Cree Reports Financial Results for the Second Quarter of Fiscal Year 2016
"We delivered on our goal of building financial momentum in Q2, with
earnings that exceeded our targets driven by solid revenue growth, good
margins and operating expense leverage," stated
Q2 2016 Financial Metrics
(in thousands, except per share
amounts and percentages)
Second Quarter | |||||||||||||||||||||||||||
2016 | 2015 | Change | |||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||
Revenue, net | $ | 435,806 | $ | 413,157 | $ | 22,649 | 5 | % | |||||||||||||||||||
GAAP | |||||||||||||||||||||||||||
Gross margin | 31.0 | % | 33.1 | % | |||||||||||||||||||||||
Operating margin | 2.2 | % | 2.5 | % | |||||||||||||||||||||||
Net income | $ | 13,958 | $ | 12,151 | $ | 1,807 | 15 | % | |||||||||||||||||||
Earnings per diluted share | $ | 0.14 | $ | 0.10 | $ | 0.04 | 40 | % | |||||||||||||||||||
Non-GAAP | |||||||||||||||||||||||||||
Gross margin | 31.7 | % | 33.9 | % | |||||||||||||||||||||||
Operating margin | 8.1 | % | 8.2 | % | |||||||||||||||||||||||
Net income | $ | 30,475 | $ | 37,949 | $ | (7,474 | ) | (20 | )% | ||||||||||||||||||
Earnings per diluted share | $ | 0.30 | $ | 0.33 | $ | (0.03 | ) | (9 | )% |
- Gross margin from Q1 of fiscal 2016 remained consistent at 31.0% on a GAAP basis and at 31.7% on a non-GAAP basis.
-
Cash and investments decreased by
$15 million from Q1 of fiscal 2016 to$617 million . -
Accounts receivable, net decreased by
$11 million from Q1 of fiscal 2016 to$183 million , with days sales outstanding of 38. -
Inventory decreased by
$8 million from Q1 of fiscal 2016 to$281 million and represents 84 days of inventory. -
Cash from operations was
$77 million , free cash flow was$42 million and share repurchases were$62 million for Q2 of fiscal 2016.
Recent Business Highlights:
- Released our breakthrough IG Series parking structure lights to volume production. This is the first product family to utilize our new WaveMax™ Technology, which features a revolutionary combination of control, uniformity and efficiency to deliver a superior visual experience in new form factors that are intelligent in both design and function;
-
Announced that Thermo Fisher Scientific selected Cree® to provide a
turnkey LED lighting solution for their
Asheville, N.C. , campus. Cree Solutions designed and managed the project from start to finish, replacing more than 2,000 light fixtures to achieve a three-year payback and energy savings of up to 40 percent; -
During the second quarter of fiscal 2016, Cree completed its LED
business restructuring recognizing
$3 million of expense for factory capacity and overhead costs reductions. The restructuring charges are included in the GAAP results only.
Business Outlook:
For its third quarter of fiscal 2016 ending
Quarterly Conference Call:
Cree will host a conference call at
The conference call will be available to the public through a live audio
web broadcast via the
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 is leading the LED lighting revolution and making energy-wasting traditional lighting technologies obsolete through the use of energy-efficient, mercury-free LED lighting. Cree is a market-leading innovator of lighting-class LEDs, lighting products and semiconductor products for power and radio frequency (RF) applications.
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.
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 suffer if the new ERP system we are
implementing beginning in the third quarter of fiscal 2016 for this
business is not successful as targeted; 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
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 equity method 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; 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; 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
Cree® is a registered trademark and WaveMax™ and Wolfspeed™ are
trademarks of
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except per share amounts and percentages) |
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||||||||||
Revenue, net | $ | 435,806 | $ | 413,157 | $ | 861,295 | $ | 840,829 | ||||||||||||||||||||
Cost of revenue, net | 300,655 | 276,378 | 594,396 | 568,230 | ||||||||||||||||||||||||
Gross profit | 135,151 | 136,779 | 266,899 | 272,599 | ||||||||||||||||||||||||
Gross margin percentage | 31.0 | % | 33.1 | % | 31.0 | % | 32.4 | % | ||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Research and development | 41,952 | 46,989 | 85,492 | 93,714 | ||||||||||||||||||||||||
Sales, general and administrative | 74,691 | 72,375 | 149,954 | 142,067 | ||||||||||||||||||||||||
Amortization or impairment of |
7,062 | 6,495 | 14,124 | 12,994 | ||||||||||||||||||||||||
Loss on disposal or impairment of |
2,014 | 735 | 16,587 | 2,182 | ||||||||||||||||||||||||
Total operating expenses |
125,719 | 126,594 | 266,157 | 250,957 | ||||||||||||||||||||||||
Operating income | 9,432 | 10,185 | 742 | 21,642 | ||||||||||||||||||||||||
Operating income percentage | 2.2 | % | 2.5 | % | 0.1 | % | 2.6 | % | ||||||||||||||||||||
Non-operating income (loss), net | 8,015 | 1,728 | (14,791 | ) | 4,632 | |||||||||||||||||||||||
Income (loss) before income taxes | 17,447 | 11,913 | (14,049 | ) | 26,274 | |||||||||||||||||||||||
Income tax expense (benefit) | 3,489 | (238 | ) | (4,384 | ) | 2,993 | ||||||||||||||||||||||
Net income (loss) | $ | 13,958 | $ | 12,151 | $ | (9,665 | ) | $ | 23,281 | |||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.14 | $ | 0.10 | $ | (0.09 | ) | $ | 0.20 | |||||||||||||||||||
Shares used in diluted per share |
102,521 | 115,845 | 102,932 | 118,599 | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) |
|||||||||||
2015 |
2015 |
||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash, cash equivalents, and short-term investments | $ | 617,153 | $ | 713,191 | |||||||
Accounts receivable, net | 183,053 | 186,157 | |||||||||
Income tax receivable | 8,926 | — | |||||||||
Inventories | 280,810 | 280,576 | |||||||||
Deferred income taxes | — | 39,190 | |||||||||
Prepaid expenses | 23,763 | 29,932 | |||||||||
Other current assets | 55,829 | 54,851 | |||||||||
Assets held for sale | 5,640 | 4,353 | |||||||||
Total current assets | 1,175,174 | 1,308,250 | |||||||||
Property and equipment, net | 623,349 | 635,072 | |||||||||
|
618,828 | 616,345 | |||||||||
Intangible assets, net | 323,666 | 317,154 | |||||||||
Other long-term investments | 41,873 | 57,595 | |||||||||
Deferred income taxes | 27,607 | 8,893 | |||||||||
Other assets | 10,161 | 11,091 | |||||||||
Total assets | $ | 2,820,658 | $ | 2,954,400 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable, trade | $ | 139,678 | $ | 163,128 | |||||||
Accrued salaries and wages | 52,952 | 45,415 | |||||||||
Income taxes payable | — | 2,035 | |||||||||
Other current liabilities | 43,009 | 44,208 | |||||||||
Total current liabilities | 235,639 | 254,786 | |||||||||
Long-term liabilities: | |||||||||||
Long-term debt | 205,000 | 200,000 | |||||||||
Deferred income taxes | 1,255 | 12,174 | |||||||||
Other long-term liabilities | 18,241 | 21,084 | |||||||||
Total long-term liabilities | 224,496 | 233,258 | |||||||||
Shareholders' equity: | |||||||||||
Common stock | 125 | 131 | |||||||||
Additional paid-in-capital | 2,321,310 | 2,285,554 | |||||||||
Accumulated other comprehensive income, net of taxes | 5,621 | 5,798 | |||||||||
Retained earnings | 33,467 | 174,873 | |||||||||
Total shareholders' equity | 2,360,523 | 2,466,356 | |||||||||
Total liabilities and shareholders' equity | $ | 2,820,658 | $ | 2,954,400 | |||||||
FINANCIAL RESULTS BY OPERATING SEGMENT
(in
thousands, except percentages)
(unaudited)
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 and six months ended
Three Months Ended |
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2015 |
2014 |
Change |
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Lighting Products revenue | $ | 254,970 | $ | 230,168 | $ | 24,802 | 11 | % | |||||||||||||
Percent of revenue | 59 | % | 56 | % | |||||||||||||||||
LED Products revenue | 153,362 | 151,877 | 1,485 | 1 | % | ||||||||||||||||
Percent of revenue | 35 | % | 37 | % | |||||||||||||||||
Power and RF Products revenue | 27,474 | 31,112 | (3,638 | ) | (12 | )% | |||||||||||||||
Percent of revenue | 6 | % | 7 | % | |||||||||||||||||
Total revenue | $ | 435,806 | $ | 413,157 | $ | 22,649 | 5 | % | |||||||||||||
Six Months Ended |
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2015 |
2014 |
Change |
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Lighting Products revenue | $ | 503,001 | $ | 453,254 | $ | 49,747 | 11 | % | |||||||||||||
Percent of revenue | 58 | % | 54 | % | |||||||||||||||||
LED Products revenue | 301,570 | 325,467 | (23,897 | ) | (7 | )% | |||||||||||||||
Percent of revenue | 35 | % | 39 | % | |||||||||||||||||
Power and RF Products revenue | 56,724 | 62,108 | (5,384 | ) | (9 | )% | |||||||||||||||
Percent of revenue | 7 | % | 7 | % | |||||||||||||||||
Total revenue | $ | 861,295 | $ | 840,829 | $ | 20,466 | 2 | % | |||||||||||||
Three Months Ended |
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2015 |
2014 |
Change |
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Lighting Products gross profit | $ | 72,642 | $ | 64,701 | $ | 7,941 | 12 | % | |||||||||||||
Lighting Products gross margin | 28.5 | % | 28.1 | % | |||||||||||||||||
LED Products gross profit | 53,242 | 59,424 | (6,182 | ) | (10 | )% | |||||||||||||||
LED Products gross margin | 34.7 | % | 39.1 | % | |||||||||||||||||
Power and RF Products gross profit | 14,346 | 17,260 | (2,914 | ) | (17 | )% | |||||||||||||||
Power and RF Products gross margin | 52.2 | % | 55.5 | % | |||||||||||||||||
Unallocated costs | (5,079 | ) | (4,606 | ) | (473 | ) | 10 | % | |||||||||||||
Consolidated gross profit | $ | 135,151 | $ | 136,779 | $ | (1,628 | ) | (1 | )% | ||||||||||||
Consolidated gross margin | 31.0 | % | 33.1 | % | |||||||||||||||||
Six Months Ended |
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2015 |
2014 |
Change |
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Lighting Products gross profit | $ | 141,723 | $ | 120,293 | $ | 21,430 | 18 | % | |||||||||||||
Lighting Products gross margin | 28.2 | % | 26.5 | % | |||||||||||||||||
LED Products gross profit | 105,901 | 127,048 | (21,147 | ) | (17 | )% | |||||||||||||||
LED Products gross margin | 35.1 | % | 39.0 | % | |||||||||||||||||
Power and RF Products gross profit | 28,669 | 35,117 | (6,448 | ) | (18 | )% | |||||||||||||||
Power and RF Products gross margin | 50.5 | % | 56.5 | % | |||||||||||||||||
Unallocated costs | (9,394 | ) | (9,859 | ) | 465 | (5 | )% | ||||||||||||||
Consolidated gross profit | $ | 266,899 | $ | 272,599 | $ | (5,700 | ) | (2 | )% | ||||||||||||
Consolidated gross margin | 31.0 | % | 32.4 | % | |||||||||||||||||
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 components, LED chips, and silicon carbide materials. The Company's Power and RF Products segment includes power devices and RF devices.
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 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.
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 stock-based compensation expense, amortization or impairment of acquisition-related intangibles and net changes associated with equity method investments.
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 stock-based compensation expense, amortization or impairment of acquisition-related intangibles, asset retirement charges, charges associated with LED business restructuring, net changes associated with equity method investments, recognition of deferred Initial Public Offering (IPO) costs 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, 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.
Asset retirement charges. Cree has recognized charges for the impact of the decision to abandon or retire certain property and equipment prior to the end of their estimated useful lives. Because these charges relate to assets which have been or will be retired prior to the end of their estimated useful lives, Cree does not consider these charges to be reflective of ongoing operating results.
Costs associated with LED business restructuring. In
Net changes associated with equity method investments. The Company's common stock ownership investment in Lextar Electronics Corporation is accounted for under the equity method 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.
Recognition of deferred IPO (Initial Public Offering) costs. The
Company has recognized an expense for previously deferred IPO costs due
to the delay in the anticipated timing of the planned initial public
offering of Wolfspeed, our Power and RF Products segment, as required by
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 or impairment of acquisition-related intangibles and net changes associated with equity method investments 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 and patent and licensing rights. 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.
Reconciliation of GAAP to Non-GAAP Measures (in thousands, except per share amounts and percentages) (unaudited) |
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Non-GAAP Gross Margin |
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Three Months Ended |
Six Months Ended |
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2015 |
2014 |
2015 |
2014 |
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GAAP gross profit | $ | 135,151 | $ | 136,779 | $ | 266,899 | $ | 272,599 | |||||||||||||||||||
GAAP gross margin percentage | 31.0 | % | 33.1 | % | 31.0 | % | 32.4 | % | |||||||||||||||||||
Adjustment: | |||||||||||||||||||||||||||
Stock-based compensation expense | 3,120 | 3,448 | $ | 6,148 | $ | 6,353 | |||||||||||||||||||||
Non-GAAP gross profit | $ | 138,271 | $ | 140,227 | $ | 273,047 | $ | 278,952 | |||||||||||||||||||
Non-GAAP gross margin percentage | 31.7 | % | 33.9 | % | 31.7 | % | 33.2 | % | |||||||||||||||||||
Non-GAAP Operating Income |
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Three Months Ended |
Six Months Ended |
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2015 |
2014 |
2015 |
2014 |
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GAAP operating income | $ | 9,432 | $ | 10,185 | $ | 742 | $ | 21,642 | |||||||||||||||||||
GAAP operating income percentage | 2.2 | % | 2.5 | % | 0.1 | % | 2.6 | % | |||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||
Stock-based compensation expense: | |||||||||||||||||||||||||||
Cost of revenue, net | 3,120 | 3,448 | 6,148 | 6,353 | |||||||||||||||||||||||
Research and development | 3,328 | 4,112 | 6,860 | 8,583 | |||||||||||||||||||||||
Sales, general and administrative | 7,942 | 8,876 | 16,452 | 18,260 | |||||||||||||||||||||||
Total stock-based compensation expense | 14,390 | 16,436 | 29,460 | 33,196 | |||||||||||||||||||||||
Amortization or impairment of acquisition-related intangibles | 7,062 | 6,495 | 14,124 | 12,994 | |||||||||||||||||||||||
Asset retirement charges | — | 884 | — | 1,395 | |||||||||||||||||||||||
Costs associated with LED business restructuring | 2,803 | — | 18,716 | — | |||||||||||||||||||||||
Recognition of deferred IPO costs | 1,810 | — | 1,810 | — | |||||||||||||||||||||||
Total adjustments to GAAP operating income | 26,065 | 23,815 | 64,110 | 47,585 | |||||||||||||||||||||||
Non-GAAP operating income | $ | 35,497 | $ | 34,000 | $ | 64,852 | $ | 69,227 | |||||||||||||||||||
Non-GAAP operating income percentage | 8.1 | % | 8.2 | % | 7.5 | % | 8.2 | % | |||||||||||||||||||
Non-GAAP Non-Operating Income, net |
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Three Months Ended |
Six Months Ended |
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2015 |
2014 |
2014 |
2014 |
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GAAP non-operating income (loss), net | $ | 8,015 | $ | 1,728 | $ | (14,791 | ) | $ | 4,632 | ||||||||||||||||||
Adjustment: | |||||||||||||||||||||||||||
Net changes associated with equity method investments | (7,262 | ) | 1,477 | 15,682 | 1,477 | ||||||||||||||||||||||
Non-GAAP non-operating income, net | $ | 753 | $ | 3,205 | $ | 891 | $ | 6,109 | |||||||||||||||||||
Non-GAAP Net Income |
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Three Months Ended |
Six Months Ended |
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2015 |
2014 |
2015 |
2014 |
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GAAP net income (loss) | $ | 13,958 | $ | 12,151 | $ | (9,665 | ) | $ | 23,281 | ||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||
Stock-based compensation expense | 14,390 | 16,436 | 29,460 | 33,196 | |||||||||||||||||||||||
Amortization or impairment of acquisition-related intangibles | 7,062 | 6,495 | 14,124 | 12,994 | |||||||||||||||||||||||
Net changes associated with equity method investments | (7,262 | ) | 1,477 | 15,682 | 1,477 | ||||||||||||||||||||||
Asset retirement charges | — | 884 | — | 1,395 | |||||||||||||||||||||||
Costs associated with LED business restructuring | 2,803 | — | 18,716 | — | |||||||||||||||||||||||
Recognition of deferred IPO costs | 1,810 | — | 1,810 | — | |||||||||||||||||||||||
Total adjustments to GAAP net income before provision for income taxes | 18,803 | 25,292 | 79,792 | 49,062 | |||||||||||||||||||||||
Income tax effect * | (2,286 | ) | 506 | (17,533 | ) | (5,593 | ) | ||||||||||||||||||||
Non-GAAP net income | $ | 30,475 | $ | 37,949 | $ | 52,594 | $ | 66,750 | |||||||||||||||||||
Earnings per share | |||||||||||||||||||||||||||
Non-GAAP diluted net income per share | $ | 0.30 | $ | 0.33 | $ | 0.51 | $ | 0.56 | |||||||||||||||||||
Shares used in diluted net income per share calculation | |||||||||||||||||||||||||||
Non-GAAP shares used | 102,521 | 115,845 | 102,932 | 118,599 |
*Estimated income tax effect is based upon the Company's overall consolidated effective tax rate for the given period.
Earnings diluted per share, excluding impact of R&D tax benefit and Lextar share price increase
Three Months Ended | |||
2015 |
|||
GAAP diluted earnings per share | $ | 0.14 | |
Adjustment: | |||
R&D tax credit benefit and Lextar share price increase | $ | (0.07 | ) |
Earnings per diluted share, excluding impact of R&D tax credit benefit and Lextar share price increase | $ | 0.07 | |
Non-GAAP earnings per diluted share, excluding impact of R&D tax credit benefit |
|||
Three Months Ended |
|||
2015 |
|||
Non-GAAP diluted net income per share (from above) | $ | 0.30 | |
Adjustment: | |||
R&D tax credit benefit | $ | (0.03 | ) |
Non-GAAP earnings per diluted share, excluding impact of R&D tax credit benefit | $ | 0.27 |
Free Cash Flow
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||||||
Cash flows from operations | $ | 76,962 | $ | 14,768 | $ | 123,796 | $ | 28,052 | ||||||||||||||||
Less: PP&E spending | (31,921 | ) | (49,929 | ) | (81,804 | ) | (113,375 | ) | ||||||||||||||||
Less: Patents spending | (3,314 | ) | (4,798 | ) | (7,628 | ) | (9,604 | ) | ||||||||||||||||
Total free cash flow | $ | 41,727 | $ | (39,959 | ) | $ | 34,364 | $ | (94,927 | ) |
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