Cree, a market leader in LED lighting, today announced revenue of US $436 million for its fourth quarter of fiscal 2014, ended June 29, 2014. This represents a 16 percent increase compared to revenue of US $375 million reported for the fourth quarter of fiscal 2013, and an 8 percent increase compared to the third quarter of fiscal 2014. GAAP net income for the fourth quarter was US $30 million, or US $0.24 per diluted share, an increase of 6 percent year-over-year compared to GAAP net income of US $28 million, or US $0.23 per diluted share, for the fourth quarter of fiscal 2013. On a non-GAAP basis, net income for the fourth quarter of fiscal 2014 was US $51 million, or US $0.42 per diluted share, an increase of 12% year-over-year compared to non-GAAP net income for the fourth quarter of fiscal 2013 of US $46 million, or US $0.38 per diluted share.

For fiscal year 2014, Cree reported revenue of US $1.65 billion, which represents a 19 percent increase compared to revenue of US $1.39 billion for fiscal 2013. GAAP net income was US $124 million, or US $1.01 per diluted share, an increase of 43 percent compared to US $87 million, or US $0.74 per diluted share, for fiscal 2013. On a non-GAAP basis, net income for fiscal year 2014 was US $203 million, or US $1.65 per diluted share, an increase of 31 percent compared to US $155 million, or US $1.32 per diluted share, for fiscal 2013. Cree generated US $319 million of operating cash flow and US $121 million of free cash flow during fiscal 2014.

"Fiscal 2014 was another great year, as we achieved record revenue and grew our non-GAAP net income by over 30 percent," stated Chuck Swoboda, Cree Chairman and CEO. "The strength of our operating model gives us the flexibility to make investments to support our goal to grow the business and increase operating margin. Our new product pipeline, brand momentum and strong balance sheet put us in a great position to enable our long-term customer goal of 100% upgrade to LED lighting."

• Gross margin increased 20 basis points from Q3 of fiscal 2014 to 37.2 percent on a GAAP basis, and increased 10 basis points to 37.9 percent on a non-GAAP basis.
• Cash and investments decreased by US $61 million from Q3 of fiscal 2014 to US $1.2 billion.
• Accounts receivable, net increased by US $3 million from Q3 of fiscal 2014 to US $225 million, with days sales outstanding of 46.
• Inventory increased by US $34 million from Q3 of fiscal 2014 to US $285 million and represents 94 days of inventory.

Recent Business Highlights:

• Introduced the Cree^® LED T8 Series, the first linear fluorescent replacement to deliver on the promise of LED technology with the industry’s best light quality, 30% energy savings and near-universal driver compatibility;
• Launched the Cree OSQ^™ Area LED luminaire, which delivers industry-leading performance, a low-profile design and a quick payback of two years*;
• Introduced the Cree XLamp^® XP-L LED, the first commercially available single-die LED to achieve breakthrough efficacy of up to 200 lumens per watt (LPW) at 350mA;
• Announced that San Luis Obispo, Calif. replaced more than 2,000 outdated high-pressure sodium (HPS) street lights with Cree XSP Series LED street lights, delivering superior light quality while saving on maintenance costs and reducing the city’s annual energy consumption by more than 65 percent;
• Announced that Walgreen Co. selected energy-efficient LED lighting by Cree for its Goodyear, Ariz. location. The store now features Cree LED troffers, linear luminaires and downlights, delivering superior illumination while saving the retailer thousands in annual energy and maintenance costs;
• Teamed with Musco Lighting to transform the San Francisco - Oakland Bay Bridge. The 1,600 Musco fixtures leverage more than 51,500 Cree^® XLamp XM-L LEDs to light the entire East Span at an estimated energy savings of 50 percent and a lifetime of 15 years, more than seven times longer than previously deployed lighting technologies.

*Payback compared to 400W Metal Halide area luminaire and based on usage of 12 hours per-day and the national average of US $0.11 per kWh electric costs.

Business Outlook:

For its first quarter of fiscal 2015 ending September 28, 2014, Cree targets revenue in a range of US $440 million to US $465 million, with GAAP gross margin targeted to be 36.9 percent+/- and non-GAAP gross margin targeted to be 37.5 percent +/-. Our GAAP gross margin targets include stock-based compensation expense of approximately US $3 million, while our non-GAAP targets do not. Operating expenses are targeted to be similar sequentially on a non-GAAP basis and US $2 million lower on a GAAP basis. The tax rate is targeted at 21.5 percent for the first quarter of fiscal 2015. GAAP net income is targeted at US $30 million to US $37 million, or US $0.25 to US $0.30 per diluted share. Non-GAAP net income is targeted in a range of US $48 million to US $55 million, or US $0.40 to US $0.45 per diluted share. The GAAP and non-GAAP net income per diluted share targets are based on an estimated 122 million diluted weighted average shares. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles and stock-based compensation expense of US $0.15 per diluted share.