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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cree Inc | NASDAQ:CREE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 79.12 | 79.00 | 79.20 | 0 | 01:00:00 |
North Carolina
|
|
56-1572719
|
(State or other jurisdiction of incorporation or
organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
4600 Silicon Drive
Durham, North Carolina
|
|
27703
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer [X]
|
|
Accelerated filer [ ]
|
||
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
|
|
Smaller reporting company [ ]
|
Description
|
Page No.
|
|
|
|
|
|
||
|
|
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Item 1.
|
||
|
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Item 2.
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Item 3.
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Item 4.
|
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Item 1.
|
||
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Item 1A.
|
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 25,
2016 |
|
June 26,
2016 |
||||
|
(In thousands, except par value)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
|
$127,841
|
|
|
|
$166,154
|
|
Short-term investments
|
461,207
|
|
|
439,151
|
|
||
Total cash, cash equivalents and short-term investments
|
589,048
|
|
|
605,305
|
|
||
Accounts receivable, net
|
146,067
|
|
|
138,772
|
|
||
Income tax receivable
|
9,855
|
|
|
6,304
|
|
||
Inventories
|
291,533
|
|
|
281,671
|
|
||
Prepaid expenses
|
23,344
|
|
|
25,728
|
|
||
Other current assets
|
41,584
|
|
|
44,501
|
|
||
Current assets held for sale
|
421,094
|
|
|
54,426
|
|
||
Total current assets
|
1,522,525
|
|
|
1,156,707
|
|
||
Property and equipment, net
|
373,211
|
|
|
387,167
|
|
||
Goodwill
|
518,059
|
|
|
518,059
|
|
||
Intangible assets, net
|
252,568
|
|
|
259,400
|
|
||
Other long-term investments
|
39,049
|
|
|
40,179
|
|
||
Deferred income taxes
|
38,708
|
|
|
38,564
|
|
||
Long-term assets held for sale
|
—
|
|
|
356,735
|
|
||
Other assets
|
8,635
|
|
|
9,249
|
|
||
Total assets
|
|
$2,752,755
|
|
|
|
$2,766,060
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, trade
|
|
$114,302
|
|
|
|
$122,808
|
|
Accrued salaries and wages
|
36,250
|
|
|
40,128
|
|
||
Other current liabilities
|
41,940
|
|
|
45,101
|
|
||
Current liabilities held for sale
|
18,383
|
|
|
14,962
|
|
||
Total current liabilities
|
210,875
|
|
|
222,999
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt
|
187,000
|
|
|
160,000
|
|
||
Deferred income taxes
|
945
|
|
|
943
|
|
||
Long-term liabilities held for sale
|
—
|
|
|
1,850
|
|
||
Other long-term liabilities
|
11,676
|
|
|
12,444
|
|
||
Total long-term liabilities
|
199,621
|
|
|
175,237
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.01; 3,000 shares authorized at September 25, 2016 and June 26, 2016; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.00125; 200,000 shares authorized at September 25, 2016 and June 26, 2016; 99,689 and 100,829 shares issued and outstanding at September 25, 2016 and June 26, 2016, respectively
|
124
|
|
|
125
|
|
||
Additional paid-in-capital
|
2,369,408
|
|
|
2,359,584
|
|
||
Accumulated other comprehensive income, net of taxes
|
8,437
|
|
|
8,728
|
|
||
Accumulated deficit
|
(35,710
|
)
|
|
(613
|
)
|
||
Total shareholders’ equity
|
2,342,259
|
|
|
2,367,824
|
|
||
Total liabilities and shareholders’ equity
|
|
$2,752,755
|
|
|
|
$2,766,060
|
|
|
Three Months Ended
|
|
||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
||||
|
(In thousands, except per share amounts)
|
|||||||
Revenue, net
|
|
$321,329
|
|
|
|
$381,549
|
|
|
Cost of revenue, net
|
234,988
|
|
|
274,357
|
|
|
||
Gross profit
|
86,341
|
|
|
107,192
|
|
|
||
Operating expenses:
|
|
|
|
|
||||
Research and development
|
28,531
|
|
|
32,731
|
|
|
||
Sales, general and administrative
|
61,371
|
|
|
70,172
|
|
|
||
Amortization or impairment of acquisition-related intangibles
|
6,266
|
|
|
6,469
|
|
|
||
Loss on disposal or impairment of long-lived assets
|
316
|
|
|
9,565
|
|
|
||
Total operating expenses
|
96,484
|
|
|
118,937
|
|
|
||
Operating loss
|
(10,143
|
)
|
|
(11,745
|
)
|
|
||
Non-operating expense
|
(158
|
)
|
|
(22,803
|
)
|
|
||
Loss from continuing operations before income taxes
|
(10,301
|
)
|
|
(34,548
|
)
|
|
||
Income tax benefit
|
(7,443
|
)
|
|
(8,812
|
)
|
|
||
Loss from continuing operations
|
(2,858
|
)
|
|
(25,736
|
)
|
|
||
Income from discontinued operations, net of tax
|
3,424
|
|
|
1,247
|
|
|
||
Net income (loss)
|
|
$566
|
|
|
|
($24,489
|
)
|
|
Earnings (loss) per share-basic
|
|
|
|
|
||||
Continuing operations
|
|
($0.03
|
)
|
|
|
($0.25
|
)
|
|
Discontinued operations
|
0.03
|
|
|
0.01
|
|
|
||
Earnings (loss) per share-basic
|
|
$—
|
|
|
|
($0.24
|
)
|
|
|
|
|
|
|
||||
Earnings (loss) per share-diluted
|
|
|
|
|
||||
Continuing operations
|
|
($0.03
|
)
|
|
|
($0.25
|
)
|
|
Discontinued operations
|
0.03
|
|
|
0.01
|
|
|
||
Earnings (loss) per share-diluted
|
|
$—
|
|
|
|
($0.24
|
)
|
|
|
|
|
|
|
||||
Weighted average shares used in per share calculation:
|
|
|
|
|
||||
Basic
|
100,559
|
|
|
103,473
|
|
|
||
Diluted
|
100,559
|
|
|
103,473
|
|
|
|
Three Months Ended
|
|
|||||||
|
September 25,
2016 |
|
|
September 27,
2015 |
|
||||
|
(In thousands)
|
||||||||
Net income (loss)
|
|
$566
|
|
|
|
|
($24,489
|
)
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||
Currency translation gain (loss)
|
29
|
|
|
|
(359
|
)
|
|
||
Net unrealized (loss) gain on available-for-sale securities, net of tax benefit (expense) of $199 and ($490), respectively
|
(320
|
)
|
|
|
792
|
|
|
||
Other comprehensive (loss) income
|
(291
|
)
|
|
|
433
|
|
|
||
Comprehensive income (loss)
|
|
$275
|
|
|
|
|
($24,056
|
)
|
|
|
Three Months Ended
|
||||||
|
September 25,
2016 |
|
September 27,
2015 |
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
|
$566
|
|
|
|
($24,489
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
35,939
|
|
|
41,360
|
|
||
Stock-based compensation
|
14,650
|
|
|
15,074
|
|
||
Excess tax benefit from stock-based payment arrangements
|
(12
|
)
|
|
(3
|
)
|
||
Loss on disposal or impairment of long-lived assets
|
325
|
|
|
14,573
|
|
||
Amortization of premium/discount on investments
|
1,382
|
|
|
1,361
|
|
||
Loss on equity investment
|
2,487
|
|
|
19,948
|
|
||
Foreign exchange loss on equity investment
|
(1,373
|
)
|
|
3,036
|
|
||
Deferred income taxes
|
54
|
|
|
979
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(9,227
|
)
|
|
(6,406
|
)
|
||
Inventories
|
(10,808
|
)
|
|
(8,428
|
)
|
||
Prepaid expenses and other assets
|
(1,922
|
)
|
|
(772
|
)
|
||
Accounts payable, trade
|
(2,111
|
)
|
|
(459
|
)
|
||
Accrued salaries and wages and other liabilities
|
(11,852
|
)
|
|
(8,940
|
)
|
||
Net cash provided by operating activities
|
18,098
|
|
|
46,834
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(19,337
|
)
|
|
(49,883
|
)
|
||
Purchases of patent and licensing rights
|
(2,252
|
)
|
|
(4,314
|
)
|
||
Proceeds from sale of property and equipment
|
165
|
|
|
3
|
|
||
Purchases of short-term investments
|
(106,749
|
)
|
|
(121,628
|
)
|
||
Proceeds from maturities of short-term investments
|
77,645
|
|
|
137,121
|
|
||
Proceeds from sale of short-term investments
|
5,148
|
|
|
8,643
|
|
||
Purchase of acquired business, net of cash acquired
|
(2,775
|
)
|
|
(12,513
|
)
|
||
Net cash used in investing activities
|
(48,155
|
)
|
|
(42,571
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from long-term debt borrowings
|
110,000
|
|
|
195,000
|
|
||
Payments on long-term debt borrowings
|
(83,000
|
)
|
|
(188,000
|
)
|
||
Net proceeds from issuance of common stock
|
406
|
|
|
2,801
|
|
||
Excess tax benefit from stock-based payment arrangements
|
12
|
|
|
3
|
|
||
Repurchases of common stock
|
(35,663
|
)
|
|
(69,604
|
)
|
||
Net cash used in financing activities
|
(8,245
|
)
|
|
(59,800
|
)
|
||
Effects of foreign exchange changes on cash and cash equivalents
|
(11
|
)
|
|
(804
|
)
|
||
Net decrease in cash and cash equivalents
|
(38,313
|
)
|
|
(56,341
|
)
|
||
Cash and cash equivalents:
|
|
|
|
||||
Beginning of period
|
166,154
|
|
|
139,710
|
|
||
End of period
|
|
$127,841
|
|
|
|
$83,369
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Significant non-cash transactions:
|
|
|
|
||||
Accrued property and equipment
|
|
$3,103
|
|
|
|
$17,672
|
|
•
|
Lighting Products
|
•
|
LED Products
|
|
Three Months Ended September 27, 2015
|
|
||||||||||
|
As Reported
|
|
Revision Adjustments
|
|
As Revised
|
|
||||||
Cost of revenue, net
|
|
$273,256
|
|
|
|
$1,101
|
|
|
|
$274,357
|
|
|
Gross profit
|
108,293
|
|
|
(1,101
|
)
|
|
107,192
|
|
|
|||
Operating loss
|
(10,644
|
)
|
|
(1,101
|
)
|
|
(11,745
|
)
|
|
|||
Loss from continuing operations before income taxes
|
(33,447
|
)
|
|
(1,101
|
)
|
|
(34,548
|
)
|
|
|||
Income tax benefit
|
(8,528
|
)
|
|
(284
|
)
|
|
(8,812
|
)
|
|
|||
Loss from continuing operations
|
(24,919
|
)
|
|
(817
|
)
|
|
(25,736
|
)
|
|
|||
Income (loss) from discontinued operations, net of tax
|
1,296
|
|
|
(49
|
)
|
|
1,247
|
|
|
|||
Net income (loss)
|
|
($23,623
|
)
|
|
|
($866
|
)
|
|
|
($24,489
|
)
|
|
(Loss) earnings per share-basic
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
($0.24
|
)
|
|
|
($0.01
|
)
|
|
|
($0.25
|
)
|
|
Discontinued operations
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
|||
(Loss) earnings per share-basic
|
|
($0.23
|
)
|
|
|
($0.01
|
)
|
|
|
($0.24
|
)
|
|
|
|
|
|
|
|
|
||||||
(Loss) earnings per share-diluted
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
($0.24
|
)
|
|
|
($0.01
|
)
|
|
|
($0.25
|
)
|
|
Discontinued operations
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
|||
(Loss) earnings per share-diluted
|
|
($0.23
|
)
|
|
|
($0.01
|
)
|
|
|
($0.24
|
)
|
|
|
Three Months Ended
|
||||||
|
September 25, 2016
|
|
|
September 27, 2015
|
|
||
Revenue, net
|
|
$49,902
|
|
|
|
$43,939
|
|
Cost of revenue, net
|
26,314
|
|
|
20,548
|
|
||
Gross profit
|
23,588
|
|
|
23,391
|
|
||
Total operating expenses
|
18,654
|
|
|
21,514
|
|
||
Income from discontinued operations before income taxes
|
4,934
|
|
|
1,877
|
|
||
Income tax expense
|
1,510
|
|
|
630
|
|
||
Income from discontinued operations, net of income taxes
|
|
$3,424
|
|
|
|
$1,247
|
|
|
September 25, 2016
|
|
|
June 26, 2016
|
|
||
Assets Held For Sale
|
|
|
|
|
|
||
Accounts receivable, net
|
|
$28,794
|
|
|
|
$26,839
|
|
Prepaid and other Current Assets
|
1,491
|
|
|
1,369
|
|
||
Inventories
|
19,005
|
|
|
21,871
|
|
||
Property and equipment, net
|
224,773
|
|
|
214,934
|
|
||
Intangible assets, net
|
44,352
|
|
|
43,409
|
|
||
Goodwill
|
100,769
|
|
|
100,769
|
|
||
Total Assets Held for Sale*
|
|
$419,184
|
|
|
|
$409,191
|
|
|
|
|
|
|
|
||
Liabilities Held for Sale
|
|
|
|
|
|
||
Accounts payable
|
|
$12,470
|
|
|
|
$9,477
|
|
Accrued salaries and wages
|
3,740
|
|
|
4,514
|
|
||
Other accrued liabilities
|
2,173
|
|
|
971
|
|
||
Other long term liabilities
|
—
|
|
|
1,850
|
|
||
Total Liabilities Held for Sale*
|
|
$18,383
|
|
|
|
$16,812
|
|
|
Three Months Ended
|
||||||
|
September 25, 2016
|
|
|
September 27, 2015
|
|
||
Net cash provided by discontinued operating activities
|
|
$9,138
|
|
|
|
$12,868
|
|
Net cash used in discontinued investing activities
|
|
$12,507
|
|
|
|
$53,049
|
|
Tangible assets:
|
|
||
Cash and cash equivalents
|
|
$1,284
|
|
Accounts receivable
|
1,006
|
|
|
Inventories
|
143
|
|
|
Property and equipment
|
935
|
|
|
Other assets
|
270
|
|
|
Total tangible assets
|
3,638
|
|
|
Intangible assets:
|
|
||
Patents
|
40
|
|
|
Customer relationships
|
4,500
|
|
|
Developed technology
|
11,403
|
|
|
In-process research and development
|
7,565
|
|
|
Non-compete agreements
|
231
|
|
|
Goodwill
|
2,483
|
|
|
Total intangible assets
|
26,222
|
|
|
Liabilities assumed:
|
|
||
Accounts payable
|
55
|
|
|
Accrued expenses and liabilities
|
1,911
|
|
|
Other long-term liabilities
|
9,291
|
|
|
Total liabilities assumed
|
11,257
|
|
|
Net assets acquired
|
|
$18,603
|
|
|
Asset Amount
|
|
Estimated Life in Years
|
||
Patents
|
|
$40
|
|
|
20
|
Customer relationships
|
4,500
|
|
|
4
|
|
Developed technology
|
11,403
|
|
|
10
|
|
In-process research and development
1
|
7,565
|
|
|
7
|
|
Non-compete agreements
|
231
|
|
|
3
|
|
Total identifiable intangible assets
|
|
$23,739
|
|
|
|
|
September 25, 2016
|
|
June 26, 2016
|
||||
Billed trade receivables
|
|
$194,218
|
|
|
|
$188,672
|
|
Unbilled contract receivables
|
192
|
|
|
59
|
|
||
|
194,410
|
|
|
188,731
|
|
||
Allowance for sales returns, discounts and other incentives
|
(42,802
|
)
|
|
(44,543
|
)
|
||
Allowance for bad debts
|
(5,541
|
)
|
|
(5,416
|
)
|
||
Accounts receivable, net
|
|
$146,067
|
|
|
|
$138,772
|
|
|
September 25, 2016
|
|
June 26, 2016
|
||||
Raw material
|
|
$74,159
|
|
|
|
$79,957
|
|
Work-in-progress
|
87,552
|
|
|
84,459
|
|
||
Finished goods
|
129,822
|
|
|
117,255
|
|
||
Inventories
|
|
$291,533
|
|
|
|
$281,671
|
|
|
September 25, 2016
|
|
June 26, 2016
|
||||
Accrued taxes
|
|
$11,887
|
|
|
|
$12,023
|
|
Accrued professional fees
|
6,411
|
|
|
7,959
|
|
||
Accrued warranty
|
18,495
|
|
|
20,102
|
|
||
Accrued other
|
5,147
|
|
|
5,017
|
|
||
Other current liabilities
|
|
$41,940
|
|
|
|
$45,101
|
|
|
September 25, 2016
|
|
June 26, 2016
|
||||
Currency translation gain
|
|
$4,653
|
|
|
|
$4,624
|
|
Net unrealized gain on available-for-sale securities
|
3,784
|
|
|
4,104
|
|
||
Accumulated other comprehensive income, net of taxes
|
|
$8,437
|
|
|
|
$8,728
|
|
|
Three Months Ended
|
|
||||||
|
September 25, 2016
|
|
September 27, 2015
|
|
||||
Foreign currency gain (loss), net
|
|
$1,361
|
|
|
|
($4,294
|
)
|
|
Gain on sale of investments, net
|
12
|
|
|
2
|
|
|
||
Loss on equity investment
|
(2,487
|
)
|
|
(19,948
|
)
|
|
||
Interest income, net
|
887
|
|
|
1,297
|
|
|
||
Other, net
|
69
|
|
|
140
|
|
|
||
Non-operating expense, net
|
|
($158
|
)
|
|
|
($22,803
|
)
|
|
Accumulated Other Comprehensive Income Component
|
|
Amount Reclassified Out of Accumulated Other Comprehensive Income
|
|
Affected Line Item in the Consolidated Statements of Income (Loss)
|
||||||
|
|
Three Months Ended
|
|
|
||||||
|
|
September 25, 2016
|
|
September 27, 2015
|
|
|
||||
Net unrealized gain on available-for-sale securities, net of taxes
|
|
|
$12
|
|
|
|
$2
|
|
|
Non-operating expense
|
|
|
12
|
|
|
2
|
|
|
Loss from continuing operations before income taxes
|
||
|
|
9
|
|
|
1
|
|
|
Income tax benefit
|
||
|
|
|
$3
|
|
|
|
$1
|
|
|
Loss from continuing operations
|
|
|
September 25, 2016
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Municipal bonds
|
|
|
$183,585
|
|
|
|
$2,775
|
|
|
|
($50
|
)
|
|
|
$186,310
|
|
Corporate bonds
|
|
165,897
|
|
|
3,347
|
|
|
(43
|
)
|
|
169,201
|
|
||||
Non-U.S. certificates of deposit
|
|
93,103
|
|
|
—
|
|
|
—
|
|
|
93,103
|
|
||||
U.S. certificates of deposit
|
|
8,791
|
|
|
—
|
|
|
—
|
|
|
8,791
|
|
||||
Commercial paper
|
|
|
$3,802
|
|
|
|
$—
|
|
|
|
$—
|
|
|
3,802
|
|
|
Total short-term investments
|
|
|
$455,178
|
|
|
|
$6,122
|
|
|
|
($93
|
)
|
|
|
$461,207
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
June 26, 2016
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Municipal bonds
|
|
|
$186,893
|
|
|
|
$3,562
|
|
|
|
($15
|
)
|
|
|
$190,440
|
|
Corporate bonds
|
|
165,766
|
|
|
3,074
|
|
|
(73
|
)
|
|
168,767
|
|
||||
Non-U.S. certificates of deposit
|
|
73,127
|
|
|
—
|
|
|
—
|
|
|
73,127
|
|
||||
U.S. certificates of deposit
|
|
3,500
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
||||
Commercial paper
|
|
3,317
|
|
|
—
|
|
|
—
|
|
|
3,317
|
|
||||
Total short-term investments
|
|
|
$432,603
|
|
|
|
$6,636
|
|
|
|
($88
|
)
|
|
|
$439,151
|
|
|
|
September 25, 2016
|
||||||||||||||||||||||
|
|
Less than 12 Months
|
|
Greater than 12 Months
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Municipal bonds
|
|
|
$17,003
|
|
|
|
($41
|
)
|
|
|
$1,620
|
|
|
|
($9
|
)
|
|
|
$18,623
|
|
|
|
($50
|
)
|
Corporate bonds
|
|
12,632
|
|
|
(30
|
)
|
|
2,487
|
|
|
(13
|
)
|
|
15,119
|
|
|
(43
|
)
|
||||||
Total
|
|
|
$29,635
|
|
|
|
($71
|
)
|
|
|
$4,107
|
|
|
|
($22
|
)
|
|
|
$33,742
|
|
|
|
($93
|
)
|
Number of securities with an unrealized loss
|
|
|
|
30
|
|
|
|
|
3
|
|
|
|
|
33
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
June 26, 2016
|
||||||||||||||||||||||
|
|
Less than 12 Months
|
|
Greater than 12 Months
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Municipal bonds
|
|
|
$2,936
|
|
|
|
($9
|
)
|
|
|
$3,535
|
|
|
|
($6
|
)
|
|
|
$6,471
|
|
|
|
($15
|
)
|
Corporate bonds
|
|
27,578
|
|
|
(73
|
)
|
|
—
|
|
|
—
|
|
|
27,578
|
|
|
(73
|
)
|
||||||
Total
|
|
|
$30,514
|
|
|
|
($82
|
)
|
|
|
$3,535
|
|
|
|
($6
|
)
|
|
|
$34,049
|
|
|
|
($88
|
)
|
Number of securities with an unrealized loss
|
|
|
|
22
|
|
|
|
|
3
|
|
|
|
|
25
|
|
|
Within One Year
|
|
After One, Within Five Years
|
|
After Five, Within Ten Years
|
|
After Ten Years
|
|
Total
|
||||||||||
Municipal bonds
|
|
$43,513
|
|
|
|
$110,598
|
|
|
|
$32,199
|
|
|
|
$—
|
|
|
|
$186,310
|
|
Corporate bonds
|
22,617
|
|
|
108,207
|
|
|
38,377
|
|
|
—
|
|
|
169,201
|
|
|||||
Non-U.S. certificates of deposit
|
93,103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,103
|
|
|||||
U.S. certificates of deposit
|
5,791
|
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
8,791
|
|
|||||
Commercial paper
|
|
$3,802
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
3,802
|
|
|
Total short-term investments
|
|
$168,826
|
|
|
|
$221,805
|
|
|
|
$70,576
|
|
|
|
$—
|
|
|
|
$461,207
|
|
•
|
Level 1 - Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
|
•
|
Level 2 - Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
|
•
|
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
|
September 25, 2016
|
|
June 26, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. agency securities
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
Non-U.S. certificates of deposit
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
||||||||
Money market funds
|
1,360
|
|
|
—
|
|
|
—
|
|
|
1,360
|
|
|
576
|
|
|
—
|
|
|
—
|
|
|
576
|
|
||||||||
Total cash equivalents
|
1,360
|
|
|
137
|
|
|
—
|
|
|
1,497
|
|
|
576
|
|
|
137
|
|
|
—
|
|
|
713
|
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal bonds
|
—
|
|
|
186,310
|
|
|
—
|
|
|
186,310
|
|
|
—
|
|
|
190,440
|
|
|
—
|
|
|
190,440
|
|
||||||||
Corporate bonds
|
—
|
|
|
169,201
|
|
|
—
|
|
|
169,201
|
|
|
—
|
|
|
168,767
|
|
|
—
|
|
|
168,767
|
|
||||||||
U.S. certificates of deposit
|
—
|
|
|
8,791
|
|
|
—
|
|
|
8,791
|
|
|
—
|
|
|
3,500
|
|
|
—
|
|
|
3,500
|
|
||||||||
Commercial paper
|
—
|
|
|
3,802
|
|
|
—
|
|
|
3,802
|
|
|
—
|
|
|
3,317
|
|
|
—
|
|
|
3,317
|
|
||||||||
Non-U.S. certificates of deposit
|
—
|
|
|
93,103
|
|
|
—
|
|
|
93,103
|
|
|
—
|
|
|
73,127
|
|
|
—
|
|
|
73,127
|
|
||||||||
Total short-term investments
|
—
|
|
|
461,207
|
|
|
—
|
|
|
461,207
|
|
|
—
|
|
|
439,151
|
|
|
—
|
|
|
439,151
|
|
||||||||
Other long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock of non-U.S. corporations
|
—
|
|
|
39,049
|
|
|
—
|
|
|
39,049
|
|
|
—
|
|
|
40,179
|
|
|
—
|
|
|
40,179
|
|
||||||||
Total other long-term investments
|
—
|
|
|
39,049
|
|
|
—
|
|
|
39,049
|
|
|
—
|
|
|
40,179
|
|
|
—
|
|
|
40,179
|
|
||||||||
Total assets
|
|
$1,360
|
|
|
|
$500,393
|
|
|
|
$—
|
|
|
|
$501,753
|
|
|
|
$576
|
|
|
|
$479,467
|
|
|
|
$—
|
|
|
|
$480,043
|
|
|
September 25, 2016
|
|
June 26, 2016
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
$136,920
|
|
|
|
($78,591
|
)
|
|
|
$58,329
|
|
|
|
$136,920
|
|
|
|
($77,313
|
)
|
|
|
$59,607
|
|
Developed technology
|
162,760
|
|
|
(114,864
|
)
|
|
47,896
|
|
|
162,760
|
|
|
(110,204
|
)
|
|
52,556
|
|
||||||
Non-compete agreements
|
10,244
|
|
|
(10,244
|
)
|
|
—
|
|
|
10,244
|
|
|
(9,917
|
)
|
|
327
|
|
||||||
Trade names, finite-lived
|
520
|
|
|
(520
|
)
|
|
—
|
|
|
520
|
|
|
(520
|
)
|
|
—
|
|
||||||
Patent and licensing rights
|
106,273
|
|
|
(39,610
|
)
|
|
66,663
|
|
|
105,035
|
|
|
(37,805
|
)
|
|
67,230
|
|
||||||
Total intangible assets with finite lives
|
416,717
|
|
|
(243,829
|
)
|
|
172,888
|
|
|
415,479
|
|
|
(235,759
|
)
|
|
179,720
|
|
||||||
Trade names, indefinite-lived
|
79,680
|
|
|
—
|
|
|
79,680
|
|
|
79,680
|
|
|
—
|
|
|
79,680
|
|
||||||
Total intangible assets
|
|
$496,397
|
|
|
|
($243,829
|
)
|
|
|
$252,568
|
|
|
|
$495,159
|
|
|
|
($235,759
|
)
|
|
|
$259,400
|
|
Fiscal Year Ending
|
|
||
June 25, 2017 (remainder of fiscal 2017)
|
|
$24,096
|
|
June 24, 2018
|
31,319
|
|
|
June 30, 2019
|
18,683
|
|
|
June 28, 2020
|
14,680
|
|
|
June 27, 2021
|
13,430
|
|
|
Thereafter
|
70,680
|
|
|
Total future amortization expense
|
|
$172,888
|
|
|
Three Months Ended
|
|
||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
||||
Loss from continuing operations
|
|
($2,858
|
)
|
|
|
($25,736
|
)
|
|
Income from discontinued operations, net of tax
|
3,424
|
|
|
1,247
|
|
|
||
Net income (loss)
|
|
$566
|
|
|
|
($24,489
|
)
|
|
Weighted average common shares
|
100,559
|
|
|
103,473
|
|
|
||
Basic loss per share from continuing operations
|
|
($0.03
|
)
|
|
|
($0.25
|
)
|
|
Basic earnings per share from discontinued operations
|
0.03
|
|
|
0.01
|
|
|
||
Earnings (loss) per share-basic
|
|
$—
|
|
|
|
($0.24
|
)
|
|
|
Three Months Ended
|
|
||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
||||
Loss from continuing operations
|
|
($2,858
|
)
|
|
|
($25,736
|
)
|
|
Income from discontinued operations, net of tax
|
3,424
|
|
|
1,247
|
|
|
||
Net income (loss)
|
|
$566
|
|
|
|
($24,489
|
)
|
|
Weighted average common shares - basic
|
100,559
|
|
|
103,473
|
|
|
||
Dilutive effect of stock options, nonvested shares and Employee Stock Purchase Plan purchase rights
|
—
|
|
|
—
|
|
|
||
Weighted average common shares - diluted
|
100,559
|
|
|
103,473
|
|
|
||
Diluted earnings (loss) per share from continuing operations
|
|
($0.03
|
)
|
|
|
($0.25
|
)
|
|
Diluted earnings (loss) per share from discontinued operations
|
0.03
|
|
|
0.01
|
|
|
||
Earnings (loss) per share-diluted
|
|
$—
|
|
|
|
($0.24
|
)
|
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|||
Outstanding at June 26, 2016
|
11,247
|
|
|
|
$40.42
|
|
Granted
|
1,651
|
|
|
|
$24.42
|
|
Exercised
|
(16
|
)
|
|
|
$25.90
|
|
Forfeited or expired
|
(666
|
)
|
|
|
$37.53
|
|
Outstanding at September 25, 2016
|
12,216
|
|
|
|
$38.43
|
|
|
Number of
RSAs/RSUs
|
|
Weighted Average
Grant-Date Fair Value
|
|||
Nonvested at June 26, 2016
|
1,631
|
|
|
|
$31.66
|
|
Granted
|
1,091
|
|
|
|
$24.40
|
|
Vested
|
(536
|
)
|
|
|
$34.38
|
|
Forfeited
|
(18
|
)
|
|
|
$27.43
|
|
Nonvested at September 25, 2016
|
2,168
|
|
|
|
$27.37
|
|
|
Three Months Ended
|
||||||
|
September 25,
2016 |
|
September 27,
2015 |
||||
Income Statement Classification:
|
|
|
|
||||
Cost of revenue, net
|
|
$2,779
|
|
|
|
$2,622
|
|
Research and development
|
2,606
|
|
|
2,631
|
|
||
Sales, general and administrative
|
7,635
|
|
|
7,712
|
|
||
Income from discontinued operations, net of tax
|
1,630
|
|
|
2,109
|
|
||
Total stock-based compensation expense
|
|
$14,650
|
|
|
|
$15,074
|
|
Balance at June 26, 2016
|
|
$21,426
|
|
Warranties accrued in current period
|
5,520
|
|
|
Recall costs accrued in current period
|
—
|
|
|
Expenditures
|
(7,093
|
)
|
|
Balance at September 25, 2016
|
|
$19,853
|
|
•
|
Lighting Products
|
•
|
LED Products
|
|
Three Months Ended
|
|
||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
||||
Revenue:
|
|
|
|
|
||||
Lighting Products revenue
|
|
$183,836
|
|
|
|
$248,031
|
|
|
LED Products revenue
|
137,493
|
|
|
133,518
|
|
|
||
Total revenue
|
|
$321,329
|
|
|
|
$381,549
|
|
|
|
|
|
|
|
||||
Gross Profit and Gross Margin:
|
|
|
|
|
||||
Lighting Products gross profit
|
|
$49,290
|
|
|
|
$69,081
|
|
|
Lighting Products gross margin
|
26.8
|
%
|
|
27.9
|
%
|
|
||
LED Products gross profit
|
41,770
|
|
|
41,869
|
|
|
||
LED Products gross margin
|
30.4
|
%
|
|
31.4
|
%
|
|
||
Total segment gross profit
|
91,060
|
|
|
110,950
|
|
|
||
Unallocated costs
|
(4,719
|
)
|
|
(3,758
|
)
|
|
||
Consolidated gross profit
|
|
$86,341
|
|
|
|
$107,192
|
|
|
Consolidated gross margin
|
26.9
|
%
|
|
28.1
|
%
|
|
|
September 25,
2016 |
|
June 26,
2016 |
||||
Lighting Products
|
|
$183,529
|
|
|
|
$172,261
|
|
LED Products
|
103,540
|
|
|
104,544
|
|
||
Total segment inventories
|
287,069
|
|
|
276,805
|
|
||
Unallocated inventories
|
4,464
|
|
|
4,866
|
|
||
Consolidated inventories
|
|
$291,533
|
|
|
|
$281,671
|
|
Capacity and Overhead Cost Reductions
|
|
Amounts incurred for the three months ended September 27, 2015
|
|
Affected Line Item in the Consolidated Statements of Income (Loss)
|
||
Loss on disposal or impairment of long-lived assets
|
|
|
$9,005
|
|
|
Loss on disposal or impairment of long-lived assets
|
Loss on disposal or impairment of long-lived assets
|
|
4,873
|
|
|
Income from discontinued operations, net of tax
|
|
Severance expense
|
|
300
|
|
|
Sales, general and administrative expenses
|
|
Lease termination and facility consolidation costs
|
|
1,735
|
|
|
Sales, general and administrative expenses
|
|
Total restructuring charges
|
|
|
$15,913
|
|
|
|
•
|
Lighting Products
|
•
|
LED Products
|
•
|
Overall Demand for Products and Applications using LEDs
. Our potential for growth depends significantly on the continued adoption of LEDs within the general lighting market and our ability to affect this rate of adoption. Demand also fluctuates based on various market cycles, a continuously evolving LED industry supply chain, and evolving competitive dynamics in the market. These uncertainties make demand difficult to forecast for us and our customers.
|
•
|
Intense and Constantly Evolving Competitive Environment.
Competition in the LED and lighting industries is intense. Many companies have made significant investments in LED development and production equipment. Product pricing pressures exist as market participants often undertake pricing strategies to gain or protect market share, increase the utilization of their production capacity and open new applications to LED-based solutions. To remain competitive, market participants must continuously increase product performance and reduce costs. To address these competitive pressures, we have invested in research and development activities to support new product development and to deliver higher levels of performance and lower costs to differentiate our products in the market.
|
•
|
Lighting Sales Channel Development.
Commercial lighting is usually sold through lighting agents and distributors in the North American lighting market. The lighting agents typically have exclusive sales rights for a defined territory and are typically aligned with one large lighting company for a large percentage of their product sales. The size, qu
|
•
|
Technological Innovation and Advancement.
Innovations and advancements in LEDs and lighting continue to expand the potential commercial application for our products. However, new technologies or standards could emerge or improvements could be made in existing technologies that could reduce or limit the demand for our products in certain markets.
|
•
|
Intellectual Property Issues.
Market participants rely on patented and non-patented proprietary information relating to product development, manufacturing capabilities and other core competencies of their business. Protection of intellectual property is critical. Therefore, steps such as additional patent applications, confidentiality and non-disclosure agreements, as well as other security measures are generally taken. To enforce or protect intellectual property rights, litigation or threatened litigation is common.
|
•
|
Revenue decreased to
$321 million
for the
three
months ended
September 25, 2016
from
$382 million
for the
three
months ended
September 27, 2015
.
|
•
|
Gross profit decreased to
$86 million
for the
three
months ended
September 25, 2016
from
$107 million
for the
three
months ended
September 27, 2015
. Gross margin declined to
27%
for the
three
months ended
September 25, 2016
from
28%
for the
three
months ended
September 27, 2015
.
|
•
|
Operating loss was
$10 million
for the
three
months ended
September 25, 2016
compared to operating loss of
$12 million
for the
three
months ended
September 27, 2015
. Net loss per diluted share was
$0.00
for the
three
months ended
September 25, 2016
compared to net loss per diluted share of
$0.24
for the
three
months ended
September 27, 2015
.
|
•
|
Cash, cash equivalents and short-term investments were consistent at
$0.6 billion
at
September 25, 2016
and
June 26, 2016
. Cash provided by operating activities was
$18 million
for the
three
months ended
September 25, 2016
compared to
$47 million
for the
three
months ended
September 27, 2015
.
|
•
|
Inventories increased to
$292 million
at
September 25, 2016
compared to
$282 million
at
June 26, 2016
.
|
•
|
Purchases of property and equipment were
$19 million
for the
three
months ended
September 25, 2016
compared to
$50 million
for the
three
months ended
September 27, 2015
.
|
•
|
Complete the sale of our Wolfspeed business to Infineon.
|
•
|
Grow company revenue.
|
◦
|
Grow commercial lighting revenue with the market, potentially adding to that growth through product line expansion and/or strategic acquisitions, and maintain consumer lighting revenue in a similar range while transitioning to a new generation LED bulb family.
|
◦
|
Maintain LED revenue in a similar range through new product design wins to offset the competitive environment.
|
•
|
Improve operating margin.
|
◦
|
Increase lighting margins through a combination of lower costs and higher value new products.
|
◦
|
Maintain LED margins in a similar range by reducing product costs and increasing performance levels.
|
◦
|
Manage company operating expenses to grow slower than revenue.
|
•
|
Continue to innovate in all of our businesses to differentiate our products in the market.
|
•
|
Improve the customer experience and service levels in all of our businesses.
|
|
Three Months Ended
|
|
||||||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
||||||||||
|
Dollars
|
|
% of Revenue
|
|
Dollars
|
|
% of Revenue
|
|
||||||
Revenue, net
|
|
$321,329
|
|
|
100
|
%
|
|
|
$381,549
|
|
|
100
|
%
|
|
Cost of revenue, net
|
234,988
|
|
|
73
|
%
|
|
274,357
|
|
|
72
|
%
|
|
||
Gross profit
|
86,341
|
|
|
27
|
%
|
|
107,192
|
|
|
28
|
%
|
|
||
Research and development
|
28,531
|
|
|
9
|
%
|
|
32,731
|
|
|
9
|
%
|
|
||
Sales, general and administrative
|
61,371
|
|
|
19
|
%
|
|
70,172
|
|
|
18
|
%
|
|
||
Amortization or impairment of acquisition-related intangibles
|
6,266
|
|
|
2
|
%
|
|
6,469
|
|
|
2
|
%
|
|
||
Loss on disposal or impairment of long-lived assets
|
316
|
|
|
—
|
%
|
|
9,565
|
|
|
3
|
%
|
|
||
Operating loss
|
(10,143
|
)
|
|
(3
|
)%
|
|
(11,745
|
)
|
|
(3
|
)%
|
|
||
Non-operating expense
|
(158
|
)
|
|
—
|
%
|
|
(22,803
|
)
|
|
(6
|
)%
|
|
||
Loss from continuing operations before income taxes
|
(10,301
|
)
|
|
(3
|
)%
|
|
(34,548
|
)
|
|
(9
|
)%
|
|
||
Income tax benefit
|
(7,443
|
)
|
|
(2
|
)%
|
|
(8,812
|
)
|
|
(2
|
)%
|
|
||
Loss from continuing operations
|
|
($2,858
|
)
|
|
(1
|
)%
|
|
|
($25,736
|
)
|
|
(7
|
)%
|
|
Income from discontinued operations, net of tax
|
3,424
|
|
|
1
|
%
|
|
1,247
|
|
|
—
|
%
|
|
||
Net income (loss)
|
|
$566
|
|
|
—
|
%
|
|
|
($24,489
|
)
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share-basic
|
|
|
|
|
|
|
|
|
|
|||||
Continuing operations
|
|
($0.03
|
)
|
|
|
|
|
($0.25
|
)
|
|
|
|
|
|
Discontinued operations
|
0.03
|
|
|
|
|
0.01
|
|
|
|
|
|
|||
Earnings (loss) per share-basic
|
|
$—
|
|
|
|
|
|
($0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share-diluted
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
($0.03
|
)
|
|
|
|
|
($0.25
|
)
|
|
|
|
||
Discontinued operations
|
0.03
|
|
|
|
|
0.01
|
|
|
|
|
||||
Earnings (loss) per share-diluted
|
|
$—
|
|
|
|
|
|
($0.24
|
)
|
|
|
|
Capacity and Overhead Cost Reductions
|
|
Amounts incurred for the three months ended September 27, 2015
|
|
Affected Line Item in the Consolidated Statements of Income (Loss)
|
||
Loss on disposal or impairment of long-lived assets
|
|
|
$9,005
|
|
|
Loss on disposal or impairment of long-lived assets
|
Loss on disposal or impairment of long-lived assets
|
|
4,873
|
|
|
Income from discontinued operations, net of tax
|
|
Severance expense
|
|
300
|
|
|
Sales, general and administrative expenses
|
|
Lease termination and facility consolidation costs
|
|
1,735
|
|
|
Sales, general and administrative expenses
|
|
Total restructuring charges
|
|
|
$15,913
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
Change
|
|
|||||||||
Lighting Products revenue
|
|
$183,836
|
|
|
|
$248,031
|
|
|
|
($64,195
|
)
|
|
(26
|
)%
|
|
Percent of revenue
|
57
|
%
|
|
65
|
%
|
|
|
|
|
|
|||||
LED Products revenue
|
137,493
|
|
|
133,518
|
|
|
3,975
|
|
|
3
|
%
|
|
|||
Percent of revenue
|
43
|
%
|
|
35
|
%
|
|
|
|
|
|
|||||
Total revenue
|
|
$321,329
|
|
|
|
$381,549
|
|
|
|
($60,220
|
)
|
|
(16
|
)%
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
Change
|
|||||||||
Lighting Products gross profit
|
|
$49,290
|
|
|
|
$69,081
|
|
|
|
($19,791
|
)
|
|
(29
|
)%
|
Lighting Products gross margin
|
26.8
|
%
|
|
27.9
|
%
|
|
|
|
|
|||||
LED Products gross profit
|
41,770
|
|
|
41,869
|
|
|
(99
|
)
|
|
—
|
%
|
|||
LED Products gross margin
|
30.4
|
%
|
|
31.4
|
%
|
|
|
|
|
|||||
Unallocated costs
|
(4,719
|
)
|
|
(3,758
|
)
|
|
(961
|
)
|
|
26
|
%
|
|||
Consolidated gross profit
|
|
$86,341
|
|
|
|
$107,192
|
|
|
|
($20,851
|
)
|
|
(19
|
)%
|
Consolidated gross margin
|
26.9
|
%
|
|
28.1
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
Change
|
|
|||||||||
Research and development
|
|
$28,531
|
|
|
|
$32,731
|
|
|
|
($4,200
|
)
|
|
(13
|
)%
|
|
Percent of revenue
|
9
|
%
|
|
9
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
Change
|
|
|||||||||
Sales, general and administrative
|
|
$61,371
|
|
|
|
$70,172
|
|
|
|
($8,801
|
)
|
|
(13
|
)%
|
|
Percent of revenue
|
19
|
%
|
|
18
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
Change
|
|||||||||
Customer relationships
|
|
$1,279
|
|
|
|
$1,318
|
|
|
|
($39
|
)
|
|
(3
|
)%
|
Developed technology
|
4,660
|
|
|
4,660
|
|
|
—
|
|
|
—
|
%
|
|||
Non-compete agreements
|
327
|
|
|
491
|
|
|
(164
|
)
|
|
(33
|
)%
|
|||
Total amortization
|
|
$6,266
|
|
|
|
$6,469
|
|
|
|
($203
|
)
|
|
(3
|
)%
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 25,
2016 |
|
September 27,
2015 |
|
Change
|
|||||||||
Loss on disposal or impairment of long-lived assets
|
|
$316
|
|
|
|
$9,565
|
|
|
|
($9,249
|
)
|
|
(97
|
)%
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 25, 2016
|
|
September 27, 2015
|
|
Change
|
|||||||||
Gain on sale of investments, net
|
|
$12
|
|
|
|
$2
|
|
|
|
$10
|
|
|
500
|
%
|
Loss on equity investment
|
(2,487
|
)
|
|
(19,948
|
)
|
|
17,461
|
|
|
(88
|
)%
|
|||
Foreign currency gain (loss), net
|
1,361
|
|
|
(4,294
|
)
|
|
5,655
|
|
|
(132
|
)%
|
|||
Interest income, net
|
887
|
|
|
1,297
|
|
|
(410
|
)
|
|
(32
|
)%
|
|||
Other, net
|
69
|
|
|
140
|
|
|
(71
|
)
|
|
(51
|
)%
|
|||
Non-operating expense, net
|
|
($158
|
)
|
|
|
($22,803
|
)
|
|
|
$22,645
|
|
|
(99
|
)%
|
|
Three Months Ended
|
|
|
|
|
|
|||||||||
|
September 25, 2016
|
|
September 27, 2015
|
|
Change
|
|
|||||||||
Income tax benefit
|
|
($7,443
|
)
|
|
|
($8,812
|
)
|
|
|
$1,369
|
|
|
(16
|
)%
|
|
Effective tax rate
|
72.3
|
%
|
|
25.5
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|||
|
September 25,
2016 |
|
June 26,
2016 |
|
Change
|
|
Days of sales outstanding
(a)
|
41
|
|
37
|
|
4
|
|
Days of supply in inventory
(b)
|
112
|
|
101
|
|
11
|
|
Days in accounts payable
(c)
|
(44)
|
|
(44)
|
|
—
|
|
Cash conversion cycle
|
109
|
|
94
|
|
15
|
|
a)
|
Days of sales outstanding (DSO) measures the average collection period of our receivables. DSO is based on the ending net trade receivables and the revenue, net for the quarter then ended. DSO is calculated by dividing ending accounts receivable, net of applicable allowances and reserves, by the average net revenue per day for the respective 90 day period.
|
b)
|
Days of supply in inventory (DSI) measures the average number of days from procurement to sale of our product. DSI is based on ending inventory and cost of revenue, net for the quarter then ended. DSI is calculated by dividing ending inventory by average cost of revenue, net per day for the respective 90 day period.
|
c)
|
Days in accounts payable (DPO) measures the average number of days our payables remain outstanding before payment. DPO is based on ending accounts payable and cost of revenue, net for the quarter then ended. DPO is calculated by dividing ending accounts payable by the average cost of revenue, net per day for the respective 90 day period.
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 25, 2016
|
|
September 27, 2015
|
|
Change
|
|||||||||
Net cash provided by operating activities
|
|
$18,098
|
|
|
|
$46,834
|
|
|
|
($28,736
|
)
|
|
(61
|
)%
|
Net cash used in investing activities
|
(48,155
|
)
|
|
(42,571
|
)
|
|
(5,584
|
)
|
|
13
|
%
|
|||
Net cash used in financing activities
|
(8,245
|
)
|
|
(59,800
|
)
|
|
51,555
|
|
|
(86
|
)%
|
|||
Effects of foreign exchange changes on cash and cash equivalents
|
(11
|
)
|
|
(804
|
)
|
|
793
|
|
|
(99
|
)%
|
|||
Net decrease in cash and cash equivalents
|
|
($38,313
|
)
|
|
|
($56,341
|
)
|
|
|
$18,028
|
|
|
|
|
•
|
achievement of technology breakthroughs required to make commercially viable devices;
|
•
|
the accuracy of our predictions for market requirements;
|
•
|
our ability to predict, influence and/or react to evolving standards;
|
•
|
acceptance of our new product designs;
|
•
|
acceptance of new technology in certain markets;
|
•
|
the availability of qualified research and development personnel;
|
•
|
our timely completion of product designs and development;
|
•
|
our ability to develop repeatable processes to manufacture new products in sufficient quantities, with the desired specifications and at competitive costs;
|
•
|
our ability to effectively transfer products and technology from development to manufacturing;
|
•
|
our customers’ ability to develop competitive products incorporating our products; and
|
•
|
market acceptance of our products and our customers’ products.
|
•
|
expand the capability of information systems to support a more complex business;
|
•
|
maintain, expand and purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, to meet customer demand;
|
•
|
manage an increasingly complex supply chain that has the ability to supply an increasing number of raw materials, subsystems and finished products with the required specifications and quality, and deliver on time to our manufacturing facilities, our third party manufacturing facilities, or our logistics operations;
|
•
|
expand research and development, sales and marketing, technical support, distribution capabilities, manufacturing planning and administrative functions;
|
•
|
manage organizational complexity and communication;
|
•
|
expand the skills and capabilities of our current management team;
|
•
|
add experienced senior level managers;
|
•
|
attract and retain qualified employees; and
|
•
|
adequately maintain and adjust the operational and financial controls that support our business.
|
•
|
the failure to obtain, on a timely basis or at all, the regulatory approvals required to complete the transaction without the imposition of conditions that may cause the parties to abandon the transaction, or the failure to satisfy, on a timely basis or at all, the other closing conditions set forth in the APA;
|
•
|
the disruption to and uncertainty in our business and our relationships with our customers, including attempts by our customers to renegotiate their relationships with us or decisions by our customers to defer or delay purchases from us;
|
•
|
the diversion of our management’s attention away from the operation of the businesses we are retaining;
|
•
|
difficulties in hiring, retaining and motivating key personnel during this process or as a result of uncertainties generated by this process or any developments or actions relating to it;
|
•
|
our incurrence of significant transaction costs in connection with the transaction, regardless of whether it is completed;
|
•
|
the restrictions on and obligations with respect to our business set forth in the APA and, following closing, the transition services agreement and the wafer supply agreement;
|
•
|
the separation of the Wolfspeed business from the businesses we are retaining and the operation of our retained businesses without the Wolfspeed business;
|
•
|
any required payments of indemnification obligations under the APA for retained liabilities and breaches of representations, warranties or covenants;
|
•
|
fluctuations in our market value, including the depreciation in our market value if the transaction is not completed or the failure of the transaction, even if completed, to increase our market value; and
|
•
|
failure to realize the full purchase price anticipated under the APA.
|
•
|
costs associated with the removal, collection and destruction of the product;
|
•
|
payments made to replace product;
|
•
|
costs associated with repairing the product;
|
•
|
the write-down or destruction of existing inventory;
|
•
|
insurance recoveries that fail to cover the full costs associated with product recalls;
|
•
|
lost sales due to the unavailability of product for a period of time;
|
•
|
delays, cancellations or rescheduling of orders for our products; or
|
•
|
increased product returns.
|
•
|
variability in our process repeatability and control;
|
•
|
contamination of the manufacturing environment;
|
•
|
equipment failure, power outages, fires, flooding, information or other system failures or variations in the manufacturing process;
|
•
|
lack of consistency and adequate quality and quantity of piece parts, other raw materials and other bill of materials items;
|
•
|
inventory shrinkage or human errors;
|
•
|
defects in production processes (including system assembly) either within our facilities or at our suppliers; and
|
•
|
any transitions or changes in our production process, planned or unplanned.
|
•
|
the failure of an acquired business, investee or joint venture to meet our performance expectations;
|
•
|
identification of additional liabilities relating to an acquired business;
|
•
|
loss of existing customers of our current and acquired businesses due to concerns that new product lines may be in competition with the customers’ existing product lines;
|
•
|
difficulty integrating an acquired business's operations, personnel and financial and operating systems into our current business;
|
•
|
diversion of management attention;
|
•
|
difficulty separating the operations, personnel and financial and operating systems of a spin-off or divestiture from our current business;
|
•
|
uncertainty of the financial markets or circumstances that cause conditions that are less favorable and/or different than expected; and
|
•
|
expenses incurred to complete a transaction may be significantly higher than anticipated.
|
•
|
protection of intellectual property and trade secrets;
|
•
|
tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost effective and timely manner, or changes in applicable tariffs or custom rules;
|
•
|
timing and availability of export licenses;
|
•
|
rising labor costs;
|
•
|
disruptions in or inadequate infrastructure of the countries where we operate;
|
•
|
difficulties in collecting accounts receivable;
|
•
|
difficulties in staffing and managing international operations;
|
•
|
the burden of complying with foreign and international laws and treaties; and
|
•
|
the burden of complying with and changes in international taxation policies.
|
•
|
pay substantial damages;
|
•
|
indemnify our customers;
|
•
|
stop the manufacture, use and sale of products found to be infringing;
|
•
|
incur asset impairment charges;
|
•
|
discontinue the use of processes found to be infringing;
|
•
|
expend significant resources to develop non-infringing products or processes; or
|
•
|
obtain a license to use third party technology.
|
•
|
the jurisdiction in which profits are determined to be earned and taxed;
|
•
|
changes in government administrations, such as the Presidency and Congress of the U.S. as well as in the states and countries in which we operate;
|
•
|
changes in tax laws or interpretation of such tax laws and changes in generally accepted accounting principles;
|
•
|
the resolution of issues arising from tax audits with various authorities;
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
adjustments to estimated taxes upon finalization of various tax returns;
|
•
|
increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions;
|
•
|
changes in available tax credits;
|
•
|
the recognition and measurement of uncertain tax positions;
|
•
|
the lack of sufficient excess tax benefits (credits) in our additional paid-in-capital pool in situations where our realized tax deductions for certain stock-based compensation awards (such as non-qualified stock options and restricted stock) are less than those originally anticipated; and
|
•
|
the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes or any changes in legislation that may result in these earnings being taxed within the U.S., regardless of our decision regarding repatriation of funds.
|
•
|
regulatory penalties, fines, legal liabilities and the forfeiture of certain tax benefits;
|
•
|
suspension of production;
|
•
|
alteration of our fabrication, assembly and test processes; and
|
•
|
curtailment of our operations or sales.
|
•
|
increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;
|
•
|
requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures, research and development and stock repurchases;
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
•
|
placing us at a competitive disadvantage compared to our peers that may have less indebtedness than we have by limiting our ability to borrow additional funds needed to operate and grow our business; and
|
•
|
increasing our interest expense if interest rates increase.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
1
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
1
|
||||||
Shares repurchased under our Stock Repurchase Program
|
|
|
|
|
|
|
|
|
||||||
June 27, 2016 to July 24, 2016
|
|
—
|
|
|
|
$—
|
|
|
—
|
|
|
|
$300,000
|
|
July 25, 2016 to August 21, 2016
|
|
—
|
|
|
|
$—
|
|
|
—
|
|
|
|
$300,000
|
|
August 22, 2016 to September 25, 2016
|
|
1,471
|
|
|
|
$24.27
|
|
|
1,471
|
|
|
|
$264,301
|
|
Total
|
|
1,471
|
|
|
|
$24.27
|
|
|
|
|
|
(1)
|
On August 24, 2016, our Board of Directors approved the extension of our stock repurchase program through June 25, 2017. Pursuant to the program, we are authorized to repurchase shares of our common stock having an aggregate purchase price not exceeding $300 million for all purchases from August 24, 2016 through the expiration of the program on June 25, 2017.
|
Exhibit No.
|
|
Description
|
|
2.1
|
|
|
Asset Purchase Agreement, dated as of July 13, 2016, by and among Infineon Technologies AG, Cree, Inc., and Cree Sweden AB (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K/A, dated July 13, 2016, filed with the Securities and Exchange Commission on July 18, 2016)
|
10.1
|
|
|
Change in Control Agreement for Section 16 Officers other than the Chief Executive Officer, dated July 13, 2016, by and between Cree, Inc. and Franco Plastina (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated July 13, 2016, filed with the Securities and Exchange Commission on July 18, 2016)
|
10.2
|
|
|
Credit Agreement Consent, dated as of July 13, 2016, by and between Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of the Company, as guarantor, and the other lenders party to the Credit Agreement
|
10.3
|
|
|
Notice of Grant to Charles M. Swoboda, dated August 23, 2016 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)
|
10.4
|
|
|
Notice of Grant to Michael E. McDevitt, dated August 23, 2016 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)
|
10.5
|
|
|
Management Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)
|
31.1
|
|
|
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
|
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
|
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following materials from Cree, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 25, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income (Loss); (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements
|
|
CREE, INC.
|
|
|
October 19, 2016
|
|
|
|
|
/s/ MICHAEL E. MCDEVITT
|
|
Michael E. McDevitt
|
|
Executive Vice President and Chief Financial Officer
|
|
(Authorized Officer and Principal Financial and Chief Accounting Officer)
|
Exhibit No.
|
|
Description
|
|
2.1
|
|
|
Asset Purchase Agreement, dated as of July 13, 2016, by and among Infineon Technologies AG, Cree, Inc., and Cree Sweden AB (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K/A, dated July 13, 2016, filed with the Securities and Exchange Commission on July 18, 2016)
|
10.1
|
|
|
Change in Control Agreement for Section 16 Officers other than the Chief Executive Officer, dated July 13, 2016, by and between Cree, Inc. and Franco Plastina (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated July 13, 2016, filed with the Securities and Exchange Commission on July 18, 2016)
|
10.2
|
|
|
Credit Agreement Consent, dated as of July 13, 2016, by and between Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of the Company, as guarantor, and the other lenders party to the Credit Agreement
|
10.3
|
|
|
Notice of Grant to Charles M. Swoboda, dated August 23, 2016 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)
|
10.4
|
|
|
Notice of Grant to Michael E. McDevitt, dated August 23, 2016 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)
|
10.5
|
|
|
Management Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)
|
31.1
|
|
|
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
|
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
|
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following materials from Cree, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 25, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income (Loss); (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements
|
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