +/-. GAAP operating expenses are targeted to increase by approximately $0.5 million to $72 million, or $61 million on a non-GAAP basis. The tax rate is targeted at 14% for fiscal Q4. GAAP net income is targeted at $16 million to $23 million, or $0.15 to $0.21 per diluted share. Non-GAAP net income is targeted in a range of $28 million to $35 million, or $0.25 to $0.31 per diluted share. The GAAP and non-GAAP net income targets are based on an estimated 110.5 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 $0.08 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 third quarter 2011 results and the fiscal fourth quarter 2011 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 — Financial Events and Presentations” for webcast details. The call will be archived and available on the website through May 3, 2011.

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 Information”, “Quarterly Results”, at www.cree.com.

Cree Inc. (Nasdaq: CREE)