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Subject:  Earnings Call Notes Date:  7/27/2000  5:57 PM
Author:  ZaksDad Number:  2970 of 41741

OK, since Sly and Ring both beat me to the good news, let me see if I can add something to this discussion.

Back up the truck!

Q4 Numbers:

EPS $.30 versus estimates of $.27 and whisper number ( of $.28.

Revenues $33,359,000, up 13% sequentially and 82% over Q4 FY1999

Net Income $11,357,000, up 26% sequentially and 183% over Q4 FY 1999

Gross Margins were 54.54%, up from 53.5% in Q3

Operating Margins were 38.6%, up from 31.8% in Q3

Net Margins were 34.04%, up from 30.35% in Q3

FY 2000 Numbers:

EPS $.87, up 112% over FYE 1999

Revenues $108,562,000, up 74% over FYE 1999

Net Income $30,520,000, up 145% over FYE 1999

Gross Margins were 51.75%, up from 45.25% for FYE 1999

Operating Margins were 33.85%, up from 25.86% for FYE 1999

Net Margins were 28.11%, up from 19.93% for FYE 1999

SG&A expenses were 10.2% for FY 2000, just about even with FY 1999's 10.37%. (Either Neal or Cindy said that SG&A would continue to run at about the same percentage of revenue as in the past). So between 9.8% and 11.5% is a pretty good range to use.

Other notes from the 45 minute conference call:

Days Sales Outstanding (DSO) was 33 days, the lowest it has been for CREE (ever?) versus an industry average of 55 days.

Inventory is up, but that results not from a decrease in demand, but from a dsire to be able to sell some products on "spot" orders which have higher margins. (I really wished I had asked a question here, since backlog is so great, why aren't they using these products to meet backlog, but I didn't)

Neal said that Backlog and demand are still strong, with $77.6 million in backlog

Blue Laser is meeting with great success with internal CW (constant wavelength?) records being set weekly. They are having success with the Blue Laser for optical data storage (I think this is what he said, but I was scribbling furiously about 15 seconds behind the call). Look for qualified product launch at FYE 2002

RF Microdevices - test stuff they sent out in June is receiving favorable response and comment from beta group and CREE has a small backlog of qualification orders

LED market continues to grow with new uses always being developed. ASP declined 47% in FY 2000 and expect another 25% decline in FY 2001. Believe that this will be more than offset by cost reductions of greater than 50%

Transition to 3" wafer is slower than anticipated (due to epitaxial capabiliities?), but all FY 2001 outlooks and cost reductions are based on 2" wafers and not 3" wafers.

When the 3" comes on line, it will like be like a light switch, turn it on and the demand will be there. Then after the initial light switch effect, demand will continue to grow. I gather there is suppressed demand for a 3" wafer just waiting to be filled.

And the greatest part of the call

CFO Cindy Merrell estimates EPS will grow 55% - 60% in FYE 2001.

Can you say EPS of $1.34 - $1.39! I can!!!!

As I said, back up the truck!

I will try and listen to the replay and pick up somethings I missed. Sorry this is so jumbled, but I wanted to get it out to you as quickly as possible.

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