UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2003
Commission file number: 0-21154
CREE, INC.
(Exact name of registrant as specified in its charter)
| North Carolina |
56-1572719 | |
| (State or other jurisdiction of |
(I.R.S. Employer | |
| incorporation or organization) |
Identification No.) |
| 4600 Silicon Drive |
||
| Durham, North Carolina |
27703 | |
| (Address of principal executive offices) |
(Zip Code) |
(919) 313-5300
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No
The number of shares outstanding of the registrant’s common stock, par value $0.00125 per share, as of April 17, 2003 was 73,294,925.
CREE, INC.
FORM 10-Q
For the Quarter Ended March 30, 2003
| Page No. | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets at March 30, 2003 (unaudited) and June 30, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 | ||
| Item 3. |
37 | |||
| Item 4. |
37 | |||
| PART II. OTHER INFORMATION | ||||
| Item 6. |
38 | |||
| 39 | ||||
| 40 | ||||
2
PART I—FINANCIAL INFORMATION
Item 1—Financial Statements
CREE, INC.
(In thousands, except per share data)
| March 30, 2003 |
June 30, 2002 |
|||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
52,152 |
|
$ |
73,744 |
| ||
| Short-term investments held to maturity |
|
69,562 |
|
|
32,396 |
| ||
| Marketable securities available for sale |
|
— |
|
|
6,008 |
| ||
| Accounts receivable, net |
|
36,890 |
|
|
34,592 |
| ||
| Interest receivable |
|
5,086 |
|
|
2,083 |
| ||
| Inventories, net |
|
17,636 |
|
|
17,966 |
| ||
| Deferred income taxes |
|
2,305 |
|
|
1,122 |
| ||
| Prepaid expenses and other current assets |
|
5,848 |
|
|
5,994 |
| ||
| Total current assets |
|
189,479 |
|
|
173,905 |
| ||
| Property and equipment, net |
|
237,875 |
|
|
211,685 |
| ||
| Long-term investments held to maturity |
|
67,292 |
|
|
64,225 |
| ||
| Deferred income taxes |
|
18,014 |
|
|
27,365 |
| ||
| Patent and license rights, net |
|
6,817 |
|
|
4,251 |
| ||
| Other assets |
|
19,897 |
|
|
22,764 |
| ||
| Total assets |
$ |
539,374 |
|
$ |
504,195 |
| ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable, trade |
$ |
16,393 |
|
$ |
13,075 |
| ||
| Accrued salaries and wages |
|
5,953 |
|
|
4,010 |
| ||
| Deferred revenue and other accrued expenses |
|
7,050 |
|
|
4,969 |
| ||
| Total current liabilities |
|
29,396 |
|
|
22,054 |
| ||
| Long term liabilities: |
||||||||
| Other long term liabilities |
|
31 |
|
|
37 |
| ||
| Total long term liabilities |
|
31 |
|
|
37 |
| ||
| Shareholders’ equity: |
||||||||
| Preferred stock, par value $0.01; 3,000 shares authorized at March 30, 2003 and June 30, 2002; none issued and outstanding |
|
— |
|
|
— |
| ||
| Common stock, par value $0.00125; 200,000 shares authorized; 73,290 and 72,729 shares issued and outstanding at March 30, 2003 and June 30, 2002, respectively |
|
91 |
|
|
90 |
| ||
| Additional paid-in-capital |
|
512,399 |
|
|
508,432 |
| ||
| Deferred compensation expense |
|
(332 |
) |
|
(696 |
) | ||
| Accumulated deficit |
|
(2,211 |
) |
|
(25,722 |
) | ||
| Total shareholders’ equity |
|
509,947 |
|
|
482,104 |
| ||
| Total liabilities and shareholders’ equity |
$ |
539,374 |
|
$ |
504,195 |
| ||
The accompanying notes are an integral part of the consolidated financial statements.
3
CREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended |
Nine Months Ended |
||||||||||||||
| March 30, 2003 |
March 24, 2002 |
March 30, 2003 |
March 24, 2002 |
||||||||||||
| Revenue: |
|||||||||||||||
| Product revenue, net |
$ |
53,774 |
|
$ |
28,566 |
|
$ |
145,149 |
$ |
104,017 |
| ||||
| Contract revenue, net |
|
6,449 |
|
|
4,810 |
|
|
20,612 |
|
13,617 |
| ||||
| Total revenue |
|
60,223 |
|
|
33,376 |
|
|
165,761 |
|
117,634 |
| ||||
| Cost of revenue: |
|||||||||||||||
| Product revenue |
|
27,018 |
|
|
21,835 |
|
|
79,662 |
|
60,255 |
| ||||
| Contract revenue |
|
5,158 |
|
|
3,164 |
|
|
15,824 |
|
9,722 |
| ||||
| Total cost of revenue |
|
32,176 |
|
|
24,999 |
|
|
95,486 |
|
69,977 |
| ||||
| Gross profit |
|
28,047 |
|
|
8,377 |
|
|
70,275 |
|
47,657 |
| ||||
| Operating expenses: |
|||||||||||||||
| Research and development |
|
8,138 |
|
|
9,327 |
|
|
22,369 |
|
20,181 |
| ||||
| Sales, general and administrative |
|
6,712 |
|
|
6,534 |
|
|
20,993 |
|
17,848 |
| ||||
| Other expense |
|
— |
|
|
77,434 |
|
|
1,891 |
|
97,104 |
| ||||
| Goodwill and intangible asset amortization |
|
— |
|
|
2,255 |
|
|
— |
|
6,765 |
| ||||
| Income (loss) from operations |
|
13,197 |
|
|
(87,173 |
) |
|
25,022 |
|
(94,241 |
) | ||||
| Other non operating income (loss) |
|
(29 |
) |
|
— |
|
|
2,887 |
|
(11,795 |
) | ||||
| Interest income |
|
1,199 |
|
|
1,006 |
|
|
3,863 |
|
4,496 |
| ||||
| Income (loss) before income taxes |
|
14,367 |
|
|
(86,167 |
) |
|
31,772 |
|
(101,540 |
) | ||||
| Income tax expense (benefit) |
|
3,735 |
|
|
(17,881 |
) |
|
8,261 |
|
(22,339 |
) | ||||
| Net income (loss) |
$ |
10,632 |
|
$ |
(68,286 |
) |
$ |
23,511 |
$ |
(79,201 |
) | ||||
| Earnings (loss) per share: |
|||||||||||||||
| Basic |
$ |
0.15 |
|
($ |
0.94 |
) |
$ |
0.32 |
($ |
1.09 |
) | ||||
| Diluted |
$ |
0.14 |
|
($ |
0.94 |
) |
$ |
0.31 |
($ |
1.09 |
) | ||||
| Shares used in per share calculation: |
|||||||||||||||
| Basic |
|
73,266 |
|
||||||||||||