Cree, Inc. announced revenue of $147.6 million for the second quarter of fiscal 2009, ended Dec. 28, 2008. This represents a 24% increase compared to revenue of $119.0 million reported for the second quarter of fiscal 2008 and a 5% increase compared to the first quarter of fiscal 2009. Revenue included $5.6 million in patent licensing fees which were not factored into previously announced targets. GAAP net income for the second quarter was $10.7 million, or $0.12 per diluted share, compared to net income of $6.6 million, or $0.08 per diluted share, for the second quarter of fiscal 2008. Net income included approximately $4.4 million, or $0.05 per diluted share, related to the patent licensing fees, as well as a franchise tax benefit, which was not factored into previously announced targets.

The GAAP results include certain costs, charges, gains and losses that are excluded from non-GAAP results. Cree's management evaluates results and makes operating decisions using both GAAP and non-GAAP measures. GAAP EPS of $0.12 per diluted share for the second quarter of fiscal 2009 includes expenses totaling $7.1 million, net of tax, or $0.08 per diluted share related to amortization of acquired intangibles and stock-based compensation expense. On a non-GAAP basis, adjusted to exclude these items, net income for the second quarter of fiscal 2009 was $17.8 million, or $0.20 per diluted share. On a non-GAAP basis, adjusted to exclude comparable items, net income for the second quarter of fiscal 2008 was $12.2 million, or $0.14 per diluted share.

「Cree delivered excellent financial results again despite challenging economic conditions, driven by strength in LED product sales for lighting applications,」 stated Chuck Swoboda, Cree chairman and CEO. 「In the third quarter of fiscal 2009, we expect that lower demand for our products in consumer, mobile and automotive applications will be partially offset by growth in LED sales for commercial lighting applications. As we look ahead to calendar 2009, we are targeting that LED lighting adoption will continue to gain momentum as product availability increases and recognition of the benefits grows from new installations like the Federal Reserve and the planned Pentagon renovation.」

Recent Business Highlights:
* Announced volume availability of the LR24, a recessed LED luminaire.
* Announced the high-volume availability of XLamp XP-E LEDs with output up to 122 lumens.
* Achieved industry-best reported R&D results of 161 lumens per watt for a white power LED.
* Entered into a patent license agreement granting Mitsubishi Chemical Corporation (MCC) an exclusive license (subject to certain exceptions) to manufacture and sell freestanding GaN substrates.
* Agreed with Bridgelux, Inc. to settle the parties' patent infringement litigation and to dismiss all claims and counterclaims in the suits.
* Welcomed Indian Wells, California, to the LED City Program.
* Welcomed Notre Dame, Madison Area Technical College, and the University of California, Davis to the LED University Program.

Q2 2009 Financial Metrics:
* GAAP gross margin was 38% of revenue compared to 35% in Q2 of fiscal 2008, and non-GAAP gross margin was 39% compared to 36% in Q2 of fiscal 2008. Q2 gross margin included approximately 200 basis points of benefit related to the MCC and Bridgelux license agreements.
* Accounts receivable increased $5.1 million from Q1 of fiscal 2009 to $108.6 million, resulting in days sales outstanding of 66, the same as Q1 of fiscal 2009.
* Inventory decreased $0.4 million from Q1 of fiscal 2009 to $78.8 million and represents 78 days of inventory, the same as Q1 of fiscal 2009.
* Cash and investments increased $26.5 million to $365.5 million, with cash flow from operations of $40.7 million and free cash flow (cash flow from operations less capital expenditures) of $23.2 million.

Business Outlook:
Current uncertainty in global economic conditions makes it particularly difficult to predict demand and makes it more likely that Cree's actual results could differ materially from expectations. For its third quarter of fiscal 2009 ending March 29, 2009, Cree targets revenue in a range of $128 million to $135 million with GAAP earnings of $0.02 to $0.05 per diluted share and non-GAAP earnings of $0.10 to $0.13 per diluted share, based on an estimated 89 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.03 per diluted share and stock-based compensation expense of $0.05 per diluted share.