Cree, a market leader in LED lighting, today announced revenue of US $427.7 million for its first quarter of fiscal 2015, ended September 28, 2014. This represents a 9% increase compared to revenue of $391.0 million reported for the first quarter of fiscal 2014. GAAP net income for the first quarter was $11.1 million, or $0.09 per diluted share, a decrease of 64% year-over-year compared to GAAP net income of $30.5 million, or $0.25 per diluted share, for the first quarter of fiscal 2014. On a non-GAAP basis, net income for the first quarter of fiscal 2015 was $29.6 million, or $0.24 per diluted share, a decrease of 38% year-over-year compared to non-GAAP net income for the first quarter of fiscal 2014 of $47.3 million, or $0.39 per diluted share.

 “We have good momentum in our Lighting and Power & RF segments, although fiscal Q1 results were below our targeted levels due primarily to lower than expected LED demand,” stated Chuck Swoboda, Cree Chairman and CEO. “While the LED industry conditions are challenging, we’re confident that innovation is still the key to leading the market and driving growth in all of our businesses. Given our technology leadership, new product pipeline and strong balance sheet, we remain uniquely positioned to capitalize as the industry transitions to LED lighting.”

·         Gross margin decreased 540 basis points from Q4 of fiscal 2014 to 31.8% on a GAAP basis, and decreased 550 basis points to 32.4% on a non-GAAP basis.

·         Cash and investments decreased by $57.6 million from Q4 of fiscal 2014 to $1.1 billion.

·         Accounts receivable, net increased by $11.8 million from Q4 of fiscal 2014 to $237.0 million, with days sales outstanding of 50.

·         Inventory increased by $26.0 million from Q4 of fiscal 2014 to $310.8 million and represents 96 days of inventory.

Recent Business Highlights:

·         Introduced the Cree^® ZR High-Efficacy (HE) LED troffer, the first commercially available 150 lumens-per-watt LED troffer in the market;

·         Launched the Cree XLamp^® MH-B LED, a new generation of high-power LEDs that delivers better performance and a more-effective way to achieve low-cost systems than mid-power LEDs;

·         Announced a cooperation with Lextar Electronics whereby Cree will make an investment in Lextar and the companies will enter into a supply agreement for sapphire-based LED chips;

·         Released the industry’s first all-SiC, 1.7kV power module in an industry-standard 62-mm housing, enabling engineers to design systems that are smaller, more efficient, more reliable and lower cost.

Business Outlook:

For its second quarter of fiscal 2015 ending December 28, 2014, Cree targets revenue in a range of $400 million to $420 million with GAAP gross margin targeted to be 32.6%+/- and non-GAAP gross margin targeted to be 33.5%+/-. Our GAAP gross margin targets include stock-based compensation expense of approximately $3.4 million, while our non-GAAP targets do not. Operating expenses are targeted to increase approximately $2 million from Q1. The tax rate is targeted at 22.5%+/- for the second quarter of fiscal 2015. GAAP net income is targeted at $6 million to $10 million, or $0.05 to $0.09 per diluted share. Non-GAAP net income is targeted in a range of $24 million to $29 million, or $0.20 to $0.24 per diluted share. The GAAP and non-GAAP net income per diluted share targets are based on an estimated 120 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles, stock-based compensation expense and asset retirement charges of $0.15 per diluted share.

Quarterly Conference Call:

Cree will host a conference call at 5:00 p.m. EST today to review the highlights of the fiscal 2015 first quarter results and the fiscal 2015 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.