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Cree updates guidance on second half of FY 2002

Cree, Inc. has updated its guidance for the second half of fiscal 2002. Due to product delays at the company?s UltraRF business (which manufactures silicon LDMOS RF power semiconductors), as well as lower short-term LED demand, Cree is now targeting fiscal 2002 third quarter revenue of between $32 and $34 million. The company?s earnings per share is targeted to be break-even before intangible amortization and anticipated charges at UltraRF due to discontinued inventory, restructuring items and a one-time write down of goodwill. The company is targeting fiscal Q4 revenue to increase at least 5% from fiscal Q3, due to anticipated increases in its LED and contracts business.

"We continue to manage the challenges we faced at the beginning of this quarter and we believe we are taking the appropriate steps to improve the outlook for our business," said Chuck Swoboda, president and CEO. "Our new LED chip products are being well received in the marketplace and customers are placing order commitments we had previously targeted. I am optimistic about our growth prospects as we move forward and into fiscal 2003."

Aside from UltraRF, Cree said it was faced with managing the rotation of its LED business from larger to smaller volume customers. The company says it has seen some increase in business from the traditionally smaller volume customers as a result of this rotation; however, these gains have not fully offset the decline from larger customers.

In addition, Cree has recently worked with its large customers to re-balance its contract commitment over the next several quarters. As a result, the company is re-assessing the carrying value of its goodwill and other long-lived assets at UltraRF. Based on initial estimates, the company expects to record a one-time charge of between $60 and $77 million to reduce goodwill during the third quarter of fiscal 2002. The company also expects to record a write down of discontinued inventory and other restructuring charges at UltraRF during the third quarter of up to $4 million. Fran Barsky
Tel: 919 313 5397
E-mail: fran_barsky@cree.com
Web site: http://www.cree.com

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