Jun 6 2005
Cree, Inc. has announced that it plans to close the silicon radio frequency (RF) and microwave semiconductor business of its wholly owned subsidiary, Cree Microwave, Inc., located in Sunnyvale, California. This business manufactures silicon-based laterally diffused metal oxide semiconductor (LDMOS) and bipolar products. The Company intends to focus on wide bandgap RF and microwave products based on its silicon carbide (SiC) and gallium nitride (GaN) technology. Cree Microwave will accept last time buy orders for its silicon LDMOS products through June 2005 and plans to wind down the operations of this business by December 2005. The decision to discontinue the Sunnyvale operation was based upon management’s review of the strategic alternatives and the financial outlook for the business. For the nine months ended March 27, 2005, the Company incurred net operating pre-tax losses of $9.2 million related to this segment of its business, or $0.08 per share, net of tax, assuming the Company’s estimated 31.1% tax rate for fiscal 2005.
The Company estimates that it will incur a total of approximately $13 million to $15 million in pre-tax expenses to close the Sunnyvale facility. Of these costs, cash charges will include $1.8 million to $1.9 million for severance and other employee related costs, relocation of production equipment and other expenses to wind down the Sunnyvale operations over the next six months. Other non-cash charges related to the closing of the facility include $6 million to $8 million in impairment charges related to inventory and equipment and approximately $4.7 million for lease obligations. The Company targets that approximately $7 million to $9 million of these charges will be expensed in the fourth quarter of fiscal 2005, while the remaining charges are expected to be recorded in the first and second quarters of fiscal 2006.
The silicon RF business operated at the Sunnyvale facility has been referred to as the Company’s Cree Microwave segment for financial reporting purposes. Although this segment will no longer be used for financial reporting purposes, the Company’s wide bandgap RF and microwave products based on SiC and GaN technology will continue to be marketed under the Cree Microwave brand.
The Company also announced that the parallel production of Schottky diode products recently qualified in the Sunnyvale facility will be consolidated in the Durham, North Carolina location in the first half of fiscal 2006.
http://www.cree.com