• Gross margin decreased from Q3 of fiscal 2016 to 29.1% on a GAAP basis, and increased to 30.8% on a non-GAAP basis.

• Cash and investments decreased by $15 million from Q3 of fiscal 2016 to $605 million.

• Accounts receivable, net decreased by $13 million from Q3 of fiscal 2016 to $166 million, with days sales outstanding of 38.

• Inventory increased by $2 million from Q3 of fiscal 2016 to $300 million and represents 98 days of inventory.

• Free cash flow was $41 million for Q4 of fiscal 2016, a $47 million increase sequentially.

Cree, a market leader in LED lighting, today announced revenue of US $388 million for its fourth quarter of fiscal 2016, ended June 26, 2016. This represents a 2% increase compared to revenue of $382 million reported for the fourth quarter of fiscal 2015, and a 6% increase compared to the third quarter of fiscal 2016. GAAP net loss for the fourth quarter was $11 million, or $0.11 per diluted share, compared to GAAP net loss of $88 million, or $0.83 per diluted share, for the fourth quarter of fiscal 2015. On a non-GAAP basis, net income for the fourth quarter of fiscal 2016 was $19 million, or $0.19 per diluted share, compared to non-GAAP net loss for the fourth quarter of fiscal 2015 of $21 million, or $0.19 per diluted share.

For fiscal year 2016, Cree reported revenue of $1.62 billion, which represents a 1% decrease compared to revenue of $1.63 billion for fiscal 2015. GAAP net loss was $22 million, or $0.21 per diluted share, compared to net loss of $65 million, or $0.57 per diluted share, for fiscal 2015. On a non-GAAP basis, net income for fiscal year 2016 was $88 million, or $0.86 per diluted share, compared to $71 million or $0.63 per diluted share, for fiscal 2015.

"Fiscal 2016 was a year of progress towards our goal to build a more focused and valuable LED lighting technology company," stated Chuck Swoboda, Cree Chairman and CEO. "We successfully restructured the LED business, improved commercial lighting fundamentals, refocused our consumer business on premium LED bulbs, and unlocked significant value with the agreement to sell Wolfspeed."

Cree financial earnings for fiscal 4Q16. (Source: Cree)

• Reached an agreement to sell Wolfspeed to Infineon for $850 million in cash;

• Released many new Lighting products, including the following:

  • LN Series suspended luminaire

  • HXB Series LED high bay luminaire

  • ZR FD LED Series troffer

  • RSW™ LED street luminaires

  • OSQ™ 28L outdoor area and flood LED luminaire

  • Essentia^® by Cree LED downlight and track light portfolios

  • XSP HO Series roadway luminaire

  • Next-generation CPY-20L™ LED canopy luminaires

  • SmartCast^® Manager software

• Launched the following new LED products:

  • XLamp^® XT-E HE LED

  • XLamp MHB-B LED

  • XLamp XQ-E Photo Red LED

• Received a favorable Initial Determination ruling from the U.S. International Trade Commission in the company's case againstFeit Electric and its Asian supplier, Unity Opto;

• Reached favorable agreements to settle patent disputes with Harvatek and Kingbright.

Business Outlook:

For its first quarter of fiscal 2017 ending September 25, 2016, Cree targets consolidated revenue, which includes both continued and discontinued operations, in a range of $356 million to $378 million. Consolidated GAAP net income is targeted at $5 million to $6 million, or $0.05 to $0.06 per diluted share. Consolidated non-GAAP net income is targeted in a range of $10 million to $16 million, or$0.10 to $0.16 per diluted share. Targeted consolidated non-GAAP earnings exclude $23 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 net income from continuing operations is targeted at $2 million to $3 million, or $0.02 to $0.03 per diluted share. Non-GAAP net income from continued operations is targeted in a range of $6 million to $11 million, or $0.06 to $0.11 per diluted share. Targeted non-GAAP earnings from continuing operations exclude $20 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 in a range of $46 million to $48 million. GAAP net income from discontinued operations is targeted at $2 million to $3 million, or $0.02 to $0.03 per diluted share. Non-GAAP net income from discontinued operations is targeted in a range of $4 million to $5 million, or $0.04 to $0.05 per diluted share. Targeted non-GAAP earnings from continuing discontinued operations exclude $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 fourth quarter and fiscal year 2016 results and the fiscal first quarter 2017 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.