Cree, Inc.
CREE INC (Form: 8-K, Received: 10/17/2017 16:05:47)


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 17, 2017



CREE, INC.
(Exact name of registrant as specified in its charter)


North Carolina
0-21154
56-1572719
(State or other jurisdiction of
incorporation)
(Commission File
Number)
(I.R.S. Employer
Identification Number)

4600 Silicon Drive
 
Durham, North Carolina
27703
(Address of principal executive offices)
(Zip Code)


(919) 407-5300
Registrant’s telephone number, including area code

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company     [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     [ ]






Item 2.02
Results of Operations and Financial Condition
    
On October 17, 2017 , Cree, Inc. (the “Company”) issued a press release announcing results for the fiscal quarter ended September 24, 2017 .  The press release is attached as Exhibit 99.1 and incorporated into this report by reference.
 
The information in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  Furthermore, the information in this report shall not be deemed incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.

Item 9.01
Financial Statements and Exhibits
    
(d)      Exhibits

 
Exhibit No.
 
Description of Exhibit
 
 
 
 
 
99.1
 






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
CREE, INC.
 
 
 
 
 
 
 
 
 
By:
 
/s/ Michael E. McDevitt
 
 
 
Michael E. McDevitt
 
 
 
Executive Vice President and Chief Financial Officer


Date: October 17, 2017
 




Exhibit 99.1


 
LOGO042115A17.GIF






October 17, 2017


Cree Reports Financial Results for the First Quarter of Fiscal Year 2018


DURHAM, N.C. -- Cree, Inc. (Nasdaq: CREE) today announced financial results for its first quarter of fiscal 2018, ended September 24, 2017. Revenue for the first quarter of fiscal 2018 was $360 million , which represents a 3% decrease compared to revenue of $371 million for the first quarter of fiscal 2017 and a slight increase compared to the fourth quarter of fiscal 2017. GAAP net loss for the first quarter of fiscal 2018 was $20 million , or $0.20 per diluted share. This compares to GAAP net income of $566 thousand , or $0.01 per diluted share, for the first quarter of fiscal 2017. On a non-GAAP basis, net income for the first quarter of fiscal 2018 was $4 million , or $0.04 per diluted share, compared to non-GAAP net income for the first quarter of fiscal 2017 of $15 million , or $0.15 per diluted share.

"Cree is a company that's known as an innovator with a long history of blazing new trails, and I'm excited to be part of this team," stated Gregg Lowe, Cree CEO. "There are a number of opportunities and challenges in front of us, and I look forward to working together with our talented team to maximize those opportunities while dealing with the challenges head on."

Business Outlook :

For its second quarter of fiscal 2018 ending December 24, 2017, Cree targets revenue in a range of $340 million to $360 million. GAAP net loss is targeted at $25 million to $31 million, or $0.25 to $0.31 per diluted share. Non-GAAP net income is targeted to be in a range of $1 million loss to a $4 million profit, or $0.01 loss per diluted share to $0.04 earnings per diluted share. Targeted non-GAAP income excludes $29 million of expenses, net of tax, 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.

Quarterly Conference Call:

Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the fiscal 2018 first quarter results and the fiscal 2018 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 leading innovator of lighting-class LEDs, lighting products and wide bandgap semiconductor products for power and radio frequency (RF) applications. Cree’s product families include LED lighting systems and lamps, blue and green LED chips, high-brightness LEDs, lighting-class power LEDs, SiC materials, power devices and RF devices.

1


Cree’s products are driving improvements in applications such as commercial and consumer general illumination, video screens, electronic signs and signals, motor drives, power supplies, EV charging, solar, traction, transportation, radar, communications, telecom, data link and broadband amplifiers.

For additional product and Company information, please refer to www.cree.com .

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 issues related to product quality of supplied components 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, including bringing on additional capacity on a timely basis to meet customer demand; the risk that longer manufacturing lead times may cause customers to fulfill their orders with a competitor's products instead; 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 warranty returns or 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 our investments may experience periods of significant stock price volatility causing us to recognize fair value losses on our investment; the risk posed by managing an increasingly complex supply chain that has the ability to supply a sufficient quantity 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, LED lighting products, and Wolfspeed 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, joint ventures 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

2


June 25, 2017, 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 ® is a registered trademark and Wolfspeed is a trademark of Cree, Inc.

3




CREE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(in thousands, except per share amounts and percentages)
 
 
Three Months Ended
 
September 24,
2017
 
September 25,
2016
Revenue, net

$360,398

 

$371,231

Cost of revenue, net
260,066

 
261,302

Gross profit
100,332

 
109,929

Gross margin percentage
27.8
 %
 
29.6
 %
 
 
 
 
Operating expenses:
 
 
 
Research and development
41,859

 
39,948

Sales, general and administrative
62,964

 
68,458

Amortization or impairment of acquisition-related intangibles
6,792

 
6,408

Loss on disposal or impairment of long-lived assets
2,825

 
324

Total operating expenses
114,440

 
115,138

 
 
 
 
Operating loss
(14,108
)
 
(5,209
)
Operating loss percentage
(3.9
)%
 
(1.4
)%
 
 
 
 
Non-operating expense, net
(1,068
)
 
(158
)
Loss before income taxes
(15,176
)
 
(5,367
)
Income tax expense (benefit)
4,697

 
(5,933
)
Net (loss) income
(19,873
)
 
566

Net loss attributable to noncontrolling interest
(16
)
 

Net (loss) income attributable to controlling interest
$(19,857)
 
$566
 
 
 
 
Diluted (loss) earnings per share

($0.20
)
 

$0.01

 
 
 
 
Shares used in diluted per share calculation
97,811

 
100,559





4



CREE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
 
September 24,
2017
 
June 25,
2017
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash, cash equivalents, and short-term investments

$624,854

 

$610,938

Accounts receivable, net
154,854

 
148,392

Income tax receivable
7,639

 
8,040

Inventories
277,944

 
284,385

Prepaid expenses
23,572

 
23,305

Other current assets
15,352

 
23,390

Current assets held for sale
2,254

 
2,180

Total current assets
1,106,469

 
1,100,630

Property and equipment, net
594,698

 
581,263

Goodwill
618,828

 
618,828

Intangible assets, net
267,066

 
274,315

Other long-term investments
47,298

 
50,366

Deferred income taxes
11,137

 
11,763

Other assets
12,491

 
12,702

Total assets

$2,657,987

 

$2,649,867

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable, trade

$146,578

 

$133,185

Accrued salaries and wages
39,766

 
41,860

Other current liabilities
43,024

 
36,978

Total current liabilities
229,368

 
212,023

 
 
 
 
Long-term liabilities:
 
 
 
Long-term debt
141,000

 
145,000

Deferred income taxes
52,895

 
49,860

Other long-term liabilities
18,743

 
20,179

Total long-term liabilities
212,638

 
215,039

 
 
 
 
Shareholders’ equity:
 
 
 
Common stock
121

 
121

Additional paid-in-capital
2,426,063

 
2,419,517

Accumulated other comprehensive income, net of taxes
7,512

 
5,909

Accumulated deficit
(222,599
)
 
(202,742
)
Total shareholders’ equity
2,211,097

 
2,222,805

Noncontrolling interest

$4,884

 

$—

Total liabilities and equity

$2,657,987

 

$2,649,867




5


CREE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended
 
September 24,
2017
 
September 25,
2016
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net (loss) income

($19,873
)
 

$566

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
37,400

 
35,939

Stock-based compensation
10,135

 
14,650

Excess tax benefit from stock-based payment arrangements

 
(12
)
Loss on disposal or impairment of long-lived assets
2,824

 
325

Amortization of premium/discount on investments
1,310

 
1,382

Loss on equity investment
3,267

 
2,487

Foreign exchange gain on equity investment
(199
)
 
(1,373
)
Deferred income taxes
3,133

 
54

Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(5,996
)
 
(9,227
)
Inventories
6,960

 
(10,808
)
Prepaid expenses and other assets
9,323

 
(1,922
)
Accounts payable, trade
6,442

 
(2,111
)
Accrued salaries and wages and other liabilities
(603
)
 
(11,852
)
Net cash provided by operating activities
54,123

 
18,098

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(36,450
)
 
(19,337
)
Purchases of patent and licensing rights
(2,476
)
 
(2,252
)
Proceeds from sale of property and equipment
327

 
165

Purchases of short-term investments
(117,607
)
 
(106,749
)
Proceeds from maturities of short-term investments
119,928

 
77,645

Proceeds from sale of short-term investments
1,974

 
5,148

Net cash used in investing activities
(34,304
)
 
(45,380
)
Cash flows from financing activities:
 
 
 
Proceeds from issuing shares to non-controlling interest
4,900

 

Payment of acquisition-related contingent consideration
(1,850
)
 
(2,775
)
Proceeds from long-term debt borrowings
95,000

 
110,000

Payments on long-term debt borrowings
(99,000
)
 
(83,000
)
Net proceeds from issuance of common stock
119

 
406

Excess tax benefit from stock-based payment arrangements

 
12

Repurchases of common stock

 
(35,663
)
Net cash used in financing activities
(831
)
 
(11,020
)
Effects of foreign exchange changes on cash and cash equivalents
473

 
(11
)
Net increase (decrease) in cash and cash equivalents
19,461

 
(38,313
)
Cash and cash equivalents:
 
 
 
Beginning of period
132,597

 
166,154

End of period

$152,058

 

$127,841

Supplemental disclosure of cash flow information:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued property and equipment

$18,909

 

$3,103

The accompanying notes are an integral part of the consolidated financial statements.


6


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 24, 2017 and the three months ended September 25, 2016. 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 24,
2017
 
September 25,
2016
 
Change
Lighting Products revenue

$149,724

 

$183,836

 

($34,112
)
 
(19
)%
Percent of revenue
42
%
 
50
%
 
 
 
 
LED Products revenue
144,520

 
137,493

 
7,027

 
5
 %
Percent of revenue
40
%
 
37
%
 
 
 
 
Wolfspeed revenue
66,154

 
49,902

 
16,252

 
33
 %
Percent of revenue
18
%
 
13
%
 
 
 
 
Total revenue

$360,398

 

$371,231

 

($10,833
)
 
(3
)%

 
Three Months Ended
 
 
 
 
 
September 24,
2017
 
September 25,
2016
 
Change
Lighting Products gross profit

$31,883

 

$49,290

 

($17,407
)
 
(35
)%
Lighting Products gross margin
21.3
%
 
26.8
%
 
 
 
 
LED Products gross profit
38,810

 
41,770

 
(2,960
)
 
(7
)%
LED Products gross margin
26.9
%
 
30.4
%
 
 
 
 
Wolfspeed gross profit
32,398

 
23,460

 
8,938

 
38
 %
Wolfspeed gross margin
49.0
%
 
47.0
%
 
 
 
 
Unallocated costs
(2,759
)
 
(4,591
)
 
1,832

 
(40
)%
Consolidated gross profit

$100,332

 

$109,929

 

($9,597
)
 
(9
)%
Consolidated gross margin
27.8
%
 
29.6
%
 
 
 
 

Reportable Segments Description

The Company's Lighting Products segment primarily consists of LED lighting systems and lamps. The Company's LED Products segment includes LED chips and LED components. The Company's Wolfspeed segment includes power devices, RF devices, and SiC materials.

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 (loss) income must be included to reconcile the consolidated gross profit presented in the preceding table to the Company's consolidated loss 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 costs being allocated.


7


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.

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 diluted (loss) earnings per 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 included 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.
Net changes associated with equity 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

8


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 terminated sale of the Wolfspeed business . The Company incurred transaction costs in fiscal 2017 in conjunction with the previously proposed sale of its Wolfspeed business to Infineon. Because these costs were incurred relative to a portion of the business which was previously reported as discontinued operations in fiscal 2017, Cree does not consider these amounts to be reflective of 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 excludes certain mandatory expenditures such as debt service.

9


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 24,
2017
 
September 25,
2016
GAAP gross profit

$100,332

 

$109,929

GAAP gross margin percentage
27.8
%
 
29.6
%
Adjustment:
 
 
 
Stock-based compensation expense
1,775

 
2,805

Non-GAAP gross profit

$102,107

 

$112,734

Non-GAAP gross margin percentage
28.3
%
 
30.4
%


Non-GAAP Operating Income
 
Three Months Ended
 
September 24,
2017
 
September 25,
2016
GAAP operating loss

($14,108
)
 

($5,209
)
GAAP operating loss percentage
(3.9
)%
 
(1.4
)%
Adjustments:
 
 
 
Stock-based compensation expense:
 
 
 
Cost of revenue, net
1,775

 
2,805

Research and development
2,457

 
3,439

Sales, general and administrative
5,903

 
8,406

Total stock-based compensation expense
10,135

 
14,650

Amortization or impairment of acquisition-related intangibles
6,792

 
6,408

LED business restructuring charges

 
7

Transaction costs related to the terminated sale of the Wolfspeed business

 
1,996

Total adjustments to GAAP operating loss
16,927

 
23,061

Non-GAAP operating income

$2,819

 

$17,852

Non-GAAP operating income percentage
0.8
 %
 
4.8
 %


Non-GAAP Non-Operating Income, net
 
Three Months Ended
 
September 24,
2017
 
September 25,
2016
GAAP non-operating loss, net

($1,068
)
 

($158
)
Adjustment:
 
 
 
Net changes associated with equity method investment
3,067

 
1,114

Non-GAAP non-operating income, net

$1,999

 

$956




10


Non-GAAP Net Income
 
Three Months Ended
 
September 24,
2017
 
September 25,
2016
GAAP net (loss) income

($19,857
)
 

$566

Adjustments:
 
 
 
Stock-based compensation expense
10,135

 
14,650

Amortization or impairment of acquisition-related intangibles
6,792

 
6,408

LED business restructuring charges

 
7

Transaction costs related to the terminated sale of the Wolfspeed business

 
1,996

Net changes associated with equity method investment
3,067

 
1,114

Total adjustments to GAAP net (loss) income before provision for income taxes
19,994

 
24,175

Income tax effect
3,974

 
(9,595
)
Non-GAAP net income

$4,111

 

$15,146

 
 
 
 
Non-GAAP Earnings per share
 
 
 
Non-GAAP diluted earnings per share

$0.04

 

$0.15

 
 
 
 
Shares used in non-GAAP diluted earnings per share calculation
 
 
 
Non-GAAP shares used
97,811

 
100,559



Free Cash Flow
 
Three Months Ended
 
September 24,
2017
 
September 25,
2016
Cash flows from operations

$54,123

 

$18,098

Less: PP&E spending
(36,450
)
 
(19,337
)
Less: Patents spending
(2,476
)
 
(2,252
)
Total free cash flow

$15,197

 

($3,491
)




Contact:
Raiford Garrabrant
Cree, Inc.
Director, Investor Relations
Phone: 919-407-7895
investorrelations@cree.com

Source: Cree, Inc.

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