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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 24, 2018
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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North Carolina
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56-1572719
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4600 Silicon Drive
Durham, North Carolina
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27703
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.00125 par value
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The Nasdaq Stock Market LLC
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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Wolfspeed
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•
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LED Products
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•
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Lighting Products
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develop higher power diodes/switches and higher power/linearity RF devices;
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increase the quality, performance and diameter of our substrate and epitaxial materials.
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continually improve our manufacturing processes;
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develop brighter, more efficient and lower cost LED chip and component products;
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create new, and improve existing, LED components; and
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improve existing LED lighting products and develop new LED lighting systems and related controls.
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achievement of technology breakthroughs required to make commercially viable products;
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the accuracy of our predictions for market requirements;
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our ability to predict, influence and/or react to evolving standards;
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acceptance of our new product and systems designs;
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acceptance of new technology in certain markets;
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the availability of qualified research and development personnel;
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our timely completion of product designs and development;
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our ability to develop repeatable processes to manufacture new products in sufficient quantities, with the desired specifications and at competitive costs;
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our ability to effectively transfer increasingly complex products and technology from development to manufacturing;
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our customers’ ability to develop competitive products incorporating our products; and
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market acceptance of our products and our customers’ products.
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maintain, expand, construct and purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, to meet customer demand;
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integrate the personnel, operations, customers, and suppliers from our recent acquisition of the Infineon RF Power business;
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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;
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expand the capability of information systems to support a more complex business;
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expand research and development, sales and marketing, technical support, distribution capabilities, manufacturing planning and administrative functions;
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manage organizational complexity and communication;
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expand the skills and capabilities of our current management team;
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add experienced senior level managers and executives;
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attract and retain qualified employees; and
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adequately maintain and adjust the operational and financial controls that support our business.
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the failure of an acquired business, investee or joint venture to meet our performance and financial expectations;
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identification of additional liabilities relating to an acquired business;
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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 or due to regulatory actions taken by governmental agencies;
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that we are not able to enter into acceptable contractual arrangements with the significant customers of an acquired business;
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difficulty integrating an acquired business's operations, personnel and financial and operating systems into our current business;
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that we are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders as we experience wide fluctuations in supply and demand;
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diversion of management attention;
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difficulty separating the operations, personnel and financial and operating systems of a spin-off or divestiture from our current business;
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the possibility we are unable to complete the transaction and expend substantial resources without achieving the desired benefit;
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the inability to obtain required regulatory agency approvals;
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reliance on a transaction counterparty for transition services for an extended period of time, which may result in additional expenses and delay the integration of the acquired business and realization of the desired benefit of the transaction;
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uncertainty of the financial markets or circumstances that cause conditions that are less favorable and/or different than expected; and
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expenses incurred to complete a transaction may be significantly higher than anticipated.
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protection of intellectual property and trade secrets;
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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;
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the burden of complying with and changes in U.S. or international taxation policies;
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timing and availability of export licenses;
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rising labor costs;
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disruptions in or inadequate infrastructure of the countries where we operate;
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difficulties in collecting accounts receivable;
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difficulties in staffing and managing international operations; and
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the burden of complying with foreign and international laws and treaties.
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costs associated with the removal, collection and destruction of the product;
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payments made to replace product;
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costs associated with repairing the product;
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the write-down or destruction of existing inventory;
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insurance recoveries that fail to cover the full costs associated with product recalls;
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lost sales due to the unavailability of product for a period of time;
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delays, cancellations or rescheduling of orders for our products; or
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increased product returns.
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variability in our process repeatability and control;
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contamination of the manufacturing environment;
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equipment failure, power outages, fires, flooding, information or other system failures or variations in the manufacturing process;
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lack of consistency and adequate quality and quantity of piece parts, other raw materials and other bill of materials items;
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inventory shrinkage or human errors;
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defects in production processes (including system assembly) either within our facilities or at our suppliers; and
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any transitions or changes in our production process, planned or unplanned.
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pay substantial damages;
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indemnify our customers;
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stop the manufacture, use and sale of products found to be infringing;
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incur asset impairment charges;
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discontinue the use of processes found to be infringing;
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expend significant resources to develop non-infringing products or processes; or
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obtain a license to use third party technology.
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the jurisdiction in which profits are determined to be earned and taxed;
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changes in tax laws or interpretation of such tax laws and changes in generally accepted accounting principles, for example interpretations and U.S. regulations issued as a result of the significant changes to the U.S. tax law included within the Tax Cuts and Jobs Act of 2017 (the Tax Legislation);
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the resolution of issues arising from tax audits with various authorities;
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changes in the valuation of our deferred tax assets and liabilities;
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adjustments to estimated taxes upon finalization of various tax returns;
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increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions;
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changes in available tax credits;
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the recognition and measurement of uncertain tax positions;
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variations in realized tax deductions for certain stock-based compensation awards (such as non-qualified stock options and restricted stock) from those originally anticipated; and
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the repatriation of non-U.S. earnings for which we have not previously provided for taxes or any changes in legislation that may result in these earnings being taxed, regardless of our decision regarding repatriation of funds, for example, the Tax Legislation, enacted in the second quarter of fiscal 2018, included a one-time tax on deemed repatriated earnings of non-U.S. subsidiaries.
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regulatory penalties, fines, legal liabilities and the forfeiture of certain tax benefits;
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suspension of production;
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alteration of our fabrication, assembly and test processes; and
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curtailment of our operations or sales.
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increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;
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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;
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limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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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
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increasing our interest expense if interest rates increase.
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Size (approximate gross square footage)
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Location
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Segment Utilization
1
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Total
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Production
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Facility
Services and
Warehousing
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Administrative
Function
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Housing /
Other
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Owned Facilities
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Durham, NC
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All
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999,170
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520,354
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14,037
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464,779
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—
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Research Triangle Park, NC
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1
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203,995
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91,063
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62,855
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50,077
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—
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Racine, WI
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3
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802,845
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160,000
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418,000
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224,845
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—
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Huizhou, China
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2
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823,951
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332,271
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116,568
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41,764
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333,348
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Total owned
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2,829,961
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1,103,688
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611,460
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781,465
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333,348
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Leased Facilities
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Durham, NC
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3
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80,600
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—
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80,600
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—
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—
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Morgan Hill, CA
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1
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83,828
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54,488
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—
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29,340
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—
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Pleasant Prairie, WI
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3
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147,877
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—
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145,477
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2,400
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—
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Fayetteville, AR
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1
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31,341
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18,771
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—
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12,570
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Sesto Fiorentino, Italy
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2,3
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63,670
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20,672
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24,998
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18,000
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—
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Hong Kong
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All
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35,811
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—
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10,020
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24,602
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1,189
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Misc. manufacturing, sales and support offices
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All
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111,397
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3,002
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15,352
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93,043
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—
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Total leased
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554,524
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96,933
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276,447
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179,955
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1,189
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Total gross square footage
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3,384,485
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1,200,621
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887,907
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961,420
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334,537
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Fiscal 2018
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Fiscal 2017
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High
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Low
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High
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Low
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First Quarter
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$26.51
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$22.21
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$28.98
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$23.19
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Second Quarter
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39.63
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26.20
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27.58
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21.12
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Third Quarter
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43.21
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32.00
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28.83
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25.56
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Fourth Quarter
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49.95
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37.32
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27.24
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21.70
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6/30/2013
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6/29/2014
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6/28/2015
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6/26/2016
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6/25/2017
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6/24/2018
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Cree, Inc.
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$100.00
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$75.95
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$42.30
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$36.33
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$38.54
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$72.45
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Nasdaq Composite Index
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100.00
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130.85
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152.90
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139.99
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188.49
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233.90
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Nasdaq Electronic Components Index
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100.00
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127.60
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141.00
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138.47
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197.04
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279.16
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Fiscal Years Ended
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June 24,
2018 |
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June 25,
2017 |
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June 26,
2016 |
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June 28,
2015 |
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June 29,
2014 |
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Consolidated Statement of (Loss) Income
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Revenue, net
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$1,493,680
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$1,473,000
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$1,616,627
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$1,632,505
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$1,647,641
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Operating (loss) income
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(329,087
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)
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(18,672
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)
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(10,471
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)
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(73,550
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)
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133,236
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Net (loss) income
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(279,968
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)
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(98,118
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)
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(21,536
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)
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(64,692
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)
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123,490
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(Loss) earnings per share
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||||||||||
Basic
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($2.81
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)
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($1.00
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)
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($0.21
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)
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($0.57
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)
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$1.02
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Diluted
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($2.81
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)
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($1.00
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)
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($0.21
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)
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($0.57
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)
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$1.00
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Weighted average shares used in per share calculation:
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||||||||||
Basic
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99,530
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98,487
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101,783
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113,022
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120,623
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|||||
Diluted
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99,530
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98,487
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101,783
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113,022
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122,914
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June 24,
2018 |
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June 25,
2017 |
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June 26,
2016 |
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June 28,
2015 |
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June 29,
2014 |
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Consolidated Balance Sheet Data
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||||||||||
Total cash, cash equivalents and short-term investments
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$387,085
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$610,938
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$605,305
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$713,191
|
|
|
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$1,162,466
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Working capital
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641,797
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|
|
888,607
|
|
|
933,708
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1,053,464
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1,467,236
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|
|||||
Total assets
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2,637,545
|
|
|
2,649,867
|
|
|
2,766,060
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|
2,948,033
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3,338,981
|
|
|||||
Total long-term liabilities
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317,171
|
|
|
215,039
|
|
|
175,237
|
|
|
231,295
|
|
|
45,943
|
|
|||||
Total shareholders’ equity
|
2,067,136
|
|
|
2,222,805
|
|
|
2,367,824
|
|
|
2,461,952
|
|
|
2,986,383
|
|
•
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Wolfspeed
|
•
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LED Products
|
•
|
Lighting Products
|
•
|
Overall Demand for Products and Applications using SiC power devices, GaN and Si RF devices, and LEDs
. Our potential for growth depends significantly on the adoption of SiC and GaN materials and device products in the power and RF markets, the continued use of Si devices in the RF telecommunications market, the continued adoption of LEDs and LED lighting, and our ability to win new designs for these applications. Demand also fluctuates based on various market cycles, continuously evolving industry supply chains, and evolving competitive dynamics in each of the respective markets. These uncertainties make demand difficult to forecast for us and our customers.
|
•
|
Intense and Constantly Evolving Competitive Environment.
Competition in the industries we serve is intense. Many companies have made significant investments in product 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 in the power, RF, LED and lighting markets we serve. To remain competitive, market participants must continuously increase product performance, reduce costs and develop improved ways to serve their customers. To address these competitive pressures, we have invested in research and development activities to support new product development, lower product costs and deliver higher levels of performance to differentiate our products in the market. In addition, we invest in systems, people and new processes to improve our ability to deliver a better overall experience for our customers.
|
•
|
Technological Innovation and Advancement.
Innovations and advancements in materials, power, RF, LEDs and lighting technologies 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.
|
•
|
Governmental Trade and Regulatory Conditions
. Our potential for growth, as with most multi-national companies, depends on a balanced and stable trade, political, economic and regulatory environment among the countries where we do business. Changes in trade policy such as the imposition of tariffs or export bans to specific customers or countries could reduce or limit demand for our products in certain markets.
|
•
|
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, quality and capability of the lighting agent has a significant effect on winning new projects and sales in any given geographic market. While these agents sell other lighting products, the large traditional lighting companies have taken steps to prevent their channel partners from selling competing product lines. We are constantly working to improve the capabilities of our existing channel partners and increase our share of their sales as well as develop new partners to improve our sales effectiveness in each geographic market.
|
•
|
Our year-over-year revenue
increased
by $
21 million
to
$1.5 billion
.
|
•
|
Gross margin
decreased
to
27.3%
from
29.5%
. Gross profit
decreased
by
$27 million
to
$408 million
.
|
•
|
Operating loss
was
$329 million
in fiscal
2018
, which includes impairment charges of
$247 million
attributable to our Lighting Products segment, compared to operating loss of
$19 million
in fiscal
2017
.
Net loss
per diluted share was
$2.81
in fiscal
2018
compared to net loss per diluted share of
$1.00
in fiscal
2017
.
|
•
|
Combined cash, cash equivalents and short-term investments
decreased
to
$387 million
at
June 24, 2018
from
$611 million
at
June 25, 2017
. Cash provided by operating activities was
$167 million
in fiscal
2018
, compared to
$216 million
in fiscal
2017
.
|
•
|
Purchases of property and equipment were
$186 million
in fiscal
2018
compared to
$87 million
in fiscal
2017
.
|
•
|
Wolfspeed
- invest in the business to expand the scale, further develop the technologies, and accelerate the growth opportunities of SiC materials, SiC power devices and modules, and GaN and Si RF devices.
|
•
|
LED Products
- focus our efforts where our best-in-class technology and application-optimized solutions are differentiated and valued while using Cree Venture LED to access the broader mid-power LED markets.
|
•
|
Lighting Products -
modestly
grow revenue and increase margins by improving product quality, investing in our channel relationships, improving execution, and delivering innovative lighting solutions focused on higher specification and intelligent features.
|
•
|
Improve the customer experience and service levels in all of our businesses.
|
|
Fiscal Years Ended
|
|||||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|||||||||||||||
|
Dollars
|
|
% of
Revenue |
|
Dollars
|
|
% of
Revenue |
|
Dollars
|
|
% of
Revenue |
|||||||||
Revenue, net
|
|
$1,493,680
|
|
|
100
|
%
|
|
|
$1,473,000
|
|
|
100
|
%
|
|
|
$1,616,627
|
|
|
100
|
%
|
Cost of revenue, net
|
1,086,038
|
|
|
73
|
%
|
|
1,038,428
|
|
|
70
|
%
|
|
1,129,553
|
|
|
70
|
%
|
|||
Gross profit
|
407,642
|
|
|
27
|
%
|
|
434,572
|
|
|
30
|
%
|
|
487,074
|
|
|
30
|
%
|
|||
Research and development
|
164,321
|
|
|
11
|
%
|
|
158,549
|
|
|
11
|
%
|
|
168,848
|
|
|
10
|
%
|
|||
Sales, general and administrative
|
283,489
|
|
|
19
|
%
|
|
277,175
|
|
|
19
|
%
|
|
283,052
|
|
|
18
|
%
|
|||
Amortization or impairment of acquisition-related intangibles
|
30,772
|
|
|
2
|
%
|
|
27,499
|
|
|
2
|
%
|
|
28,732
|
|
|
2
|
%
|
|||
Loss on disposal or impairment of long-lived assets
|
10,692
|
|
|
1
|
%
|
|
2,521
|
|
|
0
|
%
|
|
16,913
|
|
|
1
|
%
|
|||
Goodwill impairment charges
|
247,455
|
|
|
17
|
%
|
|
—
|
|
|
0
|
%
|
|
—
|
|
|
0
|
%
|
|||
Wolfspeed transaction termination fee
|
—
|
|
|
—
|
%
|
|
(12,500
|
)
|
|
(1
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Operating loss
|
(329,087
|
)
|
|
(22
|
)%
|
|
(18,672
|
)
|
|
(1
|
)%
|
|
(10,471
|
)
|
|
(1
|
)%
|
|||
Non-operating income (expense), net
|
11,642
|
|
|
1
|
%
|
|
14,008
|
|
|
1
|
%
|
|
(13,035
|
)
|
|
(1
|
)%
|
|||
Loss before income taxes
|
(317,445
|
)
|
|
(21
|
)%
|
|
(4,664
|
)
|
|
—
|
%
|
|
(23,506
|
)
|
|
(1
|
)%
|
|||
Income tax (benefit) expense
|
(37,522
|
)
|
|
(3
|
)%
|
|
93,454
|
|
|
6
|
%
|
|
(1,970
|
)
|
|
—
|
%
|
|||
Net loss
|
(279,923
|
)
|
|
(19
|
)%
|
|
(98,118
|
)
|
|
(7
|
)%
|
|
(21,536
|
)
|
|
(1
|
)%
|
|||
Net income attributable to noncontrolling interest
|
45
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
|
$—
|
|
|
—
|
%
|
||
Net loss attributable to controlling interest
|
|
($279,968
|
)
|
|
(19
|
)%
|
|
|
($98,118
|
)
|
|
(7
|
)%
|
|
|
($21,536
|
)
|
|
(1
|
)%
|
Basic loss per share
|
|
($2.81
|
)
|
|
|
|
|
($1.00
|
)
|
|
|
|
|
($0.21
|
)
|
|
|
|||
Diluted loss per share
|
|
($2.81
|
)
|
|
|
|
|
($1.00
|
)
|
|
|
|
|
($0.21
|
)
|
|
|
Capacity and overhead cost reductions
|
Total estimated charges
|
|
Cumulative amounts incurred through fiscal year 2018
|
|
Affected Line Item in the Consolidated Statements of Loss
|
||||
Loss on disposal or impairment of long-lived assets
|
|
$227
|
|
|
|
$227
|
|
|
Loss on disposal or impairment of long-lived assets
|
Severance expense
|
5,470
|
|
|
4,682
|
|
|
Sales, general and administrative expenses
|
||
Lease termination and facility consolidation costs
|
2,182
|
|
|
156
|
|
|
Sales, general and administrative expenses
|
||
Increase in inventory reserves
|
897
|
|
|
897
|
|
|
Sales, general and administrative expenses
|
||
Total restructuring charges
|
|
$8,776
|
|
|
|
$5,962
|
|
|
|
Capacity and overhead cost reductions
|
Amounts incurred during fiscal year 2015
|
|
Amounts incurred during fiscal year 2016
|
|
Cumulative amounts incurred through fiscal year 2016
|
|
Affected Line Item in the Consolidated Statements of Loss
|
||||||
Loss on disposal or impairment of long-lived assets
|
|
$42,716
|
|
|
|
$15,506
|
|
|
|
$58,222
|
|
|
Loss on disposal or impairment of long-lived assets
|
Severance expense
|
2,019
|
|
|
264
|
|
|
2,283
|
|
|
Sales, general and administrative expenses
|
|||
Lease termination and facility consolidation costs
|
1,246
|
|
|
3,079
|
|
|
4,325
|
|
|
Sales, general and administrative expenses
|
|||
Increase in channel inventory reserves
|
26,479
|
|
|
—
|
|
|
26,479
|
|
|
Revenue, net
|
|||
Increase in inventory reserves
|
11,091
|
|
|
—
|
|
|
11,091
|
|
|
Cost of revenue, net
|
|||
Total restructuring charges
|
|
$83,551
|
|
|
|
$18,849
|
|
|
|
$102,400
|
|
|
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
Wolfspeed
|
|
$328,638
|
|
|
|
$221,231
|
|
|
|
$176,338
|
|
|
|
$107,407
|
|
|
49
|
%
|
|
|
$44,893
|
|
|
25
|
%
|
Percent of revenue
|
22
|
%
|
|
15
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|||||||||
LED Products
|
596,284
|
|
|
550,302
|
|
|
551,156
|
|
|
45,982
|
|
|
8
|
%
|
|
(854
|
)
|
|
—
|
%
|
|||||
Percent of revenue
|
40
|
%
|
|
37
|
%
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Lighting Products
|
568,758
|
|
|
701,467
|
|
|
889,133
|
|
|
(132,709
|
)
|
|
(19
|
)%
|
|
(187,666
|
)
|
|
(21
|
)%
|
|||||
Percent of revenue
|
38
|
%
|
|
48
|
%
|
|
55
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
|
$1,493,680
|
|
|
|
$1,473,000
|
|
|
|
$1,616,627
|
|
|
|
$20,680
|
|
|
1
|
%
|
|
|
($143,627
|
)
|
|
(9
|
)%
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
Wolfspeed gross profit
|
|
$158,455
|
|
|
|
$103,465
|
|
|
|
$94,622
|
|
|
|
$54,990
|
|
|
53
|
%
|
|
|
$8,843
|
|
|
9
|
%
|
Wolfspeed gross margin
|
48
|
%
|
|
47
|
%
|
|
54
|
%
|
|
|
|
|
|
|
|
|
|||||||||
LED Products
|
157,914
|
|
|
151,675
|
|
|
173,814
|
|
|
6,239
|
|
|
4
|
%
|
|
(22,139
|
)
|
|
(13
|
)%
|
|||||
LED Products gross margin
|
26
|
%
|
|
28
|
%
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Lighting Products gross profit
|
108,919
|
|
|
196,218
|
|
|
238,242
|
|
|
(87,299
|
)
|
|
(44
|
)%
|
|
(42,024
|
)
|
|
(18
|
)%
|
|||||
Lighting Products gross margin
|
19
|
%
|
|
28
|
%
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Unallocated costs
|
(12,221
|
)
|
|
(16,786
|
)
|
|
(19,604
|
)
|
|
4,565
|
|
|
27
|
%
|
|
2,818
|
|
|
14
|
%
|
|||||
COGS acquisition related costs
|
(5,425
|
)
|
|
—
|
|
|
—
|
|
|
(5,425
|
)
|
|
100
|
%
|
|
—
|
|
|
—
|
%
|
|||||
Consolidated gross profit
|
|
$407,642
|
|
|
|
$434,572
|
|
|
|
$487,074
|
|
|
|
($26,930
|
)
|
|
(6
|
)%
|
|
|
($52,502
|
)
|
|
(11
|
)%
|
Consolidated gross margin
|
27
|
%
|
|
30
|
%
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
Research and development
|
|
$164,321
|
|
|
|
$158,549
|
|
|
|
$168,848
|
|
|
|
$5,772
|
|
|
4
|
%
|
|
|
($10,299
|
)
|
|
(6
|
)%
|
Percent of revenue
|
11
|
%
|
|
11
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
Sales, general and administrative
|
|
$283,489
|
|
|
|
$277,175
|
|
|
|
$283,052
|
|
|
|
$6,314
|
|
|
2
|
%
|
|
|
($5,877
|
)
|
|
(2
|
)%
|
Percent of revenue
|
19
|
%
|
|
19
|
%
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
Customer relationships
|
|
$8,097
|
|
|
|
$6,235
|
|
|
|
$6,374
|
|
|
|
$1,862
|
|
|
30
|
%
|
|
|
($139
|
)
|
|
(2
|
)%
|
Developed technology
|
21,686
|
|
|
20,860
|
|
|
20,321
|
|
|
826
|
|
|
4
|
%
|
|
539
|
|
|
3
|
%
|
|||||
Non-compete agreements
|
989
|
|
|
404
|
|
|
2,037
|
|
|
585
|
|
|
145
|
%
|
|
(1,633
|
)
|
|
(80
|
)%
|
|||||
Total
|
|
$30,772
|
|
|
|
$27,499
|
|
|
|
$28,732
|
|
|
|
$3,273
|
|
|
12
|
%
|
|
|
($1,233
|
)
|
|
(4
|
)%
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
Loss on disposal or impairment of long-lived assets
|
|
$10,692
|
|
|
|
$2,521
|
|
|
|
$16,913
|
|
|
|
$8,171
|
|
|
324
|
%
|
|
|
($14,392
|
)
|
|
(85
|
)%
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||||||||
(Loss) gain on sale of investments, net
|
|
($86
|
)
|
|
|
$93
|
|
|
|
$238
|
|
|
|
($179
|
)
|
|
(192
|
)%
|
|
|
($145
|
)
|
|
(61
|
)%
|
Gain (loss) on equity investment
|
7,145
|
|
|
7,543
|
|
|
(15,357
|
)
|
|
(398
|
)
|
|
(5
|
)%
|
|
22,900
|
|
|
149
|
%
|
|||||
Dividends from equity investment
|
—
|
|
|
16
|
|
|
1,655
|
|
|
(16
|
)
|
|
(100
|
)%
|
|
(1,639
|
)
|
|
(99
|
)%
|
|||||
Interest income, net
|
1,827
|
|
|
3,696
|
|
|
4,472
|
|
|
(1,869
|
)
|
|
(51
|
)%
|
|
(776
|
)
|
|
(17
|
)%
|
|||||
Foreign currency gain (loss), net
|
2,250
|
|
|
2,460
|
|
|
(4,500
|
)
|
|
(210
|
)
|
|
(9
|
)%
|
|
6,960
|
|
|
155
|
%
|
|||||
Other, net
|
506
|
|
|
200
|
|
|
457
|
|
|
306
|
|
|
153
|
%
|
|
(257
|
)
|
|
(56
|
)%
|
|||||
Non-operating income (expense), net
|
|
$11,642
|
|
|
|
$14,008
|
|
|
|
($13,035
|
)
|
|
|
($2,366
|
)
|
|
(17
|
)%
|
|
|
$27,043
|
|
|
207
|
%
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
One Year |
|
One to
Three Years |
|
Three to
Five Years |
|
More Than
Five Years |
||||||||||
Operating lease obligations
|
25,369
|
|
|
7,022
|
|
|
11,299
|
|
|
6,260
|
|
|
788
|
|
|||||
Purchase obligations
|
227,637
|
|
|
209,246
|
|
|
6,380
|
|
|
4,003
|
|
|
8,008
|
|
|||||
Long-term debt
|
292,000
|
|
|
—
|
|
|
—
|
|
|
292,000
|
|
|
—
|
|
|||||
Interest payments on long-term debt
1
|
35,039
|
|
|
9,730
|
|
|
19,460
|
|
|
5,849
|
|
|
—
|
|
|||||
Other long-term liabilities
2
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$580,045
|
|
|
|
$225,998
|
|
|
|
$37,139
|
|
|
|
$308,112
|
|
|
|
$8,796
|
|
|
June 24,
2018 |
|
June 25,
2017 |
|
Change
|
||||||
Cash and cash equivalents
|
|
$118,924
|
|
|
|
$132,597
|
|
|
|
($13,673
|
)
|
Short-term investments
|
268,161
|
|
|
478,341
|
|
|
(210,180
|
)
|
|||
Total cash, cash equivalents and short-term investments
|
|
$387,085
|
|
|
|
$610,938
|
|
|
|
($223,853
|
)
|
|
Three Months Ended
|
|
|
|||||
|
June 24,
2018 |
|
June 25,
2017 |
|
Change
|
|||
Days of sales outstanding (a)
|
34
|
|
|
37
|
|
|
(3
|
)
|
Days of supply in inventory (b)
|
91
|
|
|
98
|
|
|
(7
|
)
|
Days in accounts payable (c)
|
(46
|
)
|
|
(46
|
)
|
|
—
|
|
Cash conversion cycle
|
79
|
|
|
89
|
|
|
(10
|
)
|
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.
|
|
Fiscal Years Ended
|
|
Year-Over-Year Change
|
||||||||||||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|
2017 to 2018
|
|
2016 to 2017
|
||||||||||
Cash provided by operating activities
|
|
$167,358
|
|
|
|
$215,900
|
|
|
|
$203,316
|
|
|
|
($48,542
|
)
|
|
|
$12,584
|
|
Cash used in investing activities
|
(423,887
|
)
|
|
(145,250
|
)
|
|
(7,903
|
)
|
|
(278,637
|
)
|
|
(137,347
|
)
|
|||||
Cash provided by (used in) financing activities
|
242,671
|
|
|
(104,078
|
)
|
|
(167,859
|
)
|
|
346,749
|
|
|
63,781
|
|
|||||
Effect of foreign exchange changes
|
185
|
|
|
(129
|
)
|
|
(1,110
|
)
|
|
314
|
|
|
981
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
|
($13,673
|
)
|
|
|
($33,557
|
)
|
|
|
$26,444
|
|
|
|
$19,884
|
|
|
|
($60,001
|
)
|
•
|
Level 1 - Valuations based on quoted prices in active markets for identical instruments that we are 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.
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/PricewaterhouseCoopers LLP
|
|
Raleigh, North Carolina
|
|
August 20, 2018
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
|
(In thousands, except par value)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
|
$118,924
|
|
|
|
$132,597
|
|
Short-term investments
|
268,161
|
|
|
478,341
|
|
||
Total cash, cash equivalents and short-term investments
|
387,085
|
|
|
610,938
|
|
||
Accounts receivable, net
|
153,875
|
|
|
148,392
|
|
||
Income tax receivable
|
2,434
|
|
|
8,040
|
|
||
Inventories
|
296,015
|
|
|
284,385
|
|
||
Prepaid expenses
|
28,310
|
|
|
23,305
|
|
||
Other current assets
|
20,191
|
|
|
23,390
|
|
||
Current assets held for sale
|
2,180
|
|
|
2,180
|
|
||
Total current assets
|
890,090
|
|
|
1,100,630
|
|
||
Property and equipment, net
|
661,319
|
|
|
581,263
|
|
||
Goodwill
|
620,330
|
|
|
618,828
|
|
||
Intangible assets, net
|
390,054
|
|
|
274,315
|
|
||
Other long-term investments
|
57,501
|
|
|
50,366
|
|
||
Deferred income taxes
|
6,451
|
|
|
11,763
|
|
||
Other assets
|
11,800
|
|
|
12,702
|
|
||
Total assets
|
|
$2,637,545
|
|
|
|
$2,649,867
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, trade
|
|
$151,307
|
|
|
|
$133,185
|
|
Accrued salaries and wages
|
53,458
|
|
|
41,860
|
|
||
Other current liabilities
|
43,528
|
|
|
36,978
|
|
||
Total current liabilities
|
248,293
|
|
|
212,023
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt
|
292,000
|
|
|
145,000
|
|
||
Deferred income taxes
|
3,056
|
|
|
49,860
|
|
||
Other long-term liabilities
|
22,115
|
|
|
20,179
|
|
||
Total long-term liabilities
|
317,171
|
|
|
215,039
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.01; 3,000 shares authorized at June 24, 2018 and June 25, 2017; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.00125; 200,000 shares authorized at June 24, 2018 and June 25, 2017; 101,488 and 97,674 shares issued and outstanding at June 24, 2018 and June 25, 2017, respectively
|
127
|
|
|
121
|
|
||
Additional paid-in-capital
|
2,549,123
|
|
|
2,419,517
|
|
||
Accumulated other comprehensive income, net of taxes
|
596
|
|
|
5,909
|
|
||
Accumulated deficit
|
(482,710
|
)
|
|
(202,742
|
)
|
||
Total shareholders’ equity
|
2,067,136
|
|
|
2,222,805
|
|
||
Noncontrolling interest
|
4,945
|
|
|
—
|
|
||
Total liabilities and shareholders’ equity
|
|
$2,637,545
|
|
|
|
$2,649,867
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
|
(In thousands, except per share data)
|
||||||||||
Revenue, net
|
|
$1,493,680
|
|
|
|
$1,473,000
|
|
|
|
$1,616,627
|
|
Cost of revenue, net
|
1,086,038
|
|
|
1,038,428
|
|
|
1,129,553
|
|
|||
Gross profit
|
407,642
|
|
|
434,572
|
|
|
487,074
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
164,321
|
|
|
158,549
|
|
|
168,848
|
|
|||
Sales, general and administrative
|
283,489
|
|
|
277,175
|
|
|
283,052
|
|
|||
Amortization or impairment of acquisition-related intangibles
|
30,772
|
|
|
27,499
|
|
|
28,732
|
|
|||
Goodwill impairment charges
|
247,455
|
|
|
—
|
|
|
—
|
|
|||
Loss on disposal or impairment of long-lived assets
|
10,692
|
|
|
2,521
|
|
|
16,913
|
|
|||
Wolfspeed transaction termination fee
|
—
|
|
|
(12,500
|
)
|
|
—
|
|
|||
Total operating expenses
|
736,729
|
|
|
453,244
|
|
|
497,545
|
|
|||
Operating loss
|
(329,087
|
)
|
|
(18,672
|
)
|
|
(10,471
|
)
|
|||
Non-operating income (expense), net
|
11,642
|
|
|
14,008
|
|
|
(13,035
|
)
|
|||
Loss before income taxes
|
(317,445
|
)
|
|
(4,664
|
)
|
|
(23,506
|
)
|
|||
Income tax (benefit) expense
|
(37,522
|
)
|
|
93,454
|
|
|
(1,970
|
)
|
|||
Net loss
|
(279,923
|
)
|
|
(98,118
|
)
|
|
(21,536
|
)
|
|||
Net income attributable to noncontrolling interest
|
45
|
|
|
—
|
|
|
—
|
|
|||
Net loss attributable to controlling interest
|
|
($279,968
|
)
|
|
|
($98,118
|
)
|
|
|
($21,536
|
)
|
Loss per share:
|
|
|
|
|
|
||||||
Basic
|
($2.81
|
)
|
|
|
($1.00
|
)
|
|
|
($0.21
|
)
|
|
Diluted
|
($2.81
|
)
|
|
|
($1.00
|
)
|
|
|
($0.21
|
)
|
|
Weighted average shares used in per share calculation:
|
|
|
|
|
|
||||||
Basic
|
99,530
|
|
|
98,487
|
|
|
101,783
|
|
|||
Diluted
|
99,530
|
|
|
98,487
|
|
|
101,783
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
|
(In thousands)
|
||||||||||
Net loss
|
|
($279,968
|
)
|
|
|
($98,118
|
)
|
|
|
($21,536
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Currency translation gain (loss), net of tax benefit of $0, $0 and $0, respectively
|
604
|
|
|
(153
|
)
|
|
(362
|
)
|
|||
Net unrealized (loss) gain on available-for-sale securities, net of tax expense of $0, $0, and $1,936, respectively
|
(5,917
|
)
|
|
(2,666
|
)
|
|
3,292
|
|
|||
Other comprehensive (loss) income
|
(5,313
|
)
|
|
(2,819
|
)
|
|
2,930
|
|
|||
Comprehensive loss
|
|
($285,281
|
)
|
|
|
($100,937
|
)
|
|
|
($18,606
|
)
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
|
($279,923
|
)
|
|
|
($98,118
|
)
|
|
|
($21,536
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
153,937
|
|
|
150,508
|
|
|
159,145
|
|
|||
Stock-based compensation
|
43,203
|
|
|
47,725
|
|
|
58,728
|
|
|||
Excess tax benefit from share-based payment arrangements
|
—
|
|
|
2
|
|
|
(12
|
)
|
|||
Goodwill impairment charges
|
247,455
|
|
|
—
|
|
|
—
|
|
|||
Loss on disposal or impairment of long-lived assets
|
10,692
|
|
|
2,521
|
|
|
16,913
|
|
|||
Amortization of premium/discount on investments
|
4,809
|
|
|
5,427
|
|
|
5,314
|
|
|||
(Gain)/loss on equity investment
|
(7,143
|
)
|
|
(7,543
|
)
|
|
15,357
|
|
|||
Foreign exchange (gain)/loss on equity investment
|
(550
|
)
|
|
(2,644
|
)
|
|
2,057
|
|
|||
Deferred income taxes
|
(40,038
|
)
|
|
74,918
|
|
|
(15,839
|
)
|
|||
Changes in operating assets and liabilities, net of effect of acquisition:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(4,764
|
)
|
|
16,955
|
|
|
21,800
|
|
|||
Inventories
|
10,998
|
|
|
17,918
|
|
|
(23,269
|
)
|
|||
Prepaid expenses and other assets
|
(5,358
|
)
|
|
17,438
|
|
|
8,103
|
|
|||
Accounts payable, trade
|
14,296
|
|
|
(4,818
|
)
|
|
(12,090
|
)
|
|||
Accrued salaries and wages and other liabilities
|
19,744
|
|
|
(4,389
|
)
|
|
(11,355
|
)
|
|||
Net cash provided by operating activities
|
167,358
|
|
|
215,900
|
|
|
203,316
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(185,688
|
)
|
|
(86,928
|
)
|
|
(120,018
|
)
|
|||
Purchases of patent and licensing rights
|
(10,115
|
)
|
|
(12,405
|
)
|
|
(14,443
|
)
|
|||
Proceeds from sale of property and equipment
|
614
|
|
|
1,392
|
|
|
5,296
|
|
|||
Purchases of short-term investments
|
(200,688
|
)
|
|
(200,405
|
)
|
|
(220,823
|
)
|
|||
Proceeds from maturities of short-term investments
|
224,171
|
|
|
125,922
|
|
|
312,524
|
|
|||
Proceeds from sale of short-term investments
|
176,981
|
|
|
27,174
|
|
|
42,074
|
|
|||
Purchase of acquired business, net of cash acquired
|
(429,162
|
)
|
|
—
|
|
|
(12,513
|
)
|
|||
Net cash used in investing activities
|
(423,887
|
)
|
|
(145,250
|
)
|
|
(7,903
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuing Cree Venture LED to noncontrolling interest
|
4,900
|
|
|
—
|
|
|
—
|
|
|||
Payment of acquisition-related contingent consideration
|
(1,850
|
)
|
|
(2,775
|
)
|
|
—
|
|
|||
Proceeds from long-term debt borrowings
|
670,000
|
|
|
468,000
|
|
|
653,000
|
|
|||
Payments on long-term debt borrowings
|
(523,000
|
)
|
|
(483,000
|
)
|
|
(693,000
|
)
|
|||
Net proceeds from issuance of common stock
|
92,621
|
|
|
17,716
|
|
|
21,682
|
|
|||
Excess tax benefit from share-based payment arrangements
|
—
|
|
|
(2
|
)
|
|
12
|
|
|||
Repurchases of common stock
|
—
|
|
|
(104,017
|
)
|
|
(149,553
|
)
|
|||
Net cash provided by (used) in financing activities
|
242,671
|
|
|
(104,078
|
)
|
|
(167,859
|
)
|
|||
Effects of foreign exchange changes on cash and cash equivalents
|
185
|
|
|
(129
|
)
|
|
(1,110
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(13,673
|
)
|
|
(33,557
|
)
|
|
26,444
|
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Beginning of period
|
132,597
|
|
|
166,154
|
|
|
139,710
|
|
|||
End of period
|
|
$118,924
|
|
|
|
$132,597
|
|
|
|
$166,154
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$6,093
|
|
|
|
$3,588
|
|
|
|
$3,110
|
|
Cash paid for income taxes
|
|
$1,191
|
|
|
|
$8,494
|
|
|
|
$14,722
|
|
Significant non-cash transactions:
|
|
|
|
|
|
||||||
Accrued property and equipment
|
|
$15,028
|
|
|
|
$10,173
|
|
|
|
$3,721
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
(Accumulated deficit)/Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders’
Equity
|
|
Non
controlling Interest
|
|
Total Equity
|
|||||||||||||||||
|
Number
of Shares
|
|
Par
Value
|
|
|
|||||||||||||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||||||
Balance at June 28, 2015
|
105,507
|
|
|
|
$131
|
|
|
|
$2,285,554
|
|
|
|
$170,469
|
|
|
|
$5,798
|
|
|
|
$2,461,952
|
|
|
|
$—
|
|
|
|
$2,461,952
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,536
|
)
|
|
—
|
|
|
(21,536
|
)
|
|
—
|
|
|
(21,536
|
)
|
|||||||
Currency translation loss, net of tax benefit of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(362
|
)
|
|
(362
|
)
|
|
—
|
|
|
(362
|
)
|
|||||||
Unrealized gain on available-for-sale securities, net of tax expense of $1,936
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,292
|
|
|
3,292
|
|
|
—
|
|
|
3,292
|
|
|||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
(18,606
|
)
|
|
—
|
|
|
(18,606
|
)
|
||||||||||||
Income tax expense from stock option exercises
|
—
|
|
|
—
|
|
|
(3,525
|
)
|
|
—
|
|
|
—
|
|
|
(3,525
|
)
|
|
—
|
|
|
(3,525
|
)
|
|||||||
Repurchased shares
|
(5,842
|
)
|
|
(7
|
)
|
|
—
|
|
|
(149,546
|
)
|
|
|
|
|
(149,553
|
)
|
|
—
|
|
|
(149,553
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
58,425
|
|
|
—
|
|
|
—
|
|
|
58,425
|
|
|
—
|
|
|
58,425
|
|
|||||||
Exercise of stock options and issuance of shares
|
1,164
|
|
|
1
|
|
|
19,130
|
|
|
—
|
|
|
—
|
|
|
19,131
|
|
|
—
|
|
|
19,131
|
|
|||||||
Balance at June 26, 2016
|
100,829
|
|
|
|
$125
|
|
|
|
$2,359,584
|
|
|
|
($613
|
)
|
|
|
$8,728
|
|
|
|
$2,367,824
|
|
|
|
$—
|
|
|
|
$2,367,824
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,118
|
)
|
|
—
|
|
|
(98,118
|
)
|
|
—
|
|
|
(98,118
|
)
|
|||||||
Currency translation loss, net of tax benefit of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(153
|
)
|
|
(153
|
)
|
|
—
|
|
|
(153
|
)
|
|||||||
Unrealized loss on available-for-sale securities, net of tax expense of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,666
|
)
|
|
(2,666
|
)
|
|
—
|
|
|
(2,666
|
)
|
|||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
(100,937
|
)
|
|
—
|
|
|
(100,937
|
)
|
||||||||||||
Income tax expense from stock option exercises
|
—
|
|
|
—
|
|
|
(253
|
)
|
|
—
|
|
|
—
|
|
|
(253
|
)
|
|
—
|
|
|
(253
|
)
|
|||||||
Repurchased shares
|
(4,460
|
)
|
|
(6
|
)
|
|
—
|
|
|
(104,011
|
)
|
|
—
|
|
|
(104,017
|
)
|
|
—
|
|
|
(104,017
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
46,813
|
|
|
—
|
|
|
—
|
|
|
46,813
|
|
|
—
|
|
|
46,813
|
|
|||||||
Exercise of stock options and issuance of shares
|
1,305
|
|
|
2
|
|
|
13,373
|
|
|
—
|
|
|
—
|
|
|
13,375
|
|
|
—
|
|
|
13,375
|
|
|||||||
Balance at June 25, 2017
|
97,674
|
|
|
|
$121
|
|
|
|
$2,419,517
|
|
|
|
($202,742
|
)
|
|
|
$5,909
|
|
|
|
$2,222,805
|
|
|
|
$—
|
|
|
|
$2,222,805
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(279,968
|
)
|
|
—
|
|
|
(279,968
|
)
|
|
45
|
|
|
(279,923
|
)
|
|||||||
Currency translation gain, net of tax benefit of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
604
|
|
|
604
|
|
|
—
|
|
|
604
|
|
|||||||
Unrealized loss on available-for-sale securities, net of tax expense of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,917
|
)
|
|
(5,917
|
)
|
|
—
|
|
|
(5,917
|
)
|
|||||||
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(285,281
|
)
|
|
45
|
|
|
(285,236
|
)
|
||||||||||||
Income tax expense from stock option exercises
|
—
|
|
|
—
|
|
|
(6,217
|
)
|
|
—
|
|
|
—
|
|
|
(6,217
|
)
|
|
—
|
|
|
(6,217
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
43,208
|
|
|
—
|
|
|
—
|
|
|
43,208
|
|
|
—
|
|
|
43,208
|
|
|||||||
Exercise of stock options and issuance of shares
|
3,814
|
|
|
6
|
|
|
92,615
|
|
|
—
|
|
|
—
|
|
|
92,621
|
|
|
—
|
|
|
92,621
|
|
|||||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,900
|
|
|
4,900
|
|
|||||||
Balance at June 24, 2018
|
101,488
|
|
|
|
$127
|
|
|
|
$2,549,123
|
|
|
|
($482,710
|
)
|
|
|
$596
|
|
|
|
$2,067,136
|
|
|
|
$4,945
|
|
|
|
$2,072,081
|
|
•
|
Wolfspeed
|
•
|
LED Products
|
•
|
Lighting Products
|
•
|
Held-to-Maturity – Debt securities that the entity has the positive intent and ability to hold to maturity, which are reported at amortized cost.
|
•
|
Trading – Debt and equity securities that are bought and held principally for the purpose of selling in the near term, which are reported at fair value, with unrealized gains and losses included in earnings.
|
•
|
Available-for-Sale – Debt and equity securities not classified as either held-to-maturity or trading securities, which are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders’ equity.
|
Machinery and equipment
|
|
3 to 15 years
|
Buildings and building improvements
|
|
5 to 40 years
|
Furniture and fixtures
|
|
3 to 5 years
|
Aircraft and vehicles
|
|
5 to 20 years
|
Leasehold improvements
|
|
Shorter of estimated useful life or lease term
|
|
Asset Amount
|
|
Estimated Life in Years
|
||
Lease agreement
|
|
$1,000
|
|
|
10
|
Customer relationships
|
92,000
|
|
|
15
|
|
Developed technology
|
44,000
|
|
|
14
|
|
Non-compete agreements
|
12,000
|
|
|
4
|
|
Total identifiable intangible assets
|
|
$149,000
|
|
|
|
|
Amount
|
||
Revenue
|
|
$28,953
|
|
Net loss
|
|
($11,735
|
)
|
|
|
Twelve Months Ended
|
||||||
|
|
June 24, 2018
|
|
June 25, 2017
|
||||
Revenue
|
|
$1,559,099
|
|
$1,580,605
|
||||
Net loss
|
|
(284,929
|
)
|
|
(108,750
|
)
|
||
Loss per share, basic
|
|
$
|
(2.86
|
)
|
|
$
|
(1.10
|
)
|
Loss per share, diluted
|
|
$
|
(2.86
|
)
|
|
$
|
(1.10
|
)
|
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 & 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
|
|
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Billed trade receivables
|
|
$215,077
|
|
|
|
$205,516
|
|
Unbilled contract receivables
|
966
|
|
|
912
|
|
||
|
216,043
|
|
|
206,428
|
|
||
Allowance for sales returns, discounts and other incentives
|
(56,800
|
)
|
|
(49,425
|
)
|
||
Allowance for bad debts
|
(5,368
|
)
|
|
(8,611
|
)
|
||
Accounts receivable, net
|
|
$153,875
|
|
|
|
$148,392
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Balance at beginning of period
|
|
$49,425
|
|
|
|
$48,710
|
|
|
|
$58,094
|
|
Current period claims
|
(184,022
|
)
|
|
(191,325
|
)
|
|
(163,523
|
)
|
|||
Provision for sales returns, discounts and other incentives
|
191,397
|
|
|
192,040
|
|
|
154,139
|
|
|||
Balance at end of period
|
|
$56,800
|
|
|
|
$49,425
|
|
|
|
$48,710
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Balance at beginning of period
|
|
$8,611
|
|
|
|
$5,505
|
|
|
|
$4,941
|
|
Current period provision
|
1,060
|
|
|
3,541
|
|
|
564
|
|
|||
Write-offs, net of recoveries
|
(4,303
|
)
|
|
(435
|
)
|
|
—
|
|
|||
Balance at end of period
|
|
$5,368
|
|
|
|
$8,611
|
|
|
|
$5,505
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Raw material
|
|
$95,890
|
|
|
|
$73,410
|
|
Work-in-progress
|
104,300
|
|
|
100,402
|
|
||
Finished goods
|
95,825
|
|
|
110,573
|
|
||
Inventories
|
|
$296,015
|
|
|
|
$284,385
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Furniture and fixtures
|
|
$14,175
|
|
|
|
$14,567
|
|
Land and buildings
|
439,534
|
|
|
399,305
|
|
||
Machinery and equipment
|
1,229,857
|
|
|
1,185,119
|
|
||
Aircraft and vehicles
|
2,013
|
|
|
11,138
|
|
||
Computer hardware/software
|
54,024
|
|
|
46,677
|
|
||
Leasehold improvements and other
|
8,171
|
|
|
6,972
|
|
||
Construction in progress
|
211,758
|
|
|
162,450
|
|
||
Property and equipment, gross
|
1,959,532
|
|
|
1,826,228
|
|
||
Accumulated depreciation
|
(1,298,213
|
)
|
|
(1,244,965
|
)
|
||
Property and equipment, net
|
|
$661,319
|
|
|
|
$581,263
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Accrued taxes
|
|
$8,053
|
|
|
|
$11,148
|
|
Accrued professional fees
|
4,911
|
|
|
5,545
|
|
||
Accrued warranty
|
15,752
|
|
|
13,631
|
|
||
Accrued other
|
14,812
|
|
|
6,654
|
|
||
Other current liabilities
|
|
$43,528
|
|
|
|
$36,978
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Currency translation gain
|
|
$5,075
|
|
|
|
$4,471
|
|
Net unrealized (loss) gain on available-for-sale securities
|
(4,479
|
)
|
|
1,438
|
|
||
Accumulated other comprehensive income, net of taxes
|
|
$596
|
|
|
|
$5,909
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
(Loss) gain on sale of investments, net
|
|
($86
|
)
|
|
|
$93
|
|
|
|
$238
|
|
Gain (loss) on equity investment
|
7,145
|
|
|
7,543
|
|
|
(15,357
|
)
|
|||
Dividends from equity investment
|
—
|
|
|
16
|
|
|
1,655
|
|
|||
Interest income, net
|
1,827
|
|
|
3,696
|
|
|
4,472
|
|
|||
Foreign currency gain (loss), net
|
2,250
|
|
|
2,460
|
|
|
(4,500
|
)
|
|||
Other, net
|
506
|
|
|
200
|
|
|
457
|
|
|||
Non-operating income (expense), net
|
|
$11,642
|
|
|
|
$14,008
|
|
|
|
($13,035
|
)
|
Accumulated Other Comprehensive (Loss) Income Component
|
|
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income
|
|
Affected Line Item in the Consolidated Statements of Loss
|
||||||||||
|
|
Fiscal Years Ended
|
|
|
||||||||||
|
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
|
|
||||||
Net unrealized (loss) gain on available-for-sale securities, net of taxes
|
|
|
($86
|
)
|
|
|
$93
|
|
|
|
$238
|
|
|
Non-operating income (expense), net
|
|
|
(86
|
)
|
|
93
|
|
|
238
|
|
|
Loss before income taxes
|
|||
|
|
—
|
|
|
—
|
|
|
20
|
|
|
Income tax (benefit) expense
|
|||
|
|
|
($86
|
)
|
|
|
$93
|
|
|
|
$218
|
|
|
Net loss
|
|
June 24, 2018
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Municipal bonds
|
|
$110,198
|
|
|
|
$17
|
|
|
|
($939
|
)
|
|
|
$109,276
|
|
Corporate bonds
|
77,871
|
|
|
36
|
|
|
(1,150
|
)
|
|
76,757
|
|
||||
U.S. agency securities
|
3,922
|
|
|
—
|
|
|
(38
|
)
|
|
3,884
|
|
||||
Non-U.S. certificates of deposit
|
77,744
|
|
|
—
|
|
|
—
|
|
|
77,744
|
|
||||
U.S. certificates of deposit
|
500
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total short-term investments
|
|
$270,235
|
|
|
|
$53
|
|
|
|
($2,127
|
)
|
|
|
$268,161
|
|
|
June 24, 2018
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
Greater than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
Municipal bonds
|
|
$97,470
|
|
|
|
($861
|
)
|
|
|
$3,642
|
|
|
|
($78
|
)
|
|
|
$101,112
|
|
|
|
($939
|
)
|
Corporate bonds
|
61,453
|
|
|
(1,088
|
)
|
|
1,486
|
|
|
(62
|
)
|
|
62,939
|
|
|
(1,150
|
)
|
||||||
U.S. agency securities
|
3,884
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
3,884
|
|
|
(38
|
)
|
||||||
Total
|
|
$162,807
|
|
|
|
($1,987
|
)
|
|
|
$5,128
|
|
|
|
($140
|
)
|
|
|
$167,935
|
|
|
|
($2,127
|
)
|
Number of securities with an unrealized loss
|
|
|
151
|
|
|
|
|
6
|
|
|
|
|
157
|
|
|
June 25, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Municipal bonds
|
|
$177,890
|
|
|
|
$2,219
|
|
|
|
($68
|
)
|
|
|
$180,041
|
|
Corporate bonds
|
175,991
|
|
|
1,925
|
|
|
(195
|
)
|
|
177,721
|
|
||||
U.S. agency securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. certificates of deposit
|
120,379
|
|
|
—
|
|
|
—
|
|
|
120,379
|
|
||||
U.S. certificates of deposit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commercial paper
|
200
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||
Total short-term investments
|
|
$474,460
|
|
|
|
$4,144
|
|
|
|
($263
|
)
|
|
|
$478,341
|
|
|
June 25, 2017
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
Greater than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
Municipal bonds
|
|
$26,816
|
|
|
|
($68
|
)
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$26,816
|
|
|
|
($68
|
)
|
Corporate bonds
|
57,404
|
|
|
(195
|
)
|
|
—
|
|
|
—
|
|
|
57,404
|
|
|
(195
|
)
|
||||||
U.S. agency securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$84,220
|
|
|
|
($263
|
)
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$84,220
|
|
|
|
($263
|
)
|
Number of securities with an unrealized loss
|
|
|
67
|
|
|
|
|
—
|
|
|
|
|
67
|
|
|
Within One
Year
|
|
After One,
Within Five
Years
|
|
After Five,
Within Ten
Years
|
|
After Ten
Years
|
|
Total
|
||||||||||
Municipal bonds
|
|
$24,700
|
|
|
|
$84,576
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$109,276
|
|
Corporate bonds
|
22,534
|
|
|
54,223
|
|
|
—
|
|
|
—
|
|
|
76,757
|
|
|||||
U.S. agency securities
|
—
|
|
|
3,884
|
|
|
—
|
|
|
—
|
|
|
3,884
|
|
|||||
Non-U.S. certificates of deposit
|
77,744
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,744
|
|
|||||
U.S. certificates of deposit
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
|||||
Total short-term investments
|
|
$125,478
|
|
|
|
$142,683
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$268,161
|
|
•
|
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.
|
|
June 24, 2018
|
|
June 25, 2017
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal bonds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,802
|
|
|
$
|
—
|
|
|
$
|
1,802
|
|
Non-U.S. certificates of deposit
|
—
|
|
|
75,499
|
|
|
—
|
|
|
75,499
|
|
|
—
|
|
|
736
|
|
|
—
|
|
|
736
|
|
||||||||
Money market funds
|
1,992
|
|
|
—
|
|
|
—
|
|
|
1,992
|
|
|
1,184
|
|
|
—
|
|
|
—
|
|
|
1,184
|
|
||||||||
Commercial Paper
|
—
|
|
|
275
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total cash equivalents
|
1,992
|
|
|
75,774
|
|
|
—
|
|
|
77,766
|
|
|
1,184
|
|
|
2,538
|
|
|
—
|
|
|
3,722
|
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal bonds
|
—
|
|
|
109,276
|
|
|
—
|
|
|
109,276
|
|
|
—
|
|
|
180,042
|
|
|
—
|
|
|
180,042
|
|
||||||||
Corporate bonds
|
—
|
|
|
76,757
|
|
|
—
|
|
|
76,757
|
|
|
—
|
|
|
177,721
|
|
|
—
|
|
|
177,721
|
|
||||||||
U.S. agency securities
|
3,884
|
|
|
—
|
|
|
—
|
|
|
3,884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
U.S. certificates of deposit
|
—
|
|
|
500
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
||||||||
Non-U.S. certificates of deposit
|
—
|
|
|
77,744
|
|
|
—
|
|
|
77,744
|
|
|
—
|
|
|
120,378
|
|
|
—
|
|
|
120,378
|
|
||||||||
Total short-term investments
|
3,884
|
|
|
264,277
|
|
|
—
|
|
|
268,161
|
|
|
—
|
|
|
478,341
|
|
|
—
|
|
|
478,341
|
|
||||||||
Other long-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common stock of non-U.S. corporations
|
—
|
|
|
57,501
|
|
|
—
|
|
|
57,501
|
|
|
—
|
|
|
50,366
|
|
|
—
|
|
|
50,366
|
|
||||||||
Total other long-term investments
|
—
|
|
|
57,501
|
|
|
—
|
|
|
57,501
|
|
|
—
|
|
|
50,366
|
|
|
—
|
|
|
50,366
|
|
||||||||
Total assets
|
|
$5,876
|
|
|
|
$397,552
|
|
|
|
$—
|
|
|
|
$403,428
|
|
|
|
$1,184
|
|
|
|
$531,245
|
|
|
|
$—
|
|
|
|
$532,429
|
|
•
|
Wolfspeed
|
•
|
LED Products
|
•
|
Lighting Products
|
|
Wolfspeed
|
|
LED Products
|
|
Lighting Products
|
|
Consolidated Total
|
||||||||
Balance at June 25, 2017
|
|
$100,769
|
|
|
|
$180,278
|
|
|
|
$337,781
|
|
|
|
$618,828
|
|
Acquisition
|
248,957
|
|
|
—
|
|
|
—
|
|
|
|
$248,957
|
|
|||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
(247,455
|
)
|
|
|
($247,455
|
)
|
|||
Balance at June 24, 2018
|
|
$349,726
|
|
|
|
$180,278
|
|
|
|
$90,326
|
|
|
|
$620,330
|
|
|
June 24, 2018
|
|
June 25, 2017
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
$233,420
|
|
|
|
($92,770
|
)
|
|
|
$140,650
|
|
|
|
$141,420
|
|
|
|
($84,673
|
)
|
|
|
$56,747
|
|
Developed technology
|
226,728
|
|
|
(154,467
|
)
|
|
72,261
|
|
|
181,728
|
|
|
(132,747
|
)
|
|
48,981
|
|
||||||
Non-compete agreements
|
22,475
|
|
|
(11,386
|
)
|
|
11,089
|
|
|
10,475
|
|
|
(10,398
|
)
|
|
77
|
|
||||||
Trade names, finite-lived
|
520
|
|
|
(520
|
)
|
|
—
|
|
|
520
|
|
|
(520
|
)
|
|
—
|
|
||||||
Patent and licensing rights
|
159,297
|
|
|
(72,923
|
)
|
|
86,374
|
|
|
151,985
|
|
|
(63,155
|
)
|
|
88,830
|
|
||||||
Total intangible assets with finite lives
|
642,440
|
|
|
(332,066
|
)
|
|
310,374
|
|
|
486,128
|
|
|
(291,493
|
)
|
|
194,635
|
|
||||||
Trade names, indefinite-lived
|
79,680
|
|
|
|
|
79,680
|
|
|
79,680
|
|
|
|
|
79,680
|
|
||||||||
Total intangible assets
|
|
$722,120
|
|
|
|
($332,066
|
)
|
|
|
$390,054
|
|
|
|
$565,808
|
|
|
|
($291,493
|
)
|
|
|
$274,315
|
|
Fiscal Year Ending
|
|
||
June 30, 2019
|
|
$38,281
|
|
June 28, 2020
|
32,826
|
|
|
June 27, 2021
|
31,379
|
|
|
June 26, 2022
|
28,038
|
|
|
June 25, 2023
|
22,809
|
|
|
Thereafter
|
157,041
|
|
|
Total future amortization expense
|
|
$310,374
|
|
|
Number of
Shares
|
|
For exercise of outstanding common stock options
|
6,287
|
|
For vesting of outstanding stock units
|
3,631
|
|
For future equity awards under 2013 Long-Term Incentive Compensation Plan
|
6,077
|
|
For future issuance under the Non-Employee Director Stock Compensation and Deferral Program
|
57
|
|
For future issuance to employees under the 2005 Employee Stock Purchase Plan
|
1,949
|
|
Total common shares reserved
|
18,001
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Basic:
|
|
|
|
||||||||
Net loss
|
|
($279,968
|
)
|
|
|
($98,118
|
)
|
|
|
($21,536
|
)
|
Weighted average common shares
|
99,530
|
|
|
98,487
|
|
|
101,783
|
|
|||
Basic loss per share
|
|
($2.81
|
)
|
|
|
($1.00
|
)
|
|
|
($0.21
|
)
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Diluted:
|
|
|
|
|
|
||||||
Net loss
|
|
($279,968
|
)
|
|
|
($98,118
|
)
|
|
|
($21,536
|
)
|
Weighted average common shares - basic
|
99,530
|
|
|
98,487
|
|
|
101,783
|
|
|||
Weighted average common shares - diluted
|
99,530
|
|
|
98,487
|
|
|
101,783
|
|
|||
Diluted loss per share
|
|
($2.81
|
)
|
|
|
($1.00
|
)
|
|
|
($0.21
|
)
|
|
Number of
Shares
|
|
Weighted Average
Exercise price
|
|
Weighted Average
Remaining
Contractual Term
|
|
Total
Intrinsic Value
|
|||||
Outstanding at June 25, 2017
|
10,604
|
|
|
|
$38.27
|
|
|
|
|
|
||
Granted
|
53
|
|
|
24.66
|
|
|
|
|
|
|||
Exercised
|
(2,684
|
)
|
|
29.08
|
|
|
|
|
|
|||
Forfeited or expired
|
(1,686
|
)
|
|
47.57
|
|
|
|
|
|
|||
Outstanding at June 24, 2018
|
6,287
|
|
|
|
$39.58
|
|
|
3.13
|
|
|
$63,493
|
|
Vested and expected to vest at June 24, 2018
|
6,214
|
|
|
|
$39.75
|
|
|
3.10
|
|
|
$61,864
|
|
Exercisable at June 24, 2018
|
4,929
|
|
|
|
$43.59
|
|
|
2.64
|
|
|
$32,795
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Price
|
|
Number
|
|
Weighted Average
Remaining Contractual
Life (Years)
|
|
Weighted Average Exercise Price
|
|
Number
|
|
Weighted Average Exercise Price
|
||||||
$0.01 to $30.92
|
|
2,670
|
|
|
3.83
|
|
|
$25.92
|
|
|
1,314
|
|
|
|
$26.87
|
|
$30.93 to $43.94
|
|
100
|
|
|
2.97
|
|
36.72
|
|
|
98
|
|
|
36.85
|
|
||
$43.95 to $45.13
|
|
1,729
|
|
|
3.11
|
|
45.13
|
|
|
1,729
|
|
|
45.13
|
|
||
$45.14 to $54.26
|
|
95
|
|
|
2.47
|
|
48.63
|
|
|
95
|
|
|
48.63
|
|
||
$54.27 to $75.55
|
|
1,693
|
|
|
2.11
|
|
55.10
|
|
|
1,693
|
|
|
55.10
|
|
||
Total
|
|
6,287
|
|
|
|
|
|
|
|
4,929
|
|
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Weighted average grant date fair value per share of options
|
|
$8.02
|
|
|
|
$8.20
|
|
|
|
$8.79
|
|
Total intrinsic value of options exercised
|
|
$24,347
|
|
|
|
$344
|
|
|
|
$838
|
|
|
Number of
RSAs/RSUs
|
|
Weighted Average
Grant-Date Fair Value
|
|||
Nonvested at June 25, 2017
|
2,412
|
|
|
|
$26.74
|
|
Granted
|
2,614
|
|
|
28.00
|
|
|
Vested
|
(700
|
)
|
|
29.12
|
|
|
Forfeited
|
(637
|
)
|
|
24.71
|
|
|
Nonvested at June 24, 2018
|
3,689
|
|
|
|
$27.53
|
|
|
Fiscal Years Ended
|
||||||||||
Income Statement Classification:
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Cost of revenue, net
|
|
$7,372
|
|
|
|
$10,427
|
|
|
|
$12,394
|
|
Research and development
|
8,383
|
|
|
10,619
|
|
|
13,842
|
|
|||
Sales, general and administrative
|
27,448
|
|
|
26,679
|
|
|
32,492
|
|
|||
Total stock-based compensation expense
|
|
$43,203
|
|
|
|
$47,725
|
|
|
|
$58,728
|
|
|
Fiscal Years Ended
|
|||||||
Stock Option Grants:
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
|||
Risk-free interest rate
|
1.75
|
%
|
|
1.06
|
%
|
|
1.18
|
%
|
Expected life, in years
|
4.00
|
|
|
3.80
|
|
|
3.66
|
|
Expected volatility
|
38.6
|
%
|
|
42.4
|
%
|
|
43.3
|
%
|
Dividend yield
|
—
|
|
|
—
|
|
|
—
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Domestic
|
|
($348,117
|
)
|
|
|
($43,195
|
)
|
|
|
($45,278
|
)
|
Foreign
|
30,672
|
|
|
38,531
|
|
|
21,772
|
|
|||
Total loss before income taxes
|
|
($317,445
|
)
|
|
|
($4,664
|
)
|
|
|
($23,506
|
)
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
|
($2,263
|
)
|
|
|
$10,304
|
|
|
|
$5,347
|
|
Foreign
|
5,670
|
|
|
7,332
|
|
|
7,278
|
|
|||
State
|
576
|
|
|
900
|
|
|
1,244
|
|
|||
Total current
|
3,983
|
|
|
18,536
|
|
|
13,869
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(44,070
|
)
|
|
68,199
|
|
|
(26,086
|
)
|
|||
Foreign
|
5,536
|
|
|
190
|
|
|
12,340
|
|
|||
State
|
(2,971
|
)
|
|
6,529
|
|
|
(2,093
|
)
|
|||
Total deferred
|
(41,505
|
)
|
|
74,918
|
|
|
(15,839
|
)
|
|||
Income tax (benefit) expense
|
|
($37,522
|
)
|
|
|
$93,454
|
|
|
|
($1,970
|
)
|
|
Fiscal Years Ended
|
||||||||||||||||
|
June 24,
2018 |
|
% of Loss
|
|
June 25,
2017 |
|
% of Loss
|
|
June 26,
2016 |
|
% of Income
|
||||||
Federal income tax provision at statutory rate
|
|
($89,863
|
)
|
|
28.3%
|
|
|
($1,632
|
)
|
|
35%
|
|
|
($8,227
|
)
|
|
35%
|
(Decrease) increase in income tax expense resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
State tax provision, net of federal benefit
|
(7,148
|
)
|
|
2%
|
|
(727
|
)
|
|
16%
|
|
(748
|
)
|
|
3%
|
|||
State tax credits
|
(82
|
)
|
|
—%
|
|
(69
|
)
|
|
1%
|
|
(269
|
)
|
|
1%
|
|||
Tax exempt interest
|
(1,182
|
)
|
|
—%
|
|
(1,243
|
)
|
|
27%
|
|
(2,019
|
)
|
|
9%
|
|||
48C investment tax credit
|
(1,732
|
)
|
|
1%
|
|
(4,383
|
)
|
|
94%
|
|
(4,334
|
)
|
|
18%
|
|||
Increase (decrease) in tax reserve
|
116
|
|
|
—%
|
|
(3,587
|
)
|
|
77%
|
|
(80
|
)
|
|
—%
|
|||
Research and development credits
|
(2,168
|
)
|
|
1%
|
|
(1,728
|
)
|
|
37%
|
|
(2,138
|
)
|
|
9%
|
|||
Foreign tax credit
|
(39,951
|
)
|
|
13%
|
|
(1,114
|
)
|
|
24%
|
|
(954
|
)
|
|
4%
|
|||
Increase in valuation allowance
|
17,334
|
|
|
(5)%
|
|
108,077
|
|
|
(2,318)%
|
|
9,286
|
|
|
(39)%
|
|||
Stock-based compensation
|
9,238
|
|
|
(3)%
|
|
1,389
|
|
|
(30)%
|
|
1,346
|
|
|
(6)%
|
|||
Statutory rate differences
|
(2,255
|
)
|
|
1%
|
|
(5,162
|
)
|
|
111%
|
|
2,748
|
|
|
(12)%
|
|||
Foreign earnings taxed in U.S.
|
52,699
|
|
|
(17)%
|
|
1,313
|
|
|
(28)%
|
|
1,165
|
|
|
(5)%
|
|||
Foreign currency fluctuations
|
(1,288
|
)
|
|
—%
|
|
841
|
|
|
(18)%
|
|
748
|
|
|
(3)%
|
|||
Other foreign adjustments
|
(554
|
)
|
|
—%
|
|
715
|
|
|
(15)%
|
|
13
|
|
|
—%
|
|||
Net operating loss carryback
|
(138
|
)
|
|
—%
|
|
494
|
|
|
(11)%
|
|
238
|
|
|
(1)%
|
|||
Provision to return adjustments
|
(41
|
)
|
|
—%
|
|
165
|
|
|
(4)%
|
|
(10
|
)
|
|
—%
|
|||
Tax on distributable foreign earnings
|
5,408
|
|
|
(2)%
|
|
—
|
|
|
—%
|
|
—
|
|
|
—%
|
|||
Impact of rate changes
|
11,183
|
|
|
(4)%
|
|
—
|
|
|
—%
|
|
—
|
|
|
—%
|
|||
Expiration of state credits
|
1,350
|
|
|
—%
|
|
—
|
|
|
—%
|
|
—
|
|
|
—%
|
|||
Goodwill impairment
|
11,060
|
|
|
(3)%
|
|
—
|
|
|
—%
|
|
—
|
|
|
—%
|
|||
Other
|
492
|
|
|
—%
|
|
105
|
|
|
(2)%
|
|
1,265
|
|
|
(5)%
|
|||
Income tax (benefit) expense
|
|
($37,522
|
)
|
|
12%
|
|
|
$93,454
|
|
|
(2,004)%
|
|
|
($1,970
|
)
|
|
8%
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Deferred tax assets:
|
|
|
|
||||
Compensation
|
|
$3,259
|
|
|
|
$3,029
|
|
Inventories
|
16,868
|
|
|
21,042
|
|
||
Sales return reserve and allowance for bad debts
|
6,927
|
|
|
8,480
|
|
||
Warranty reserve
|
8,406
|
|
|
10,340
|
|
||
Federal and state net operating loss carryforwards
1
|
10,124
|
|
|
19,122
|
|
||
Federal credits
|
49,054
|
|
|
13,425
|
|
||
State credits
|
3,521
|
|
|
3,507
|
|
||
48C investment tax credits
|
28,007
|
|
|
23,525
|
|
||
Investments
|
695
|
|
|
796
|
|
||
Stock-based compensation
|
21,341
|
|
|
46,922
|
|
||
Deferred revenue
|
2,613
|
|
|
3,262
|
|
||
Other
|
1,552
|
|
|
2,522
|
|
||
Total gross deferred assets
|
152,367
|
|
|
155,972
|
|
||
Less valuation allowance
|
(127,443
|
)
|
|
(107,544
|
)
|
||
Deferred tax assets, net
|
24,924
|
|
|
48,428
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(15,052
|
)
|
|
(7,443
|
)
|
||
Intangible assets
|
(2,279
|
)
|
|
(73,692
|
)
|
||
Investments
1
|
—
|
|
|
(1,448
|
)
|
||
Prepaid taxes and other
|
(902
|
)
|
|
(1,461
|
)
|
||
Foreign earnings recapture
|
(1,888
|
)
|
|
(2,481
|
)
|
||
Taxes on unremitted foreign earnings
|
(1,408
|
)
|
|
—
|
|
||
Total gross deferred liability
|
(21,529
|
)
|
|
(86,525
|
)
|
||
Deferred tax asset (liability), net
|
|
$3,395
|
|
|
|
($38,097
|
)
|
|
Balance at June 24, 2018
|
||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||
|
Current
|
|
Noncurrent
|
|
Current
|
|
Noncurrent
|
||||||||
U.S. federal income taxes
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
($2,061
|
)
|
Foreign income taxes
|
—
|
|
|
6,451
|
|
|
—
|
|
|
(995
|
)
|
||||
Total net deferred tax assets (liabilities)
|
|
$—
|
|
|
|
$6,451
|
|
|
|
$—
|
|
|
|
($3,056
|
)
|
|
Balance at June 25, 2017
|
||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||
|
Current
|
|
Noncurrent
|
|
Current
|
|
Noncurrent
|
||||||||
U.S. federal income taxes
|
|
$—
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
($49,103
|
)
|
Foreign income taxes
|
—
|
|
|
11,763
|
|
|
—
|
|
|
(757
|
)
|
||||
Total net deferred tax assets (liabilities)
|
|
$—
|
|
|
|
$11,763
|
|
|
|
$—
|
|
|
|
($49,860
|
)
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Balance at beginning of period
|
|
$13,338
|
|
|
|
$17,727
|
|
|
|
$17,795
|
|
Decrease related to current year change in law
|
(4,731
|
)
|
|
—
|
|
|
—
|
|
|||
Increases related to prior year tax positions
|
634
|
|
|
—
|
|
|
617
|
|
|||
Decreases related to prior year tax positions
|
(73
|
)
|
|
(100
|
)
|
|
(530
|
)
|
|||
Settlements with tax authorities
|
(54
|
)
|
|
(608
|
)
|
|
—
|
|
|||
Expiration of statute of limitations for assessment of taxes
|
(369
|
)
|
|
(3,681
|
)
|
|
(155
|
)
|
|||
Balance at end of period
|
|
$8,745
|
|
|
|
$13,338
|
|
|
|
$17,727
|
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
Accrued interest and penalties
|
|
$25
|
|
|
|
$2
|
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Recognized interest and penalties (benefit)
|
|
$23
|
|
|
|
$7
|
|
|
|
($15
|
)
|
|
Fiscal Years Ended
|
||||||||||
|
June 24,
2018 |
|
June 25,
2017 |
|
June 26,
2016 |
||||||
Balance at beginning of period
|
|
$27,919
|
|
|
|
$21,531
|
|
|
|
$13,968
|
|
Warranties accrued in current period
|
23,451
|
|
|
32,024
|
|
|
19,866
|
|
|||
Recall costs accrued in current period
|
—
|
|
|
—
|
|
|
5,756
|
|
|||
Expenditures
|
(16,730
|
)
|
|
(25,636
|
)
|
|
(18,059
|
)
|
|||
Balance at end of period
|
|
$34,640
|
|
|
|
$27,919
|
|
|
|
$21,531
|
|
Fiscal Years Ending
|
Minimum Rental
Amount
|
||
June 30, 2019
|
|
$7,022
|
|
June 28, 2020
|
6,443
|
|
|
June 27, 2021
|
4,856
|
|
|
June 26, 2022
|
3,390
|
|
|
June 25, 2023
|
2,870
|
|
|
Thereafter
|
788
|
|
|
Total future minimum rental payments
|
|
$25,369
|
|
•
|
Wolfspeed
|
•
|
LED Products
|
•
|
Lighting Products
|
|
Revenue
|
|
Gross Profit and Gross Margin
|
||||||||||||||||||||
|
Year Ended
|
|
Year Ended
|
||||||||||||||||||||
|
June 24,
2018 |
|
June 25, 2017
|
|
June 26, 2016
|
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
||||||||||||
Wolfspeed
|
|
$328,638
|
|
|
|
$221,231
|
|
|
|
$176,338
|
|
|
|
$158,455
|
|
|
|
$103,465
|
|
|
|
$94,622
|
|
Wolfspeed gross margin
|
|
|
|
|
|
|
48
|
%
|
|
47
|
%
|
|
54
|
%
|
|||||||||
LED Products
|
596,284
|
|
|
550,302
|
|
|
551,156
|
|
|
157,914
|
|
|
151,675
|
|
|
173,814
|
|
||||||
LED Products gross margin
|
|
|
|
|
|
|
26
|
%
|
|
28
|
%
|
|
32
|
%
|
|||||||||
Lighting Products
|
568,758
|
|
|
701,467
|
|
|
889,133
|
|
|
108,919
|
|
|
196,218
|
|
|
238,242
|
|
||||||
Lighting Products gross margin
|
|
|
|
|
|
|
19
|
%
|
|
28
|
%
|
|
27
|
%
|
|||||||||
Total segment reporting
|
|
$1,493,680
|
|
|
|
$1,473,000
|
|
|
|
$1,616,627
|
|
|
425,288
|
|
|
451,358
|
|
|
506,678
|
|
|||
Unallocated costs
|
|
|
|
|
|
|
(12,221
|
)
|
|
(16,786
|
)
|
|
(19,604
|
)
|
|||||||||
COGS acquisition related costs
|
|
|
|
|
|
|
(5,425
|
)
|
|
—
|
|
|
—
|
|
|||||||||
Consolidated gross profit
|
|
|
|
|
|
|
|
$407,642
|
|
|
|
$434,572
|
|
|
|
$487,074
|
|
||||||
Consolidated gross margin
|
|
|
|
|
|
|
27
|
%
|
|
30
|
%
|
|
30
|
%
|
|
June 24, 2018
|
|
June 25, 2017
|
||||
Wolfspeed
|
|
$47,190
|
|
|
|
$26,453
|
|
LED Products
|
100,452
|
|
|
108,297
|
|
||
Lighting Products
|
144,193
|
|
|
145,710
|
|
||
Total segment inventories
|
291,835
|
|
|
280,460
|
|
||
Unallocated inventories
|
4,180
|
|
|
3,925
|
|
||
Consolidated inventories
|
|
$296,015
|
|
|
|
$284,385
|
|
|
For the Years Ended
|
|||||||
|
June 24, 2018
|
|
June 25, 2017
|
|
June 26, 2016
|
|||
United States
|
46
|
%
|
|
56
|
%
|
|
59
|
%
|
China
|
26
|
%
|
|
22
|
%
|
|
20
|
%
|
Europe
|
14
|
%
|
|
10
|
%
|
|
8
|
%
|
South Korea
|
1
|
%
|
|
2
|
%
|
|
1
|
%
|
Japan
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
Malaysia
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Taiwan
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Other
|
6
|
%
|
|
4
|
%
|
|
6
|
%
|
Total percentage of revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
June 24,
2018 |
|
June 25,
2017 |
||||
United States
|
|
$578,569
|
|
|
|
$483,953
|
|
China
|
76,386
|
|
|
94,022
|
|
||
Other
|
6,364
|
|
|
3,288
|
|
||
Total tangible long-lived assets
|
|
$661,319
|
|
|
|
$581,263
|
|
Capacity and overhead cost reductions
|
Total estimated charges
|
|
Cumulative amounts incurred through fiscal year 2018
|
|
Affected Line Item in the Consolidated Statements of Loss
|
||||
Loss on disposal or impairment of long-lived assets
|
|
$227
|
|
|
|
$227
|
|
|
Loss on disposal or impairment of long-lived assets
|
Severance expense
|
5,470
|
|
|
4,682
|
|
|
Sales, general and administrative expenses
|
||
Lease termination and facility consolidation costs
|
2,182
|
|
|
156
|
|
|
Sales, general and administrative expenses
|
||
Increase in inventory reserves
|
897
|
|
|
897
|
|
|
Sales, general and administrative expenses
|
||
Total restructuring charges
|
|
$8,776
|
|
|
|
$5,962
|
|
|
|
Capacity and overhead cost reductions
|
|
Amounts incurred during fiscal year 2016
|
|
Cumulative amounts incurred through fiscal year 2016
|
|
Affected Line Item in the Consolidated Statements of Loss
|
||||
Loss on disposal or impairment of long-lived assets
|
|
|
$15,506
|
|
|
|
$58,222
|
|
|
Loss on disposal or impairment of long-lived assets
|
Severance expense
|
|
264
|
|
|
2,283
|
|
|
Sales, general and administrative expenses
|
||
Lease termination and facility consolidation costs
|
|
3,079
|
|
|
4,325
|
|
|
Sales, general and administrative expenses
|
||
Increase in channel inventory reserves
|
|
—
|
|
|
26,479
|
|
|
Revenue, net
|
||
Increase in inventory reserves
|
|
—
|
|
|
11,091
|
|
|
Cost of revenue, net
|
||
Total restructuring charges
|
|
|
$18,849
|
|
|
|
$102,400
|
|
|
|
|
September 24,
2017 |
|
December 24, 2017
|
|
March 25, 2018
|
|
June 24,
2018 |
|
Fiscal Year 2018
|
||||||||||
Revenue, net
|
|
$360,398
|
|
|
|
$367,870
|
|
|
|
$355,958
|
|
|
|
$409,454
|
|
|
|
$1,493,680
|
|
Cost of revenue, net
|
260,066
|
|
|
275,267
|
|
|
256,902
|
|
|
293,803
|
|
|
1,086,038
|
|
|||||
Gross profit
|
100,332
|
|
|
92,603
|
|
|
99,056
|
|
|
115,651
|
|
|
407,642
|
|
|||||
Net (loss) income
|
(19,873
|
)
|
|
13,752
|
|
|
(240,533
|
)
|
|
(33,269
|
)
|
|
(279,923
|
)
|
|||||
Net (loss) income attributable to noncontrolling interest
|
(16
|
)
|
|
31
|
|
|
44
|
|
|
(14
|
)
|
|
45
|
|
|||||
Net (loss) income
|
(19,857
|
)
|
|
13,721
|
|
|
(240,577
|
)
|
|
(33,255
|
)
|
|
(279,968
|
)
|
|||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
($0.20
|
)
|
|
|
$0.14
|
|
|
|
($2.40
|
)
|
|
|
($0.33
|
)
|
|
|
($2.81
|
)
|
Diluted
|
|
($0.20
|
)
|
|
|
$0.14
|
|
|
|
($2.40
|
)
|
|
|
($0.33
|
)
|
|
|
($2.81
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
September 25,
2016 |
|
December 25,
2016 |
|
March 26,
2017 |
|
June 25,
2017 |
|
Fiscal Year 2017
|
||||||||||
Revenue, net
|
|
$371,231
|
|
|
|
$401,325
|
|
|
|
$341,505
|
|
|
|
$358,939
|
|
|
|
$1,473,000
|
|
Cost of revenue, net
|
261,302
|
|
|
260,759
|
|
|
255,429
|
|
|
260,938
|
|
|
1,038,428
|
|
|||||
Gross profit
|
109,929
|
|
|
140,566
|
|
|
86,076
|
|
|
98,001
|
|
|
434,572
|
|
|||||
Net income (loss)
|
566
|
|
|
6,219
|
|
|
(99,013
|
)
|
|
(5,890
|
)
|
|
(98,118
|
)
|
|||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$—
|
|
|
|
$0.06
|
|
|
|
($1.02
|
)
|
|
|
($0.06
|
)
|
|
|
($1.00
|
)
|
Diluted
|
|
$—
|
|
|
|
$0.06
|
|
|
|
($1.02
|
)
|
|
|
($0.06
|
)
|
|
|
($1.00
|
)
|
(i)
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
(ii)
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
(iii)
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
EXHIBIT NO.
|
|
DESCRIPTION
|
|
|
|
|
Articles of Incorporation, as amended (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002, as filed with the Securities and Exchange Commission on August 19, 2002)
|
|
|
|
|
|
Bylaws, as amended and restated (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, dated January 27, 2015, filed with the Securities and Exchange Commission on January 28, 2015)
|
|
|
|
|
|
Specimen Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 24, 2017, as filed with the Securities and Exchange Commission on January 24, 2018)
|
|
|
|
|
10.1
*
|
|
2004 Long-Term Incentive Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated October 23, 2012, as filed with the Securities and Exchange Commission on October 25, 2012)
|
|
|
|
10.2
*
|
|
Addendum to Form of Master Stock Option Award Agreement Terms and Conditions for Grants of Nonqualified Stock Options to Non-Employee Directors (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2009, as filed with the Securities and Exchange Commission on October 21, 2009)
|
|
|
|
10.3
*
|
|
Form of Nonqualified Stock Option Award Agreement for Non-Employee Directors (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 23, 2012, as filed with the Securities and Exchange Commission on October 17, 2012)
|
|
|
|
10.4
*
|
|
Form of Master Stock Option Award Agreement for Grants of Nonqualified Stock Options (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 24, 2006, as filed with the Securities and Exchange Commission on November 2, 2006)
|
|
|
|
10.5
*
|
|
Form of Master Stock Option Award Agreement for Grants of Nonqualified Stock Options (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010, as filed with the Securities and Exchange Commission on January 19, 2011)
|
|
|
|
10.6
*
|
|
Form of Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 23, 2012, as filed with the Securities and Exchange Commission on October 17, 2012)
|
|
|
|
10.7
*
|
|
Form of Master Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 24, 2006, as filed with the Securities and Exchange Commission on November 2, 2006)
|
|
|
|
10.8
*
|
|
Form of Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 23, 2012, as filed with the Securities and Exchange Commission on October 17, 2012)
|
|
|
|
10.9
*
|
|
Non-Employee Director Stock Compensation and Deferral Program (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2009, as filed with the Securities and Exchange Commission on October 21, 2009)
|
|
|
|
10.10
*
|
|
Amendment One to Non-Employee Director Stock Compensation and Deferral Program (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010, as filed with the Securities and Exchange Commission on January 19, 2011)
|
|
|
|
10.11
*
|
|
Form of Cree, Inc. Indemnification Agreement for Directors and Officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated October 25, 2010, as filed with the Securities and Exchange Commission on October 29, 2010)
|
|
|
|
10.12
*
|
|
Form of Master Performance Unit Award Agreement (incorporated herein by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K, dated August 30, 2013, as filed with the Securities and Exchange Commission on September 5, 2013)
|
|
|
|
10.13
*
|
|
Form of Stock Unit Award Agreement (Time-Based) (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2013, as filed with the Securities and Exchange Commission on October 23, 2013)
|
|
|
|
10.14
*
|
|
Form of Stock Unit Award Agreement (Performance-Based) (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2013, as filed with the Securities and Exchange Commission on October 23, 2013)
|
|
|
|
10.15
*
|
|
2005 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated October 24, 2017, as filed with the Securities and Exchange Commission on October 24, 2017)
|
|
|
|
10.16
*
|
|
Form of Nonqualified Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013, as filed with the Securities and Exchange Commission on January 22, 2014)
|
|
|
|
10.17
*
|
|
Form of Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013, as filed with the Securities and Exchange Commission on January 22, 2014)
|
|
|
|
10.18
*
|
|
Form of Master Performance Unit Award Agreement (incorporated herein by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, dated August 25, 2014, filed with the Securities and Exchange Commission on August 29, 2014)
|
|
|
|
10.19
*
|
|
2013 Long-Term Incentive Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated October 25, 2016, filed with the Securities and Exchange Commission on October 28, 2016)
|
|
|
|
|
Credit Agreement, dated January 9, 2015, 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 thereto (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated January 9, 2015, filed with the Securities and Exchange Commission on January 12, 2015)
|
|
|
|
|
|
First Amendment to the Credit Agreement, dated September 10, 2015, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent, E-conolight LLC, a domestic subsidiary of the Cree, Inc., as guarantor, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 24, 2017, as filed with the Securities and Exchange Commission on January 24, 2018)
|
|
|
|
|
|
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 (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 25, 2016, as filed with the Securities and Exchange Commission on October 19, 2016)
|
|
|
|
|
|
Second Amendment to Credit Agreement, dated November 13, 2017, by and among Cree, Inc., Wells Fargo, National Association, as administrative agent, E-conolight LLC, a domestic subsidiary of the Cree, Inc., as guarantor, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated November 13, 2017, filed with the Securities and Exchange Commission on November 16, 2017)
|
|
|
|
|
10.24
*
|
|
Notice of Grant to Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 28, 2017, filed with the Securities and Exchange Commission on September 1, 2017)
|
|
|
|
10.25
*
|
|
Notice of Grant to Michael E. McDevitt (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated August 28, 2017, filed with the Securities and Exchange Commission on September 1, 2017)
|
|
|
|
10.26
*
|
|
Notice of Grant to Daniel J. Castillo (incorporated herein by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K, dated August 28, 2017, filed with the Securities and Exchange Commission on September 1, 2017)
|
|
|
|
10.27
*
|
|
Notice of Grant to David T. Emerson (incorporated herein by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K, dated August 28, 2017, filed with the Securities and Exchange Commission on September 1, 2017)
|
|
|
|
10.28
*
|
|
Management Incentive Compensation Plan, as amended and restated (incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K, dated August 23, 2016, as filed with the Securities and Exchange Commission on August 25, 2016)
|
|
|
|
10.29*
|
|
Schedule of Compensation for Non-Employee Directors
|
|
|
|
10.30
*
|
|
Form of Performance Share Award Agreement - Section 16 Officer (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2015, as filed with the Securities and Exchange Commission on October 21, 2015)
|
|
|
|
|
Termination Agreement, dated as of March 6, 2017, by and between Cree, Inc. and Infineon Technologies AG (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, March 6, 2017, filed with the Securities and Exchange Commission on March 7, 2017)
|
|
|
|
|
10.32
*
|
|
Separation, General Release and Consulting Agreement, dated May 18, 2017, between Cree, Inc. and Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated May 18, 2017, as filed with the Securities and Exchange Commission on May 24, 2017)
|
|
|
|
10.33
*
|
|
Change in Control Agreement for Chief Executive Officer, dated September 22, 2017, between Cree, Inc. and Gregg A. Lowe (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated September 27, 2017, as filed with the Securities and Exchange Commission on September 28, 2017)
|
|
|
|
10.34
*
|
|
First Amendment to Change in Control Agreement (for Chief Executive Officer), dated May 4, 2018 (incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, dated April 30, 2018, as filed with the Securities and Exchange Commission on May 4, 2018)
|
|
|
|
10.35
*
|
|
Notice of Grant to Gregg A. Lowe, dated September 27, 2017 (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated September 27, 2017, as filed with the Securities and Exchange Commission on September 28, 2017)
|
|
|
|
10.36
*
|
|
Form of Stock Unit Award Agreement (Performance-Based) for Gregg A. Lowe (incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, dated September 27, 2017, as filed with the Securities and Exchange Commission on September 28, 2017)
|
|
|
|
10.37
*
|
|
Separation and General Release Agreement with Daniel J. Castillo, dated December 21, 2017 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 24, 2017, as filed with the Securities and Exchange Commission on January 24, 2018)
|
|
|
|
10.38
*
|
|
Cree Severance Plan - Senior Leadership Team, Plan Document and Summary Plan Description, effective as of April 30, 2018 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated April 30, 2018, as filed with the Securities and Exchange Commission on May 4, 2018)
|
|
|
|
10.39
*
|
|
Form of Participation Agreement Under Cree Severance Plan - Senior Leadership Team (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated April 30, 2018, as filed with the Securities and Exchange Commission on May 4, 2018)
|
|
|
|
10.40
*
|
|
Separation, General Release and Consulting Agreement, dated June 7, 2018, between Cree, Inc. and Michael E. McDevitt (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated June 5, 2018, as filed with the Securities and Exchange Commission on June 7, 2018)
|
|
|
|
10.41
*
|
|
Form of Stock Unit Award Agreement (Performance-Based)
|
|
|
|
10.42
*
|
|
Form of Stock Unit Award Agreement (Time-Based)
|
|
|
|
|
Subsidiaries of the Company
|
|
|
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
|
|
|
|
Consent of KPMG
|
|
|
|
|
|
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
|
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
|
99.1
**
|
|
Audited financial statements of Lextar Electronics Corporation as of and for the years ended December 31, 2015 and 2014.
|
|
|
|
101
|
|
The following materials from Cree, Inc.’s Annual Report on Form 10-K for the fiscal year ended June 24, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Loss; (iii) Consolidated Statements of Comprehensive Loss; (iv) Consolidated Statements of Cash Flows; (v) Consolidated Statements of Shareholders' Equity; and (vi) Notes to Consolidated Financial Statements
|
*
|
Management contract or compensatory plan
|
|
|
**
|
The financial statements as of and for the years ended December 31, 2015 and 2014 of Lextar Electronics Corporation
, prepared by Lextar and audited by its independent public accounting firm,
are included in this Annual Report pursuant to Rule 3-09 of Regulation S-X.
|
CREE, INC.
|
|
Date:
|
August 20, 2018
|
|
|
By:
|
/s/ Gregg A. Lowe
|
|
Gregg A. Lowe
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ G
REGG
A. L
OWE
|
|
Chief Executive Officer and President
|
|
August 20, 2018
|
Gregg A. Lowe
|
|
|
|
|
|
|
|
|
|
/s/ M
ICHAEL
E. M
C
D
EVITT
|
|
Executive Vice President and Chief Financial Officer
|
|
August 20, 2018
|
Michael E. McDevitt
|
|
(Principal Financial and Chief Accounting Officer)
|
|
|
|
|
|
|
|
/s/ R
OBERT
A. I
NGRAM
|
|
Chairman and Director
|
|
August 20, 2018
|
Robert A. Ingram
|
|
|
|
|
|
|
|
|
|
/s/ C
LYDE
R. H
OSEIN
|
|
Director
|
|
August 20, 2018
|
Clyde R. Hosein
|
|
|
|
|
|
|
|
|
|
/s/ D
ARREN
R. J
ACKSON
|
|
Director
|
|
August 20, 2018
|
Darren R. Jackson
|
|
|
|
|
|
|
|
|
|
/s/ C. H
OWARD
N
YE
|
|
Director
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August 20, 2018
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C. Howard Nye
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/s/ J
OHN
B. R
EPLOGLE
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Director
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August 20, 2018
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John B. Replogle
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/s/ T
HOMAS
H. W
ERNER
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Director
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August 20, 2018
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Thomas H. Werner
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/s/ A
NNE
C. W
HITAKER
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Director
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August 20, 2018
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Anne C. Whitaker
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RESTRICTED STOCK UNIT
AWARD AGREEMENT
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Participant: [Name]
Award Number: [Option Number]
Plan: 2013 Long-Term Incentive Compensation Plan
Award Type: Restricted Stock Unit
Grant Date: [Month DD, YYYY]
Number Units: [ ]
Purchase Price: [$0.00]
Restriction Period: [Grant Date] through [Vest Date]
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Cree, Inc. (the “Company”) has awarded you [ ] restricted stock units (“RSUs”) to acquire the common stock of the Company (the “Shares”) effective [Month DD, YYYY], the Grant Date of the Award, pursuant to the Cree, Inc. 2013 Long-Term Incentive Compensation Plan (the “2013 Plan”) and the terms of this Restricted Stock Unit Award Agreement (the “Agreement”).
In accordance with this Agreement and the 2013 Plan, upon any Termination of Service (as defined in this Agreement) before the end of the Restriction Period, unless provided otherwise in an applicable Cree severance plan, all RSUs that are not then vested will be forfeited. If not previously vested or forfeited, the RSUs will vest at 12:00 a.m. local time in Durham, NC in installments as follows, provided that you have not experienced a Termination of Service prior to the indicated vesting date:
[ ] Stock Units on [Month DD, YYYY]
[ ] additional Stock Units on [Month DD, YYYY]
[ ] additional Stock Units on [Month DD, YYYY]; and
[ ] additional Stock Units on [Month DD, YYYY]
Capitalized terms defined in the 2013 Plan and used in this Agreement without definition have the meaning specified in the 2013 Plan.
You acknowledge and agree that if you breach the terms of any restrictive covenants in any agreement between you and the Company, including without limitation the most recent version of the Employee Agreement Regarding Confidential Information, Intellectual Property, and Noncompetition in effect for you as the relevant date, within one (1) year after the vesting of any RSUs hereunder, then in the sole judgement of the Company, the amount of the total fair market value of such vested RSUs as of the vesting date shall inure to the benefit of the Company, and you agree to promptly pay the same to the Company.
THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING THE APPENDIX, ARE AN INTEGRAL PART OF THIS AGREEMENT AND ARE INCORPORATED HEREIN BY THIS REFERENCE. BY SIGNING BELOW YOU ACKNOWLEDGE THAT YOU HAVE READ, UNDERSTAND AND AGREE TO BE BOUND BY SUCH TERMS AND CONDITIONS. FAILURE TO SIGN WILL RESULT IN FORFEITURE OF THE AWARD.
Dated: [Month DD, YYYY]
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CREE, INC.:
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ACCEPTED AND AGREED TO:
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Gregg Lowe, President and Chief Executive Officer
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TERMS AND CONDITIONS
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1.
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Grant of RSUs.
Subject to the terms of the 2013 Plan and this Agreement, the Company hereby grants you the RSUs as set forth on the first page of this Agreement. Each RSU represents the right to receive one Share on the date the RSU vests (subject to adjustment for a change in capitalization within the meaning of Section 4.4 of the 2013 Plan).
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2.
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Vesting
. The RSUs will vest in accordance with the installment vesting schedule set out on the first page of this Agreement and will become fully vested, to the extent not already vested, upon your death or on the effective date of the determination of your Disability (as defined below) by the Employee Benefits Committee of the Company (the “EBC”) or such other committee as may be designated by the Board of Directors of the Company or a committee thereof, unless otherwise provided in this Agreement or the 2013 Plan. For purposes of this Agreement, “Disability” means a medically determinable physical or mental impairment resulting in your inability to perform your position or any substantially similar position, where such impairment has lasted or can be expected to last for a continuous period of not less than six months. The determination of whether or not you have a Disability will be made by the EBC in good faith in its sole discretion, and such determination shall be conclusive, final and binding upon all parties. The above definition of Disability applies in lieu of the definition set out in the 2013 Plan.
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3.
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Forfeiture of RSUs upon Termination of Service
. Except as otherwise provided in this Agreement or the 2013 Plan, or in any Company severance plan applicable to you, and upon your Termination of Service, you will forfeit all of the RSUs that are not vested as of the date of your Termination of Service.
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4.
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Forfeiture of RSUs for Awards Not Timely Accepted
. This Award is conditioned upon and subject to your accepting the Award by signing and delivering to the Company this Agreement, or otherwise electronically accepting the Award, no later than the first date the RSUs are scheduled to vest pursuant to the Award. In the event of your death or incapacitation prior to accepting the Award, the Company will deem the Award as being accepted. If you fail to accept the Award within the time described above, you will forfeit the RSUs.
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5.
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Settlement of RSUs
. Subject to the terms of the 2013 Plan and this Agreement, any RSUs that vest and become nonforfeitable pursuant to Section 2 above shall be released and settled in whole Shares within thirty (30) days after the applicable vesting date. Upon settlement, the Company shall deliver to you (or, in the event of your death, to your estate or, if the Committee establishes a beneficiary designation procedure pursuant to Section 12 of the 2013 Plan, to any beneficiary that you have designated pursuant to such procedure) one or more certificates for the vested Shares or in the Company's discretion may cause the vested Shares to be deposited in an account maintained by a broker designated by the Company.
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6.
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Responsibility for Taxes.
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(a)
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For purposes of this Agreement, “Tax-Related Items” means any or all income tax, social insurance tax, payroll tax, payment on account or other tax-related items that may be applicable to this Award by law or regulation of any governmental authority, whether federal, state or local, domestic or foreign. Regardless of any action the Company
takes with respect to withholding Tax-Related Items, you acknowledge that you are ultimately responsible for all Tax-Related Items and that such Tax-Related Items may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, without limitation, the grant, vesting or release of the RSUs, the subsequent sale of Shares and the receipt of any dividends or dividend equivalents pursuant to Shares; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items or to achieve any particular tax result. Furthermore, if you have become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
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(b)
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Prior to any relevant taxable or tax withholding event, as applicable, you will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (1) withholding from your wages or other cash compensation paid to you by the Company and/or the Employer; or (2) selling or arranging for the sale of Shares that you acquire under the 2013 Plan; or (3) withholding of Shares consistent with the “Share Withholding” provisions under Section 14.2 of the 2013 Plan.
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(c)
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Depending upon the withholding method, the Company or the Employer may withhold or account for Tax-Related Items by considering applicable minimum or maximum statutory withholding amounts or other applicable withholding rates. In the event Tax-Related Items are over-withheld, you will receive a refund in cash for any over-withheld amounts and will have no entitlement to the Shares equivalent. If the obligation for Tax-Related Items is satisfied by withholding of Shares, you shall be deemed, for tax purposes, to have been issued the full number of Shares, notwithstanding that a number of Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the 2013 Plan.
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(d)
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You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the 2013 Plan that cannot be satisfied by the means previously described. The Company may refuse to release and settle the RSUs if you fail to comply with your obligations in connection with the Tax-Related Items.
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7.
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Transfer of RSUs.
The RSUs and any rights under this Agreement may not be assigned, pledged as collateral or otherwise transferred, except as permitted by the 2013 Plan, nor may the RSUs or such rights be subject to attachment, execution or other judicial process until the RSUs become vested pursuant to Section 2 above. In the event of any attempt to assign, pledge or otherwise dispose of RSUs which are not then vested, or any rights under this Agreement, except as permitted by the 2013 Plan, or in the event of the levy of any attachment, execution or similar judicial process upon the rights or interests with respect to the RSUs which are not then vested, the Committee may in its discretion, upon notice to you, cause you to forfeit such RSUs.
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8.
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Rights Prior to Vesting of RSUs
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(a)
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You will have no rights as a shareholder with respect to any Shares issuable under the RSUs until such Shares have been duly issued by the Company or its transfer agent pursuant to the vesting and settlement of the Award.
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(b)
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In the event of a change in capitalization within the meaning of Section 4.4 of the 2013 Plan, the number and class of Shares or other securities that you are entitled to pursuant to this Agreement shall be appropriately adjusted or changed as determined by the Committee to reflect the change in capitalization, provided that any such additional Shares or additional or different shares of securities shall remain subject to the restrictions in this Agreement.
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9.
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Termination of Service.
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(a)
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Unless otherwise provided in this Agreement or the 2013 Plan, for purposes of this Agreement “Termination of Service” means the discontinuance of your service relationship with the Company as an employee or a consultant of the Company or the Employer or any subsidiary or affiliate of the Company under the 2013 Plan, or as a member of the Board of Directors of Cree, Inc. Except as determined otherwise by the Committee, you will not be deemed to have incurred a Termination of Service if the capacity in which you provide services to the Company changes (for example, you change from being a non-employee director to being an employee or if you change from being an employee to a consultant to the Company) or if you transfer employment among the various subsidiaries or affiliates of the Company constituting the Employer, so long as there is no interruption in your provision of services to the Company or other Employer as an employee or consultant, or as a non-employee member of the Board of Directors of Cree, Inc. The Committee, in its discretion, will determine whether you have incurred a Termination of Service. You will not be deemed to have incurred a Termination of Service during a period for which you are on military leave, sick leave, or other leave of absence approved by the Employer.
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(b)
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If you are deemed to have incurred a Termination of Service
other than a Termination of Service on account of your death, your right to vest in the RSUs under this Agreement or the 2013 Plan, if any, will terminate effective as of the date that you are no longer actively providing services to the Company or one of its subsidiaries or affiliates (regardless of the reason for the termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), unless otherwise provided by the terms of a written Company severance plan that applies to you and the circumstances surrounding your Termination of Service. The vesting period will not be extended by any notice period mandated under local law (
e.g.
, active employment would not include a period of “garden leave” or similar period mandated under the employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any). The Committee, in its discretion, will determine when you are no longer providing services for purposes of this Award (including whether you may still be considered to be providing services while on a leave of absence).
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10.
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Provisions of the 2013 Plan
.
The provisions of the 2013 Plan are incorporated by reference in this Agreement as if set out in full in this Agreement. To the extent that any conflict may exist between any other provision of this Agreement and a provision of the 2013 Plan, the 2013 Plan provision will control. All decisions of the Committee with respect to the interpretation, construction and application of the 2013 Plan or this Agreement shall be final, conclusive and binding upon you and the Company.
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11.
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Detrimental Activity.
The Committee in its sole discretion may cancel and cause to be forfeited any RSUs not previously vested or released under this Agreement if you engage in any "Detrimental Activity” (as defined below). In addition, if you engage in any Detrimental Activity prior to or within one (1) year after your Termination of Service, the Committee in its sole discretion may require you to pay to the Company the amount of all gain you realized from any vesting of the RSUs beginning six (6) months prior to your Termination of Service, provided that the Committee gives you notice of such requirement within one (1) year after your Termination of Service. In that event, the Company will be entitled to set off such amount against any amount the Company owes to you, in addition to any other rights the Company may have. For purposes of this section:
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(a)
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“Company” includes Cree, Inc. and all other Employers under the 2013 Plan.
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(b)
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“Detrimental Activity” means that you have engaged in activity that breaches the terms of any restrictive covenants in any agreement between you and the Company, including without limitation the most recent version of the Employee Agreement Regarding Confidential Information, Intellectual Property, and Noncompetition in effect for you as the relevant date. If no such agreement exists, then “Detrimental Activity” shall mean any of the following conduct, as determined by the Committee in good faith:
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(1)
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the performance of services for any Competing Business (as defined below), whether as an employee, officer, director, consultant, agent, contractor or in any other capacity, except to the extent expressly permitted by any written agreement between you and the Company;
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(2)
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the unauthorized disclosure or use of any trade secrets or other confidential information of the Company;
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(3)
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any attempt to induce an employee to leave employment with the Company to perform services elsewhere, or any attempt to cause a customer or supplier of the Company to curtail or cancel its business with the Company; or
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(4)
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any act of fraud, misappropriation, embezzlement, or tortious or criminal behavior that adversely impacts the Company.
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(c)
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“Competing Business” as used in Section 11(b)(1) means any corporation, partnership, university, government agency or other entity or person (other than the Company) that is conducting research directed to, developing, manufacturing, marketing, distributing, or selling any product, service, or technology that is competitive with any part of the Company’s Business (as defined below). "Company's Business" means the development, manufacture, marketing, distribution, or sale of, or the conduct of research directed to, any product, service, or technology that the Company is developing, manufacturing, marketing, distributing, selling, or conducting research directed to, at any time during your employment or other relationship with the Company, except that following your Termination of Service the Company’s Business will be determined as of the time of such termination. As of the effective date of this Agreement, the Company’s Business includes but is not limited to the conduct of research directed to, development, manufacture, marketing, distribution, and/or sale of the following products, services, and technologies: (1) silicon carbide (SiC) materials for electronic applications; (2) SiC materials for gemstone applications; (3) A
III
nitride materials for electronic applications; (4) light-emitting diode (LED) devices and components; (5) power semiconductor devices made using SiC and/or A
III
nitride materials and components incorporating such devices; (6) radio frequency (RF) and microwave devices made using SiC and/or A
III
nitride materials and components and modules incorporating such devices; (7) LED backlights for liquid crystal displays (LCDs); (8) lighting products, modules, fixtures or devices incorporating any of the above materials or technology; and (9) other semiconductor devices made using SiC and/or A
III
nitride materials and components incorporating such devices. You acknowledge that during your employment or other relationship with the Company the Company’s Business may expand or change and you agree that any such expansions and changes shall expand or contract the definition of the Company’s Business accordingly.
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12.
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Data Privacy. You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your Data as described in this Agreement and any other grant materials by and among, as applicable, your Employer, the Company and its subsidiaries and affiliates, for the exclusive purpose of implementing, administering and managing your participation in the 2013 Plan.
You understand that the Company and/or the Employer hold or may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social security or insurance number or other identification number (e.g., resident registration number), salary, nationality, position title, any shares of stock or directorships held in the Company, details of RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the purpose of implementing, administering and managing the 2013 Plan.
You understand that Data may be transferred to E*Trade any other third parties as may be selected by the Company currently or in the future, which are assisting the Company in the implementation, administration and management of the 2013 Plan. You understand that these recipients may be located in the United States or elsewhere, including outside the European Economic Area, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the 2013 Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any Shares acquired upon vesting of the RSUs or any other awards or other entitlement to Shares.
You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting the Company’s Stock Plan Administrator. You understand that Data will be held pursuant to this Agreement only as long as is reasonably necessary to implement, administer and manage your participation in the 2013 Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents above, in any case without cost, by contacting in writing the Company's Stock Plan Administrator. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke our consent, your employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing consent is that the Company would not be able to grant you RSUs or any other equity awards or administer or maintain such awards. Therefore, you acknowledge that refusing or withdrawing your consent may affect your ability to participate in the 2013 Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you may contact the Stock Plan Administrator of the Company.
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13.
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Language.
If you have received this Agreement or any other document related to the 2013 Plan translated into a language other than English and if the translated version differs in meaning from the English version, the English version will control.
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14.
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Electronic Delivery.
The Company may, in its sole discretion, deliver any documents related to current or future participation in the 2013 Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the 2013 Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company. Signed documents delivered to either party via facsimile or in portable document format will have the same effect as an original, unless otherwise required by applicable law.
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15.
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General.
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(a)
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Nothing in this Agreement will be construed as: (1) constituting a commitment, agreement or understanding of any kind that the Company or any other Employer will continue your employment or other relationship with the Company; or (2) limiting or restricting either party’s right to terminate your employment or other relationship.
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(b)
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This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. You may not assign any rights under this Agreement without the written consent of the Company, which it may withhold in its sole discretion; any such attempted assignment without the Company's written consent shall be void. The Company may assign its rights under this Agreement at any time upon notice to you.
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(c)
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Notices under this Agreement must be in writing and delivered personally, by electronic transmission or by a reputable domestic or international carrier (postage prepaid and return receipt or proof of delivery requested), and, in the case of notices to the Company, unless otherwise provided herein, addressed to its principal executive offices to the attention of the Stock Plan Administrator, and, in your case, addressed to your address as shown on the Employer’s records.
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(d)
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This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina without regard to the conflict of law provisions thereof, as if made and to be performed wholly within such State. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the Award or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of North Carolina, agree that such litigation shall be conducted in the courts of Durham County, North Carolina, or the federal courts for the United States for the Middle District of North Carolina, and no other courts, where the Award of the RSUs is made and/or to be performed.
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(e)
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If any provision of this Agreement is held to be invalid or unenforceable, such determination shall not affect the other provisions of the Agreement and the Agreement shall be construed as if the invalid or unenforceable provision were omitted and a valid and enforceable provision, as nearly comparable as possible, substituted in its place.
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(f)
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Notwithstanding any prior award agreement between you and the Company under which RSUs may have been awarded, this Agreement and the 2013 Plan set forth all of the promises, agreements and understandings between you and Company relating to the RSUs granted pursuant to this Agreement, constitute the complete agreement between the parties regarding the RSUs and replace any prior oral or written communications regarding the same.
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(g)
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Shares issued pursuant to this Award may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under applicable law or the rules and regulations of the U.S. Securities and Exchange Commission or any stock exchange or trading system upon which the common stock of the Company is listed, and the Committee may cause a legend or legends to be placed on any such certificates or the stock records of the Company to make appropriate reference to such restrictions.
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(h)
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You agree that the RSUs, even if later forfeited, serve as additional, valuable consideration for your obligations, if any, undertaken in any existing agreement between you and the Company and/or other Employer regarding confidential information, noncompetition, nonsolicitation or similar covenants.
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(i)
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You acknowledge, represent and warrant to the Company, and agree with the Company, that (i) except for information provided in the Company’s filings with the U.S. Securities and Exchange Commission and in the Company’s current prospectus relating to the 2013 Plan, you have not relied and will not rely upon the Committee, the Company, an Employer or any employee or agent of the Company or an Employer in determining whether to accept this Award, or in connection with any disposition of Shares obtained pursuant to this Award, or with respect to any tax consequences related to the grant of the RSUs or the disposition of Shares obtained pursuant to the RSUs; and (ii) you will seek from your own professional advisors such investment, tax and other advice as you believe necessary.
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(j)
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You acknowledge that you may incur a substantial tax liability as a result of vesting of the RSUs. You assume full responsibility for all such consequences and the filing of all tax returns and related elections you may be required or find desirable to file. If you are required to make any valuation of Shares obtained pursuant to the RSUs under any federal, state or other applicable tax law, and if the valuation affects any tax return or election of the Company or the Employer or affects the Company’s financial statement reporting, you agree that the Company may determine the value and that you will observe any determination so made by the Company in all tax returns and elections filed by you.
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(k)
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You acknowledge that copies of the 2013 Plan and Plan prospectus are available upon written or telephonic request to the Company’s Stock Plan Administrator.
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16.
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Severability
. The provisions of this Agreement are severable and if any one or more provisions is determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
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17.
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Nature of Grant.
In accepting this grant, you acknowledge, understand and agree that:
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(a)
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the 2013 Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless expressly provided otherwise in the 2013 Plan or the Agreement;
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(b)
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the grant of the RSUs is voluntary and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted repeatedly in the past;
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(c)
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all decisions with respect to future grants of RSUs, if any, will be at the sole discretion of the Company;
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(d)
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your participation in the 2013 Plan is voluntary;
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(e)
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your participation in the 2013 Plan will not create a right to employment with the Company or the Employer and will not interfere with the ability of the Company, the Employer or any subsidiary or affiliate to terminate your employment or service relationship at any time;
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(f)
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if you are employed by a non-U.S. entity and provide services outside the U.S., the RSUs are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to your Employer, and they are outside the scope of your employment or service contract, if any, with your Employer;
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(g)
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the grant of the RSUs is not intended to replace any pension rights or compensation;
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(h)
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the grant of the RSUs is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
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(i)
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the grant of the RSUs and your participation in the 2013 Plan will not be interpreted to form an employment or service contract or relationship with the Company, the Employer or any subsidiary or affiliate of the Company;
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(j)
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the future value of the Shares is unknown and cannot be predicted with certainty;
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(k)
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no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from termination of your employment or service relationship by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and, in consideration of the grant of the RSUs, to which you otherwise are not entitled, you irrevocably agree (i) never to institute any such claim against the Company, the Employer, or any subsidiary or affiliate of the Company, (ii) to waive your ability, if any, to bring any such claim, and (iii) to release the Company and the Employer and any subsidiary or affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the 2013 Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims;
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(l)
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the grant of the RSUs and the benefits under the 2013 Plan, if any, will not automatically transfer to another company in the case of a merger, takeover, or transfer of liability;
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(m)
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neither the Company, the Employer nor any subsidiary or affiliate of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the RSUs or of any payments due to you pursuant to the subsequent sale of any Shares acquired upon the vesting of the RSUs; and
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(n)
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this award and any other award(s) granted under the 2013 Plan on the Grant Date are intended to fulfill any and all agreements, obligations or promises, whether legally binding or not, previously made by the Company or another Employer under the 2013 Plan to grant you the RSUs or other rights to common stock of the Company. By signing this Agreement, you accept such awards, along with all prior awards received by you, in full satisfaction of any such agreement, obligation or promise.
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18.
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No Advice Regarding Grant.
The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding your participation in the 2013 Plan or sale of Shares. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the 2013 Plan before taking any action related to the 2013 Plan.
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19.
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Compliance with Law
.
Notwithstanding any other provision of the 2013 Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the RSUs, the Company shall not be required to deliver the RSUs or any of the underlying Shares prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the RSUs or any of the underlying Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance of the RSUs and Shares. Further, you agree that the Company shall have unilateral authority to amend the 2013 Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.
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20.
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Waiver
.
You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other participant
.
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21.
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Appendix.
Notwithstanding any provisions in this Agreement, this Award shall be subject to any special terms and conditions set forth in the Appendix to this Agreement for your country to the extent that the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the 2013 Plan. Moreover, if you relocate to or from one of the countries included in the Appendix, the special terms and conditions for the country you are moving from and/or the country you are moving to will apply to you to the extent that the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the 2013 Plan. The Appendix is incorporated in and constitutes part of this Agreement.
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22.
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Imposition of Other Requirements.
The Company reserves the right to impose other requirements on your participation in the 2013 Plan, on the RSUs and on any Shares acquired under the 2013 Plan, to the extent that the Company determines it is necessary or advisable in order to comply with local law or to facilitate the administration of the 2013 Plan, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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23.
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Code Section 409A.
The Award is intended to qualify for the “short-term deferral” exemption from Section 409A of the Code, and the provisions of this Agreement will be interpreted, operated and administered in a manner consistent with these intentions. The right to payment triggered by each installment vesting date or vesting event pursuant to Section 2 above is intended to be a right to a separate payment for purposes of Section 409A. The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, without your consent, to unilaterally amend or modify the 2013 Plan and/or this Agreement to ensure that the RSUs qualify for exemption from or comply with Section 409A of the Code; provided, however, that the Company makes no representations that the RSUs will be exempt from Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to these RSUs. The Company will have no liability to you or to any other party if the Award, the vesting of the Award, delivery of Shares upon settlement of the Award or any other event hereunder that is intended to be exempt from or compliant with Section 409A of the Code, is not so exempt or compliant, or for any action taken by the Company with respect thereto.
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24
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Insider Trading/Market Abuse Laws.
You acknowledge that, depending on your country, you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell Shares under the 2013 Plan during such times as you is considered to have “inside information” regarding the Company (as defined by the laws in your country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Company. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to consult with your own personal legal and financial advisors on this matter.
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APPENDIX
ADDITIONAL TERMS AND CONDITIONS OF THE
RESTRICTED STOCK UNIT AWARD AGREEMENT
TERMS AND CONDITIONS
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TERMS AND CONDITIONS
This Appendix includes additional terms and conditions that govern the RSUs granted to you under the 2013 Plan if you are in one of the countries listed below on the Grant Date. Unless otherwise defined in this Appendix, capitalized terms used in this Appendix and defined in the 2013 Plan or this Agreement will have the same meaning as defined in the 2013 Plan or Agreement, as applicable.
NOTIFICATIONS
This Appendix also includes information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the 2013 Plan. The information is based on securities, exchange control, and other laws in effect in the respective countries as of July 2015. Such laws are often complex and change frequently. The Company strongly recommends that you do not rely on the information in this Appendix as the only source of information relating to the consequences of your participation in the 2013 Plan because such information may be outdated when the RSUs vest and you acquire Shares or sell any Shares acquired under the 2013 Plan.
In addition, the information contained in this Appendix is general in nature and may not apply to your particular situation, and the Company cannot assure you of a particular result. Accordingly, you are advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation. Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transfer employment after the Grant Date, or are considered a resident of another country for local law purposes, the information contained in this Appendix may not apply to you.
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AUSTRALIA
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TERMS AND CONDITIONS
Australian Offer Document.
You understand that the offering of the 2013 Plan in Australia is intended to qualify for exemption from the prospectus requirements under Class Order 14/1000 issued by the Australian Securities and Investments Commission. Participation in the 2013 Plan is subject to the terms and conditions set forth in the Australian Offer Document and the Award Documentation provided to you.
NOTIFICATIONS
Exchange
Control
Notice.
Exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers of any amount. The Australian bank assisting with the transaction will file the report for you. If there is no Australian bank involved in the transfer, you will have to file the report yourself.
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CANADA
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TERMS AND CONDITIONS
Settlement of RSUs and Sale of Shares.
The following provisions supplement Section 7 of the Agreement: Notwithstanding the provisions of the 2013 Plan, the RSUs will be settled in Shares only, not cash.
Data Privacy Notice and Consent.
This provision supplements Section 12 of the Agreement: You hereby authorize the Company and the Company’s representatives to discuss with and obtain all relevant information about you from all personnel, professional or not, involved in the administration and operation of the 2013 Plan. You further authorize the Company and any subsidiary or affiliate and the administrator of the 2013 Plan to disclose and discuss your participation in the 2013 Plan with their advisors. You further authorize the Company and any subsidiary or affiliate and the administrator of the 2013 Plan to record such personal information and to keep such information in your employee file.
Termination of Service
. The following provision replaces Section 9(b) of the Agreement: If you are deemed to have incurred a Termination of Service other than a Termination of Service on account of your death (whether or not in breach of local labor laws and whether or not later found to be invalid), your right to vest in the RSUs under the 2013 Plan (if any) will terminate effective as of the earlier of (1) the date the you receive notice of termination from the Employer, or (2) the date you are no longer actively employed, regardless of any notice period or period of pay in lieu of such notice required under applicable laws (including, but not limited to statutory law, regulatory law and/or common law); the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of the RSU grant.
French Language Provision.
The following provisions will apply if you are a resident of Quebec: The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la Convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.
NOTIFICATIONS
Securities Law Notification:
You are permitted to sell Shares acquired through the 2013 Plan through the designated broker appointed under the 2013 Plan, if any, provided the resale of Shares acquired under the 2013 Plan takes place outside of Canada through the facilities of a stock exchange on which the shares are listed.
Foreign Assets Reporting Information:
You are required to report any foreign property (including RSUs and Shares) on form T1135 (Foreign Income Verification Statement) if the total value of your foreign property exceeds C$100,000 at any time in the year. The form must be filed by April 30 of the following year. You are advised to consult with a personal advisor to ensure you comply with applicable reporting obligations.
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CHINA
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TERMS AND CONDITIONS
Exchange Control Notice.
The following terms and conditions will apply to Employees who are subject to exchange control restrictions and regulations in the PRC, including the requirements imposed by the State Administration of Foreign Exchange (“SAFE”), as determined by the Company in its sole discretion:
You understand and agree that, pursuant to local exchange control requirements, you will not be permitted to vest in an RSU or be issued any Shares under the 2013 Plan unless or until the Company, its Subsidiary or the Employer in the PRC has obtained an approval from SAFE for the 2013 Plan.
You further understand and agree that, pursuant to local exchange control requirements, you will be required to immediately repatriate any cash payments or proceeds obtained with respect to participation in the 2013 Plan to the PRC. You further understand that such repatriation of any cash payments or proceeds may need to be effectuated through a special exchange control account established by the Company, any Parent or Subsidiary, or the Employer, and you hereby consent and agree that any payment or proceeds may be transferred to such special account prior to being delivered to you.
You further understand and agree that, pursuant to local exchange control requirements, the Shares you acquire through RSU vesting will be sold at the Company's direction within ninety (90) calendar days following the date of your Termination of Service, or within such other time period as may be required by SAFE.
Any payment or proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. If the payments or proceeds are paid to you in U.S. dollars, you will be required to set up a U.S. dollar bank account in the PRC so that the payments or proceeds may be deposited into this account. If the payments or proceeds are paid to you in local currency, the Company is under no obligation to secure any particular exchange conversion rate and the Company may face delays in converting the payments or proceeds to local currency due to exchange control restrictions.
You further agree to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.
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FRANCE
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TERMS AND CONDITIONS
Consent to Receive Information in English.
By accepting the Award, you confirm having read and understood the 2013 Plan and the Agreement, which were provided in the English language. You accept the terms of those documents accordingly.
En acceptant l’attribution, vous confirmez avoir lu et compris le Plan de travail et ce Contrat, qui ont été transmis en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.
NOTIFICATIONS
Exchange Control Notice.
You may hold Shares acquired under the 2013 Plan outside of France provided that you declare all foreign accounts (including any accounts that were opened or closed during the tax year) on the your annual income tax return. Furthermore, you must declare to the customs and excise authorities any cash or securities you import or export without the use of a financial institution when the value of the cash or securities exceeds €10,000.
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GERMANY
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NOTIFICATIONS
Exchange Control Notice.
Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (Bundesbank). For payments in connection with securities (including proceeds realized upon the sale of Shares), the report must be made by the 5th day of the month following the month in which the payment was received. Effective from September 2013, the report must be filed electronically. The form of report (“Allgemeine Meldeportal Statistik”) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. You are responsible for making this report.
In addition, you must report any receivables or payables or debts in foreign currency exceeding €5,000,000 on a monthly basis.
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HONG KONG
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TERMS AND CONDITIONS
Settlement of RSUs and Sale of Shares.
The following provisions supplement Section 7 of the Agreement: Notwithstanding the provisions of the 2013 Plan, the RSUs will be settled in Shares only, not cash.
If any portion of the RSUs vest and Shares are issued within six (6) months of the Grant Date, you agree that you will not sell the Shares acquired upon vesting before the six-month anniversary of the Grant Date.
NOTIFICATIONS
Securities Warning:
The RSUs and any Shares acquired upon vesting of the RSUs do not constitute a public offering of securities under Hong Kong law and are available only to directors of Cree, Inc. and employees and former employees of the Company and its subsidiaries and affiliates. The Agreement, the 2013 Plan and other incidental communication materials have not been prepared in accordance with the rules applicable to and are not intended to constitute a “prospectus” for a public offering of securities under applicable Hong Kong securities legislation, nor have the documents been reviewed by any regulatory authority in Hong Kong. The RSUs and any related documentation are intended only for the personal use of each eligible director or employee of the Employer, the Company, or its subsidiaries or affiliates and may not be distributed to any other person. If you are in doubt as to any of the contents of the Agreement or the 2013 Plan, you should obtain independent professional advice.
Nature of Scheme.
The Company specifically intends that the 2013 Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
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INDIA
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NOTIFICATIONS
Exchange Control Notice.
You
must repatriate any funds received pursuant to the 2013 Plan (
e.g.
, proceeds from the sale of Shares) to India within 90 days of receipt. You should obtain evidence of the repatriation of funds in the form of a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation.
Because exchange control regulations can change frequently and without notice, you should consult your personal legal advisor before selling Shares to ensure compliance with current regulations. It is your
responsibility to comply with exchange control laws in India
, and neither the Company nor the Employer will be liable for any fines or penalties resulting from your failure to comply with applicable laws
.
Foreign
Asset/Account
Reporting Information.
You are required to declare your foreign bank accounts and any foreign financial assets (including Shares held outside India) in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult your personal advisor in this regard.
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ITALY
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TERMS AND CONDITIONS
Data Privacy Notice.
The following provision replaces Section 12 of the Agreement:
You understand that the Employer, the Company and any of its subsidiaries or affiliates hold certain personal information about you, including, without limitation, your name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or any of its subsidiaries or affiliates, details of Awards of RSUs, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, managing and administering the 2013 Plan (“Data”) and in compliance with applicable laws and regulations.
You also understand that providing the Company with Data is necessary for the performance of the 2013 Plan and that your refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect your ability to participate in the 2013 Plan. The Controller of personal data processing is Cree, Inc., with registered offices at 4600 Silicon Drive, Durham, North Carolina 27703, U.S.A., and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is Cree Europe S.r.l., Via dei Giunchi 52-54, Firenze 50145 Italia.
You understand that Data will not be publicized, but it may be transferred to banks, other financial institutions or brokers involved in the management and administration of the 2013 Plan. You understand that Data also may be transferred to the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, or such other public accounting firm that may be engaged by the Company in the future. You understand further that the Company and/or any of its subsidiaries or affiliates will transfer Data among themselves as necessary for the purposes of implementing, administering and managing your participation in the 2013 Plan, and that the Company and/or any of its subsidiaries or affiliates may each further transfer Data to third parties assisting the Company in implementation, administration and management of the 2013 Plan, including any requisite transfer of Data to a broker or other third party with whom you may elect to deposit any Shares acquired under the 2013 Plan. Such recipients may receive, possess, use, retain and transfer Data in electronic or other form, for the purposes of implementing, administering and managing your participation in the 2013 Plan. You understand that these recipients may be located in or outside of the European Economic Area, such as in the United States or elsewhere and in locations that might not provide the same level of protection as intended under Italian data privacy laws. Should the Company exercise its discretion in suspending all necessary legal obligations in connection with the management and administration of the 2013 Plan, it will delete Data as soon as it has completed all necessary legal obligations connected with the management and administration of the 2013 Plan.
You understand that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.
The processing activity, including communication, and the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require your consent thereto, as the processing is necessary to performance of contractual obligations related to implementation, administration and management of the 2013 Plan. You understand that, pursuant to Section 7 of the Legislative Decree no. 196/2003, you have a right, without limitation, to access, delete, update, correct or terminate, for legitimate reason, the Data processing. Furthermore, you are aware that Data will not be used for direct-marketing purposes. In addition, Data provided can be reviewed and questions or complaints may be addressed by contacting the Stock Plan Administrator of the Company.
Plan Document Acknowledgement:
By accepting the Award of RSUs, you acknowledge that you have received a copy of the 2013 Plan, the Agreement and this Appendix, that you have reviewed these documents in their entirety and that you fully understand and accept all provisions of the 2013 Plan and the Agreement.
You acknowledge having read and specifically and expressly approve the following sections of the Agreement: Section 3. (“Forfeiture of RSUs upon Termination of Service”), Section 4. (“Forfeiture of RSUs for Awards Not Timely Accepted”), Section 6. (“Responsibility for Taxes”), Section 13. (“Language”), Section 15(d) regarding North Carolina, U.S.A. law governing the Agreement, Section 17. (“Nature of Grant”), and the above Data Privacy Notice section included in this Appendix.
NOTIFICATIONS
Foreign Asset/Account Reporting Information.
Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
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JAPAN
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NOTIFICATIONS
Exchange Control Notice.
If you acquire Shares valued at more than ¥100,000,000 in a single transaction, you must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of the Shares.
Foreign Asset/Account Reporting.
You are required to report details of any assets held outside of Japan as of December 31st (including any Shares acquired under the 2013 Plan) to the extent such assets have a total net fair market value exceeding ¥50,000,000 on your annual income tax return.
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KOREA (SOUTH)
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NOTIFICATIONS
Exchange Control Notice.
Exchange control laws require Korean residents who realize US$500,000 or more (in a single transaction) from the sale of Shares repatriate the sale proceeds back to Korea within 18 months of the sale.
Foreign Asset/Account Reporting Information.
Korean residents must declare all foreign financial accounts (e.g., non-Korean bank accounts, brokerage accounts) based in foreign countries that have not entered into an “inter-governmental agreement for automatic exchange of tax information” with Korea to the Korean tax authority and file a report with respect to such accounts if the value of such accounts exceeds KRW 1 billion (or an equivalent amount in foreign currency). You should consult with your personal tax advisor for additional information about this reporting obligation, including whether or not there is an applicable inter-governmental agreement between Korea and the U.S. (or any other country where you may hold any Shares or cash acquired in connection with the 2013 Plan).
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MALAYSIA
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TERMS AND CONDITIONS
Data Privacy Consent.
This provision replaces in its entirety the data privacy consent in Section 12 of the Agreement:
NOTIFICATIONS
Director Notification Obligation
. If you are a director of the Company’s Malaysian subsidiary or affiliate, you are subject to certain notification requirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian subsidiary or affiliate in writing when you receive or dispose of an interest (
e.g
., the Shares) in the Company or any related company. Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.
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MEXICO
TERMS AND CONDITIONS
Acknowledgement of the Agreement
. By participating in the 2013 Plan, you acknowledge that you have received a copy of the 2013 Plan, have reviewed the 2013 Plan in its entirety and fully understand and accept all provisions of the 2013 Plan. You further acknowledge that you have read and expressly approve the terms and conditions set forth in the Nature of Grant section of the Agreement, in which the following is clearly described and established: (i) your participation in the 2013 Plan does not constitute an acquired right; (ii) the 2013 Plan and your participation in the 2013 Plan are offered by the Company on a wholly discretionary basis; (iii) your participation in the 2013 Plan is voluntary; and (iv) the Company and its subsidiaries are not responsible for any decrease in the value of the underlying Shares.
Labor Law Policy and Acknowledgement
. By participating in the 2013 Plan, you expressly recognize that Cree, Inc., with registered offices at 4600 Silicon Drive, Durham, North Carolina 27703, U.S.A., is solely responsible for the administration of the 2013 Plan and that your participation in the 2013 Plan and acquisition of Shares does not constitute an employment relationship between you and the Company
since you are participating in the 2013 Plan on a wholly commercial basis. Based on the foregoing, you expressly recognize that the 2013 Plan and the benefits that you may derive from participation in the 2013 Plan do not establish any rights between you and the Company and do not form part of the employment conditions and/or benefits provided by the Company, and that any modification of the 2013 Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.
You further understand that your participation in the 2013 Plan is as a result of a unilateral and discretionary decision of
the Company
;
therefore, the Company reserves the absolute right to amend and/or discontinue your participation at any time without any liability to you.
Finally, you hereby declare that you do not reserve any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the 2013 Plan or the benefits derived under the 2013 Plan, and you therefore grant a full and broad release to the Company, its subsidiaries, branches, representation offices, its shareholders, officers, agents or legal representatives with respect to any claim that may arise.
TÈRMINOS Y CONDICIONES
Reconocimiento del Contrato
. Al participar en el Plan, usted reconoce que ha recibido una copia del Plan, que ha revisado el Plan en su totalidad, y que entiende y acepta en su totalidad, todas y cada una de las disposiciones del Plan. Asimismo reconoce que ha leído y aprueba expresamente los términos y condiciones señalados en el párrafo titulado Naturaleza de la Oferta en el Convenio, en lo que claramente se describe y establece lo siguiente: (i) su participación en el Plan no constituye un derecho adquirido; (ii) el Plan y su participación en el Plan son ofrecidos por la Compañía sobre una base completamente discrecional; (iii) su participación en el Plan es voluntaria; y (iv) la Compañía y sus afiliadas no son responsables de ninguna por la disminución en el valor de las Acciones subyacentes.
Política de Legislación Laboral y Reconocimiento
. Al participar en el Plan, usted reconoce expresamente que Cree, Inc., con oficinas registradas en 4600 Silicon Drive, Durham, North Carolina 27703, Estados Unidos de América, es la única responsable por la administración del Plan, y que su participación en el Plan, así como la adquisición de las Acciones, no constituye una relación laboral entre usted y la Compañía, debido a que usted participa en el plan sobre una base completamente mercantil. Con base en lo anterior, usted reconoce expresamente que el Plan y los beneficios que pudiera obtener por su participación en el Plan, no establecen derecho alguno entre usted y la Compañía, y no forman parte de las condiciones y/o prestaciones laborales que la Compañía ofrece, y que las modificaciones al Plan o su terminación, no constituirán un cambio ni afectarán los términos y condiciones de su relación laboral.
Asimismo usted entiende que su participación en el Plan es el resultado de una decisión unilateral y discrecional de la Compañía; por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o suspender su participación en cualquier momento, sin que usted incurra en responsabilidad alguna.
Finalmente, usted declara que no se reserva acción o derecho alguno para interponer reclamación alguna en contra de la Compañía, por concepto de compensación o daños relacionados con cualquier disposición del Plan o de los beneficios derivados del Plan, y por lo tanto, usted libera total y ampliamente de toda responsabilidad a la Compañía, a sus afiliadas, sucursales, oficinas de representación, sus accionistas, funcionarios, agentes o representantes legales, con respecto a cualquier reclamación que pudiera surgir.
RUSSIA
TERMS AND CONDITIONS
U.S. Transaction
. You understand that the RSUs shall be valid and this Agreement shall be concluded and become effective only when the Agreement is received by the Company in the United States. Upon vesting of the RSUs, any Shares to be issued to you shall be delivered to you through a bank or brokerage account in the United States. In no event will Shares be delivered to you in Russia; instead, all Shares acquired upon vesting of the RSUs will be maintained on your behalf in the United States. You are not permitted to sell Shares acquired at vesting directly to a Russian legal entity or resident.
Depending on the development of local regulatory requirements, the Company reserves the right to settle RSUs in cash and/or to pay any proceeds related to the RSUs to you through local payroll.
NOTIFICATIONS
Exchange Control Information
. Under current exchange control regulations, within a reasonably short time after receipt, you must repatriate any proceeds from the sale of Shares received under the 2013 Plan to Russia. Such proceeds must be initially credited to you through a foreign currency account at an authorized bank in Russia. After the proceeds are initially received in Russia, they may be further remitted to foreign banks in accordance with Russian exchange control laws. However, dividends can be held in a foreign currency account at a foreign individual bank account opened in certain countries (including the United States).
You are encouraged to contact your personal advisor before RSUs vest and Shares are sold as significant penalties may apply in the case of non-compliance with exchange control requirements and because exchange control requirements may change.
Securities Law Information
. This Agreement, the 2013 Plan and all other materials that you may receive regarding participation in the 2013 Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the 2013 Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Labor Law Information
. If you continue to hold Shares after an involuntary Termination of Service, you may not be eligible to receive unemployment benefits in Russia.
SINGAPORE
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NOTIFICATIONS
Securities Law Notice.
The Award is being made on a private basis and is, therefore, exempt from registration in Singapore.
Chief Executive Officer and Director Notification Requirement.
If you are the Chief Executive Officer or a director of a Singapore Subsidiary of the Company, you must notify the Singapore Subsidiary in writing of an interest (e.g., RSUs, Shares) in the Company or any Subsidiary within two days of (i) its acquisition or disposal, (ii) any change in a previously-disclosed interest (e.g., when Shares acquired under the 2013 Plan are subsequently sold), or (iii) becoming the CEO / a director.
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TAIWAN
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TERMS AND CONDITIONS
Data Privacy Consent.
You hereby acknowledge that you have read and understood the terms regarding collection, processing and transfer of Data contained in Section 12 of the Agreement and by participating in the 2013 Plan, you agree to such terms. In this regard, upon request of the Company or the Employer, you agree to provide an executed data privacy consent form to the Employer or the Company (or any other agreements or consents that may be required by the Employer or the Company) that the Company and/or the Employer may deem necessary to obtain under the data privacy laws in the Employee’s country, either now or in the future. You understand you will not be able to participate in the 2013 Plan if you fail to execute any such consent or agreement.
NOTIFICATIONS
Securities Law Notice.
The RSUs and the Shares to be issued pursuant to the 2013 Plan are available only to employees of the Company, its Subsidiaries and Affiliates. The grant of the RSUs does not constitute a public offer of securities.
Exchange Control Notice.
You may acquire and remit foreign currency (including proceeds from the sale of Shares) into and out of Taiwan up to US$5,000,000 per year. If the transaction amount is TWD$500,000 or more in a single transaction, you must submit a foreign exchange transaction form and also provide supporting documentation to the satisfaction of the remitting bank. If the transaction amount is US$500,000 or more in a single transaction, you may be required to provide additional supporting documentation to the satisfaction of the remitting bank. You should consult your personal advisor to ensure compliance with applicable exchange control laws in Taiwan.
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TURKEY
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NOTIFICATIONS
Securities Law Notice.
You are prohibited by Turkish law from selling any Shares acquired under the 2013 Plan in Turkey. The Company’s ordinary shares are currently traded on the NASDAQ, which is located outside of Turkey, under the ticker symbol “CREE” and shares acquired under the 2013 Plan may be sold through this exchange.
Exchange Control Notice.
You may be required to engage a Turkish financial intermediary to assist with the sale of Shares acquired under the 2013 Plan. To the extent a Turkish financial intermediary is required in connection with the sale of any shares acquired under the 2013 Plan, you are solely responsible for engaging such Turkish financial intermediary. You should consult your personal legal advisor prior to the vesting of the awards or any sale of Shares to ensure compliance with the current requirements.
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UNITED KINGDOM
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TERMS AND CONDITIONS
Responsibility for Taxes.
The following provision supplements Section 6 of this Agreement:
You agree that, if you do not pay or the Employer or the Company does not withhold the full amount of income tax that you owe at vesting of the equity awards, or the release or assignment of the equity awards for consideration, or the receipt of any other benefit in connection with the equity awards (the “Chargeable Event”) within 90 days after the end of the UK tax year in which the Chargeable Event occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), then the amount that should have been withheld shall constitute a loan owed by you to the Employer, effective on the Due Date. You agree that the loan will bear interest at the HMRC’s official rate and will be immediately due and repayable by you, and the Company and/or the Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any other funds due to you by the Employer, by withholding in cash or in Shares issued upon vesting of the equity awards or from the cash proceeds from the sale of Shares or by demanding cash or a check from you. You also authorize the Company to delay the issuance of any Shares unless and until the loan is repaid in full.
Notwithstanding the foregoing, if you are an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply. In the event that you are an executive officer or director and income tax is not collected from or paid by you by the Due Date, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and National Insurance Contributions (“NICs”) may be payable. You acknowledge that the Company or the Employer may recover any such additional income tax and NICs at any time thereafter by any of the means referred to in Section 6 of the Agreement, although you acknowledge that you ultimately will be responsible for reporting any income tax or NICs due on this additional benefit directly to the HMRC under the self-assessment regime.
|
|
1.
|
I have reviewed this annual report on Form 10-K of Cree, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ GREGG A. LOWE
|
|
Gregg A. Lowe
|
|
Chairman, Chief Executive Officer and President
|
1.
|
I have reviewed this annual report on Form 10-K of Cree, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ MICHAEL E. MCDEVITT
|
|
Michael E. McDevitt
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ GREGG A. LOWE
|
|
Gregg A. Lowe
|
|
Chairman, Chief Executive Officer and President
|
|
|
|
August 20, 2018
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ MICHAEL E. MCDEVITT
|
|
Michael E. McDevitt
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
August 20, 2018
|
|
Note
|
December 31,
2015 |
December 31,
2014
|
|
Note
|
December 31,
2015 |
December 31,
2014
|
Assets
|
|
|
|
Liabilities
|
|
|
|
Current assets:
|
|
|
|
Current liabilities:
|
|
|
|
Cash and cash equivalents
|
6
|
$5,240,128
|
5,397,182
|
Short-term borrowings
|
16
|
$ -
|
924,629
|
Financial assets measured at fair value through profit or loss-current
|
7, 17
|
1,875
|
240
|
Accounts payable
|
|
3,285,365
|
3,162,169
|
Accounts receivable, net
|
9
|
3,732,499
|
3,593,240
|
Accounts payable to related parties
|
34
|
29,844
|
4,914
|
Accounts receivable from related parties, net
|
9, 34
|
1,194,187
|
1,540,628
|
Financial liabilities measured at fair value through profit or loss-current
|
7, 17
|
50,026
|
86,175
|
Other financial assets
|
6,9
|
199,981
|
35,850
|
Current tax liabilities
|
28
|
35,917
|
129,797
|
Inventories
|
10
|
3,004,148
|
2,825,163
|
Other current liabilities
|
|
1,151,106
|
1,323,600
|
Other current assets
|
|
222,855
|
332,341
|
Current installments of long-term borrowings
|
18
|
851,250
|
1,250
|
Total current assets
|
|
13,595,673
|
13,724,644
|
Total current liabilities
|
|
5,403,508
|
5,632,534
|
Noncurrent assets:
|
|
|
|
|
|
|
|
Investments in equity-accounted investees
|
11
|
242,381
|
232,756
|
Noncurrent liabilities:
|
|
|
|
Available-for-sale financial assets-noncurrent
|
8
|
116,921
|
219,552
|
Long-term borrowings, excluding current installments
|
18
|
947,500
|
1,798,750
|
Property, plant and equipment, net
|
13, 35
|
7,705,603
|
9,445,343
|
Convertible bonds payable
|
17
|
1,886,125
|
1,842,643
|
Intangible assets
|
14
|
17,388
|
18,487
|
Other noncurrent liabilities
|
28
|
179,989
|
179,802
|
Deferred tax assets
|
28
|
243,219
|
255,368
|
Total noncurrent liabilities
|
|
3,013,614
|
3,821,195
|
Long-term prepayments for rents
|
15
|
101,529
|
99,960
|
Total liabilities
|
|
8,417,122
|
9,453,729
|
Other noncurrent assets
|
20, 35
|
371,124
|
294,166
|
|
|
|
|
Total noncurrent assets
|
|
8,798,165
|
10,565,632
|
Equity
|
12, 17, 21, 22
|
|
|
|
|
|
|
Common stock, $10 par value
|
|
6,025,723
|
6,228,300
|
|
|
|
|
Capital collected in advance
|
|
412
|
1,238
|
|
|
|
|
Capital surplus
|
|
6,973,068
|
7,158,596
|
|
|
|
|
Retained earnings
|
|
1,119,627
|
1,377,377
|
|
|
|
|
Other components of equity
|
|
191,791
|
21,618
|
|
|
|
|
Treasury stock
|
|
(333,905)
|
-
|
|
|
|
|
Equity attributable to stockholders of Lextar Electronics Corporation
|
|
13,976,716
|
14,787,129
|
|
|
|
|
Non-controlling interests
|
|
-
|
49,418
|
|
|
|
|
Total equity
|
|
13,976,716
|
14,836,547
|
Total Assets
|
|
$22,393,838
|
24,290,276
|
Total Liabilities and Equity
|
|
$22,393,838
|
24,290,276
|
|
|
|
|
|
|
|
|
|
Note
|
|
2015
|
|
2014
|
|
2013 (Unaudited)
|
|
|
|
|
|
|
|
|||
Net revenue
|
23, 34
|
$
|
14,230,534
|
|
14,517,137
|
|
13,751,666
|
|
Cost of sales
|
10, 19, 20, 22, 24, 34
|
|
12,632,960
|
|
12,392,047
|
|
12,005,060
|
|
Gross profit
|
|
|
1,597,574
|
|
2,125,090
|
|
1,746,606
|
|
Selling and distribution expenses
|
9, 14, 19, 20, 22, 24
|
|
450,505
|
|
338,134
|
|
287,725
|
|
General and administrative expenses
|
14, 19, 20, 22, 24, 34
|
|
453,436
|
|
554,000
|
|
558,502
|
|
Research and development expenses
|
14, 19, 20, 24, 34
|
|
562,834
|
|
432,110
|
|
366,137
|
|
Other income
|
12, 25
|
|
75,228
|
|
69,055
|
|
665,397
|
|
Other gains and losses
|
17, 26
|
|
174,712
|
|
14,588
|
|
65,061
|
|
Finance costs
|
17, 27
|
|
(87,214)
|
|
(132,388)
|
|
(165,807)
|
|
Share of profit (loss) of equity-accounted investees
|
11
|
|
10,873
|
|
(12,694
|
)
|
(13,997
|
)
|
Profit before income tax
|
|
|
304,398
|
|
739,407
|
|
1,084,896
|
|
Income tax expense
|
28
|
|
905
|
|
92,442
|
|
204,175
|
|
Profit for the year
|
|
|
303,493
|
|
646,965
|
|
880,721
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Items that will never be reclassified to profit or loss
|
|
|
|
|
|
|||
Remeasurement of defined benefit obligations
|
|
|
190
|
|
2,939
|
|
22,113
|
|
Items that are or may be reclassified to profit or loss
|
|
|
|
|
|
|
||
Foreign operations – foreign currency translation differences
|
|
|
136,645
|
|
185,770
|
|
60,786
|
|
Net change in fair value of available-for-sale financial assets
|
|
|
(38,808
|
)
|
(47,162
|
)
|
(44,293
|
)
|
Other comprehensive income, net of tax
|
|
|
98,027
|
|
141,547
|
|
38,606
|
|
Total comprehensive income for the year
|
|
$
|
401,520
|
|
788,512
|
|
919,327
|
|
Profit attributable to:
|
|
|
|
|
|
|||
Stockholders of Lextar Electronics Corporation
|
|
$
|
308,934
|
|
661,163
|
|
912,475
|
|
Non-controlling interests
|
|
|
(5,441
|
)
|
(14,198
|
)
|
(31,754
|
)
|
Profit for the year
|
|
$
|
303,493
|
|
646,965
|
|
880,721
|
|
Total comprehensive income attributable to:
|
|
|
|
|
|
|||
Stockholders of Lextar Electronics Corporation
|
|
$
|
407,700
|
|
802,668
|
|
951,128
|
|
Non-controlling interests
|
|
|
(6,180
|
)
|
(14,156
|
)
|
(31,801
|
)
|
Total comprehensive income for the year
|
|
$
|
401,520
|
|
788,512
|
|
919,327
|
|
Earnings per share
|
|
|
|
|
|
|||
Basic earnings per share
|
29
|
$
|
0.50
|
|
1.23
|
|
1.78
|
|
Diluted earnings per share
|
29
|
$
|
0.50
|
|
1.15
|
|
1.73
|
|
|
Equity attributable to owners of parent
|
|
||||||||||
|
Share capital
|
|
Retained earnings
|
Other components of equity
|
|
|
|
|||||
|
|
|
|
|
|
Exchange
differences on |
Unrealized
losses |
|
|
|
|
|
|
Ordinary
|
Capital
collected
|
Capital
|
Legal
|
Special
|
Unappropriated
|
translation of
foreign financial |
on available-
for-sale financial |
|
Treasury
|
Non-controlling
|
|
|
shares
|
in advance
|
surplus
|
reserve
|
reserve
|
retained earnings
|
statements
|
assets
|
Others
|
stock
|
interests
|
Total equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance on January 1, 2013 (Unaudited)
|
4,304,724
|
895
|
3,433,042
|
124,258
|
201
|
665,128
|
(32,595)
|
(2,196)
|
—
|
—
|
—
|
8,493,457
|
Profit (loss) for the year ended December 31, 2013 (Unaudited)
|
—
|
—
|
—
|
—
|
—
|
912,475
|
-
|
-
|
—
|
—
|
(31,754)
|
880,721
|
Other comprehensive income (loss) for the year ended December 31, 2013 (Unaudited)
|
—
|
—
|
—
|
—
|
—
|
22,113
|
60,833
|
(44,293)
|
—
|
—
|
(47)
|
38,606
|
Comprehensive income (loss) for the year ended December 31, 2013 (Unaudited)
|
—
|
—
|
—
|
—
|
—
|
934,588
|
60,833
|
(44,293)
|
—
|
—
|
(31,801)
|
919,327
|
Appropriation and distribution of retained earnings (Unaudited) :
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal reserve
|
—
|
—
|
—
|
29,095
|
-
|
(29,095)
|
—
|
—
|
—
|
—
|
—
|
—
|
Special reserve
|
—
|
—
|
—
|
—
|
34,590
|
(34,590)
|
—
|
—
|
—
|
—
|
—
|
—
|
Cash dividends to shareholders
|
—
|
—
|
—
|
—
|
—
|
(225,524)
|
—
|
—
|
—
|
—
|
—
|
(225,524)
|
Issuance of shares due to merger (Unaudited)
|
849,750
|
—
|
1,402,088
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
2,251,838
|
Non-controlling interest acquired due to merger (Unaudited)
|
—
|
—
|
-
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
48,877
|
48,877
|
Retirement of treasury stock due to merger (Unaudited)
|
(144,931)
|
—
|
(122,961)
|
—
|
—
|
(116,175)
|
—
|
—
|
—
|
—
|
—
|
(384,067)
|
Conversion of convertible bonds (Unaudited)
|
—
|
5,009
|
(467)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
4,542
|
Conversion of convertible bonds to ordinary shares (Unaudited)
|
220,425
|
(401)
|
302,438
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
522,462
|
Share-based payment transactions (Unaudited)
|
—
|
—
|
34,039
|
—
|
—
|
—
|
—
|
—
|
54,542
|
—
|
—
|
88,581
|
Employee stock options exercised (Unaudited)
|
—
|
4,114
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
4,114
|
Issuance of shares for exercise of employee stock options (Unaudited)
|
4,042
|
(4,325)
|
283
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Issuance of restricted employee stock (Unaudited)
|
88,000
|
—
|
136,400
|
—
|
—
|
—
|
—
|
—
|
(224,400)
|
—
|
—
|
—
|
Difference between consideration and carrying amount of subsidiaries acquired or disposed (Unaudited)
|
—
|
—
|
7,485
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,485)
|
—
|
Contribution by non-controlling interests (Unaudited)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
37,500
|
37,500
|
Changes in non-controlling interests (Unaudited)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,066
|
1,066
|
Balance on December 31, 2013 (Unaudited)
|
5,322,010
|
5,292
|
5,192,347
|
153,353
|
34,791
|
1,194,332
|
28,238
|
(46,489)
|
(169,858)
|
—
|
48,157
|
11,762,173
|
Profit (loss) for the year ended December 31, 2014
|
—
|
—
|
—
|
—
|
—
|
661,163
|
-
|
-
|
—
|
—
|
(14,198)
|
646,965
|
Other comprehensive income (loss) for the year ended December 31, 2014
|
—
|
—
|
—
|
—
|
—
|
2,939
|
185,728
|
(47,162)
|
—
|
—
|
42
|
141,547
|
Comprehensive income (loss) for the year ended December 31, 2014
|
—
|
—
|
—
|
—
|
—
|
664,102
|
185,728
|
(47,162)
|
—
|
—
|
(14,156)
|
788,512
|
Appropriation and distribution of retained earnings :
|
|
—
|
—
|
|
|
|
|
|
—
|
|
|
|
Legal reserve
|
—
|
—
|
—
|
97,956
|
—
|
(97,956)
|
—
|
—
|
—
|
—
|
—
|
—
|
Special reserve
|
—
|
—
|
—
|
—
|
(16,540)
|
16,540
|
—
|
—
|
—
|
—
|
—
|
—
|
Cash dividends on ordinary shares
|
—
|
—
|
—
|
—
|
—
|
(669,201)
|
—
|
—
|
—
|
—
|
—
|
(669,201)
|
Capital increase by cash
|
830,000
|
—
|
1,660,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
2,490,000
|
Retirement of treasury stock
|
(8,700)
|
—
|
(13,695)
|
—
|
—
|
—
|
—
|
—
|
—
|
22,395
|
—
|
-
|
Issuance of convertible bonds
|
—
|
—
|
195,200
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
195,200
|
Conversion of convertible bonds
|
—
|
125,157
|
(11,688)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
113,469
|
Conversion of convertible bonds to ordinary shares
|
49,558
|
(129,649)
|
80,091
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Difference between consideration and carrying amount of subsidiaries acquired or disposed
|
—
|
—
|
4,736
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(4,736)
|
—
|
Share-based payment transactions
|
—
|
—
|
(6,894)
|
—
|
—
|
—
|
—
|
—
|
109,486
|
—
|
—
|
102,592
|
Employee stock options exercised
|
—
|
33,649
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
33,649
|
Issuance of shares for exercise of employee stock options
|
13,432
|
(33,211)
|
19,779
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Issuance of restricted employee stock
|
22,000
|
—
|
38,720
|
—
|
—
|
—
|
—
|
—
|
(60,720)
|
—
|
—
|
—
|
Expiration of restricted employee stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
22,395
|
(22,395)
|
—
|
—
|
Contribution by non-controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
25,000
|
25,000
|
Changes in non-controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(4,847)
|
(4,847)
|
Balance on December 31, 2014
|
6,228,300
|
1,238
|
7,158,596
|
251,309
|
18,251
|
1,107,817
|
213,966
|
(93,651)
|
(98,697)
|
—
|
49,418
|
14,836,547
|
Profit (loss) for the year ended December 31, 2015
|
—
|
—
|
—
|
—
|
—
|
308,934
|
—
|
—
|
—
|
—
|
(5,441)
|
303,493
|
Other comprehensive income (loss) for the year ended December 31, 2015
|
—
|
—
|
—
|
—
|
—
|
190
|
137,384
|
(38,808)
|
—
|
—
|
(739)
|
98,027
|
Comprehensive income (loss) for the year ended December 31, 2015
|
—
|
—
|
—
|
—
|
—
|
309,124
|
137,384
|
(38,808)
|
—
|
—
|
(6,180)
|
401,520
|
Appropriation and distribution of retained earnings :
|
|
|
|
|
|
|
|
|
—
|
—
|
|
|
Legal reserve
|
—
|
—
|
—
|
62,986
|
—
|
(62,986)
|
—
|
—
|
—
|
—
|
—
|
—
|
Special reserve
|
—
|
—
|
—
|
—
|
(18,251)
|
18,251
|
—
|
—
|
—
|
—
|
—
|
—
|
Cash dividends on ordinary shares
|
—
|
—
|
(93,443)
|
—
|
—
|
(566,874)
|
—
|
—
|
—
|
—
|
—
|
(660,317)
|
Acquisition of treasury stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(618,001)
|
—
|
(618,001)
|
Retirement of treasury stock
|
(206,692)
|
—
|
(94,724)
|
—
|
—
|
—
|
—
|
—
|
—
|
301,416
|
—
|
—
|
Conversion of convertible bonds
|
—
|
104
|
(9)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
95
|
Conversion of convertible bonds to ordinary shares
|
245
|
(622)
|
377
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Share-based payment transactions
|
—
|
—
|
(960)
|
—
|
—
|
—
|
—
|
—
|
54,277
|
—
|
—
|
53,317
|
Loss of control of subsidiary
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(43,238)
|
(43,238)
|
Employee stock options exercised
|
—
|
412
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
412
|
Issuance of shares for exercise of employee stock options
|
3,870
|
(720)
|
3,231
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
6,381
|
Expiration of restricted employee stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
17,320
|
(17,320)
|
—
|
—
|
Balance on December 31, 2015
|
6,025,723
|
412
|
6,973,068
|
314,295
|
—
|
805,332
|
351,350
|
(132,459)
|
(27,100)
|
(333,905)
|
—
|
13,976,716
|
|
2015
|
2014
|
2013 (Unaudited)
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Profit before income tax
|
$
|
304,398
|
|
739,407
|
|
1,084,896
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Depreciation
|
2,080,207
|
|
2,046,212
|
|
1,970,885
|
|
|
Amortization
|
77,278
|
|
52,497
|
|
40,900
|
|
|
Changes in fair values of financial instruments
|
(37,849)
|
|
41,736
|
|
16,394
|
|
|
Interest expense
|
87,214
|
|
132,388
|
|
165,807
|
|
|
Interest income
|
(32,134)
|
|
(40,610)
|
|
(30,233)
|
|
|
Share-based payment transactions
|
53,317
|
|
102,592
|
|
88,581
|
|
|
Share of profit (loss) of equity-accounted investees
|
(10,873)
|
|
12,694
|
|
13,997
|
|
|
Gain on bargain purchase
|
—
|
|
—
|
|
(552,561)
|
|
|
Cash dividends received from associates accounted for using equity method
|
—
|
|
—
|
|
6,206
|
|
|
Loss (gain) from disposal of property, plant and equipment
|
(167,090)
|
|
3,389
|
|
(621)
|
|
|
Gain from transfer of the right of long-term prepaid rents
|
—
|
|
—
|
|
(61,919)
|
|
|
Gain from loss of control of subsidiary
|
(15,045)
|
|
—
|
|
—
|
|
|
Others
|
(3,290
|
)
|
(38
|
)
|
13,122
|
|
|
|
2,031,735
|
|
2,350,860
|
|
1,670,558
|
|
|
Change in:
|
|
|
|
||||
- Accounts receivable
|
175,567
|
|
(452,850)
|
|
476,181
|
|
|
- Inventories
|
(199,640)
|
|
(747,581)
|
|
(126,079)
|
|
|
- Other current assets
|
156,391
|
|
177,730
|
|
(101,055)
|
|
|
- Other financial assets
|
(164,571)
|
|
3,384
|
|
61,481
|
|
|
- Other operating assets
|
(7,125)
|
|
—
|
|
—
|
|
|
- Accounts payable
|
189,661
|
|
198,543
|
|
(725,666)
|
|
|
- Other current liabilities
|
(1,608)
|
|
(126,233)
|
|
(153,535)
|
|
|
- Other non-current liabilities
|
19,005
|
|
(25,168
|
)
|
22,623
|
|
|
|
167,680
|
|
(972,175
|
)
|
(546,050
|
)
|
|
Cash generated from operating activities
|
2,503,813
|
|
2,118,092
|
|
2,209,404
|
|
|
Cash received from interest income
|
32,639
|
|
43,560
|
|
26,535
|
|
|
Cash paid for interest
|
(46,073)
|
|
(92,596)
|
|
(159,430)
|
|
|
Cash paid for income taxes
|
(154,015
|
)
|
(150,156
|
)
|
(17,631
|
)
|
|
Net cash provided by operating activities
|
2,336,364
|
|
1,918,900
|
|
2,058,878
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||
Acquisitions of available-for-sale financial assets
|
—
|
|
(74,022)
|
|
(9,875)
|
|
|
Proceeds from disposal of available-for-sale financial assets
|
74,878
|
|
—
|
|
—
|
|
|
Return of financial assets due to capital reduction
|
—
|
|
1,050
|
|
—
|
|
|
Net cash outflows from loss of control of subsidiary
|
(35,978)
|
|
—
|
|
—
|
|
|
Acquisitions of property, plant and equipment
|
(624,023)
|
|
(2,112,821)
|
|
(669,412)
|
|
|
Proceeds from disposals of property, plant and equipment
|
416,525
|
|
32,600
|
|
53,635
|
|
|
Decrease (increase) in refundable deposits
|
(992)
|
|
703
|
|
1,043
|
|
|
Net cash inflows from business combination
|
—
|
|
—
|
|
1,872,412
|
|
|
Increase in other noncurrent assets
|
(141,762)
|
|
(85,237)
|
|
(13,342)
|
|
|
Proceeds from transfer of the right of long-term prepaid rents
|
—
|
|
141,492
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
(311,352
|
)
|
(2,096,235
|
)
|
1,234,461
|
|
|
Cash flows from financing activities:
|
|
|
|
||||
Decrease in short-term borrowings, net
|
(924,629)
|
|
(142,895)
|
|
750,516
|
|
|
Proceeds from issuance of convertible bonds
|
—
|
|
1,995,000
|
|
—
|
|
|
Repayments of long-term borrowings
|
(1,250)
|
|
(3,143,693)
|
|
(1,867,121)
|
|
|
Increase in guarantee deposits
|
(775)
|
|
(291)
|
|
1,223
|
|
|
Cash dividends
|
(660,317)
|
|
(669,201)
|
|
(225,524)
|
|
|
Proceeds from issuance of common stock
|
—
|
|
2,490,000
|
|
—
|
|
|
Proceeds from exercise of employee stock options
|
6,793
|
|
33,649
|
|
4,114
|
|
|
Cost of acquisition of treasury stock
|
(618,001)
|
|
—
|
|
—
|
|
|
Net change of non-controlling interests and others
|
—
|
|
25,000
|
|
37,500
|
|
|
Net cash provided by (used in) financing activities
|
(2,198,179
|
)
|
587,569
|
|
(1,299,292
|
)
|
|
Effect of exchange rate change on cash held
|
16,113
|
|
33,337
|
|
(32,969
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
(157,054)
|
|
443,571
|
|
1,961,078
|
|
|
Cash and cash equivalents at January 1
|
5,397,182
|
|
4,953,611
|
|
2,992,533
|
|
|
Cash and cash equivalents at December 31
|
$
|
5,240,128
|
|
5,397,182
|
|
4,953,611
|
|
(1)
|
Organization
|
(2)
|
The Authorization of Financial Statements
|
(3)
|
New Accounting Pronouncements Under International Financial Reporting Standards (“IFRS”)
|
(a)
|
New and revised standards, amendments and interpretations in issue but not yet effective
|
New standards and amendments
|
Effective date per IASB
|
IFRS 9 “
Financial Instruments”
|
January 1, 2018
|
Amendments to IFRS 10 and IAS 28,
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
|
Subject to IASB’s announcement
|
Amendments to IFRS 10, IFRS 12 and IAS 28,
Investments Entities: Applying the Consolidation Exception
|
January 1, 2016
|
Amendments to IFRS 11,
Accounting for Acquisitions of Interests in Joint Operations
|
January 1, 2016
|
IFRS 14,
Regulatory Deferral Accounts
|
January 1, 2016
|
IFRS 15,
Revenue from Contracts with Customers
|
January 1, 2018
|
IFRS 16,
Lease
|
January 1, 2019
|
Amendments to IAS 1,
Presentation of Financial Statements -Disclosure Initiative
|
January 1, 2016
|
Amendments to IAS 7,
Statement of Cash Flows - Disclosure Initiative
|
January 1, 2017
|
Amendments to IAS 12,
Recognition of Deferred Tax Assets for Unrealized Losses
|
January 1, 2017
|
Amendments to IAS 16 and IAS 38,
Clarification of Acceptable Methods of Depreciation and Amortization
|
January 1, 2016
|
Amendments to IAS 16 and IAS 41,
Agriculture: Bearer Plants
|
January 1, 2016
|
Amendments to IAS 27,
Equity Method in Separate Financial Statements
|
January 1, 2016
|
Annual Improvements to IFRS: 2012-2014 cycles
|
January 1, 2016
|
(b)
|
Except for the items discussed below, the Company believes that the initial adoption of aforementioned standards or interpretations will not have any significant impact on its accounting policies.
|
1.
|
IFRS 9,
Financial Instruments
|
2.
|
IFRS 15,
Revenue from Contracts with Customers
|
(4)
|
Summary of Significant Accounting Policies
|
(a)
|
Statement of compliance
|
(b)
|
Basis of preparation
|
1.
|
The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the consolidated statements of financial position:
|
(i)
|
Financial instruments measured at fair value through profit or loss (including derivative financial instruments) (note 7);
|
(ii)
|
Available-for-sale financial assets measured at fair value (note 8); and
|
(iii)
|
Defined benefit asset (liability) is recognized as the fair value the plan assets less the present value of the defined benefit obligation (note 20).
|
2.
|
Functional and presentation currency
|
(c)
|
Basis of consolidation
|
1.
|
Principle of preparation of the consolidated financial statements
|
(i)
|
The aggregate of:
|
A.
|
the far value of the consideration received, and
|
B.
|
the fair value of any retained non-controlling investment in the former subsidiary at the date when the Company losses control.
|
(ii)
|
The aggregate of the carrying amount of the former subsidiary’s assets (including goodwill), liabilities and non-controlling interests at the date when the Company losses control.
|
2.
|
List of subsidiaries in the consolidated financial statements
|
|
|
|
|
|
|
Percentage of Ownership (%)
|
|
||
Name of
investor |
|
Name of subsidiary
|
|
Main Activities and Location
|
|
December 31,2015
|
|
December 31,2014
|
|
The Company
|
|
Lextar (Singapore) Pte. Ltd. (LEXSG)
|
|
General Investing
(Singapore) |
|
100%
|
|
100%
|
|
〞
|
|
Liang Li Investment Co., Ltd. (Liang Li)
|
|
General Investing
(Taiwan) |
|
100%
|
|
100%
|
|
〞
|
|
Wellypower Optronics Corp. (Wellypower)
|
|
Investment and sale of products (Taiwan)
|
|
100%
|
|
100%
|
|
〞
|
|
Apower Optronics Corp. (Apower)
|
|
Investment and sale of products (BVI)
|
|
100%
|
|
100%
|
|
〞
|
|
Wellybond Corporation (Wellybond)
|
|
General Investing
(Taiwan) |
|
100%
|
|
100%
|
|
〞
|
|
Wellybond Optronics (H.K.) Limited (Wellybond (H.K.))
|
|
General Investing
(Hong Kong) |
|
100%
|
|
100%
|
|
〞
|
|
Trendylite Corporation
(Trendylite)
|
|
Sale of products
(Taiwan) |
|
100%
|
|
100%
|
|
LEXSG
|
|
Lextar Electronics (SuZhou) Co., Ltd. (LEXZ)
|
|
Manufacture of Light-Emitting Diode (wafer、light bar、module) (PRC)
|
|
100%
|
|
100%
|
|
〞
|
|
Lextar Electronics (Xiamen) Co., Ltd. (LEXM)
|
|
〞
|
|
100%
|
|
100%
|
|
〞
|
|
Lextar Electronics Korea Ltd.
|
|
Sale of Light-Emitting Diode and After-sales service
(South Korea) |
|
100%
|
|
100%
|
|
Wellypower
|
|
Wellypower Optronics
(SuZhou) Corporation
(Wellypower (SuZhou))
|
|
Manufacture and sale of CCFL、LED and PCB surface mount technology (PRC)
|
|
13.36%
|
|
13.36%
|
|
Apower
|
|
Wellypower Optronics
(SuZhou) Corporation
(Wellypower (SuZhou))
|
|
〞
|
|
86.64%
|
|
86.64%
|
|
Wellybond (H.K.)
|
|
SuZhou Welly Trading Co., Ltd
(SuZhou Welly )
|
|
Import and export trade, Wholesale
(PRC) |
|
100%
|
|
100%
|
|
Liang Li and Wellybond
|
|
Verticil Electronics Corporation (Verticil)
|
|
Business of power convertors
(Taiwan) |
|
0 (Note 2)
|
|
32.17%
(Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
Verticil
|
|
Wellypower Electronics (Samoa) Corp. ( Wellypower (Samoa))
|
|
Investment holding
(Samoa) |
|
0 (Note 2)
|
|
100%
(Note 1)
|
|
Wellypower
(Samoa)
|
|
Weiliyang (Suzhou) Optoelectronics Co., Ltd. (Weiliyang (Suzhou))
|
|
Manufacture and sale of light products and power supply
(PRC) |
|
0 (Note 2)
|
|
100%
(Note 1)
|
|
Note 2:
|
Beginning May 2015, the Company lost control over the financial and operating policies of Verticil because it no longer has the majority vote in the board of director’s meeting, resulting in the exclusion of Verticil as a subsidiary in the consolidated financial statements of the Company. Therefore, the Company’s investment in Vercitil and its subsidiaries was accounted for under available-for-sale financial asset།noncurrent.
|
(d)
|
Foreign currencies
|
1.
|
Foreign currency transaction
|
2.
|
Foreign operations
|
(e)
|
Classification of current and non-current assets and liabilities
|
1.
|
The asset expected to realize, or intends to sell or consume, in its normal operating cycle;
|
2.
|
The asset primarily held for the purpose of trading;
|
3.
|
The asset expected to realize within twelve months after the reporting date; or
|
4.
|
Cash and cash equivalent excluding the asset restricted to be exchanged or used to settle a liability for at least twelve months after the reporting date.
|
1.
|
The liability expected to settle in its normal operating cycle;
|
2.
|
The liability primarily held for the purpose of trading;
|
3.
|
The liability is due to be settled within twelve months after the reporting date; or
|
4.
|
The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issuance of equity instruments, do not affect its classification.
|
(f)
|
Cash and cash equivalents
|
(g)
|
Financial instruments
|
1.
|
Financial assets
|
(i)
|
Financial assets measured at fair value through profit or loss
|
(ii)
|
Available-for-sale financial assets
|
(iii)
|
Receivables
|
(iv)
|
Impairment of financial assets
|
(v)
|
De-recognition of financial assets
|
2.
|
Financial liabilities
|
(i)
|
Convertible bonds
|
(ii)
|
|
(ii)
|
Financial liabilities measured at fair value through profit or loss
|
(iii)
|
Other financial liabilities
|
(iv)
|
De-recognition of financial liabilities
|
(v)
|
Offsetting of financial assets and liabilities
|
3.
|
Derivative financial instruments
|
(h)
|
Inventories
|
(i)
|
Investment in associates
|
(j)
|
Property, plant and equipment
|
1.
|
Recognition and measurement
|
2.
|
Subsequent cost
|
3.
|
Depreciation
|
(i)
|
Buildings: 35 years
|
(ii)
|
Machinery and equipment: 3 ~9 years
|
(iii)
|
Other equipment: 1 ~ 6 years
|
(k)
|
Long-term prepaid rent
|
(l)
|
Lease
|
1.
|
Lessor
|
2.
|
Lessee
|
(m)
|
Intangible assets
|
1.
|
Goodwill
|
2.
|
Research & development
|
3.
|
Other intangible assets
|
4.
|
Subsequent expenditure
|
5.
|
Amortization
|
(n)
|
Impairment – non-financial assets
|
(o)
|
Provisions
|
(p)
|
Treasury stock
|
(q)
|
Revenue recognition
|
1.
|
Goods sold
|
2.
|
Government grants
|
(r)
|
Employee benefits
|
1.
|
Defined contribution plans
|
2.
|
Defined benefit plans
|
3.
|
Short-term employee benefits
|
(s)
|
Share-based payment transactions
|
(t)
|
Borrowing cost
|
(u)
|
Income taxes
|
1.
|
Current income taxes
|
2.
|
Deferred income taxes
|
(i)
|
temporary difference on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither taxable profit or loss;
|
(ii)
|
temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
|
(iii)
|
temporary differences arising on the initial recognition of goodwill.
|
(v)
|
Business combination
|
(w)
|
Earnings per share
|
(x)
|
Operating segments and geographic information
|
(5)
|
Use of Judgments and Estimates
|
(6)
|
Cash and Cash Equivalents
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Cash on hand and demand deposits
|
$
|
2,672,124
|
|
1,787,570
|
|
Time deposits
|
1,674,004
|
|
2,328,612
|
|
|
Bond acquired under repurchase agreement
|
894,000
|
|
1,281,000
|
|
|
|
$
|
5,240,128
|
|
5,397,182
|
|
(7)
|
Derivative Financial Instruments
|
1.
|
Derivative Financial Instruments
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Financial assets measured at fair value through profit or loss-current:
|
|
|
|||
Forward exchange contracts
|
$
|
1,875
|
|
206
|
|
Redemption rights of bonds payable at the option of the Company or the bondholders (note 17)
|
—
|
|
34 |
|
|
|
$
|
1,875
|
|
240
|
|
Financial liabilities measured at fair value through profit or loss-current:
|
|
|
|||
Forward exchange contracts
|
$
|
15,037
|
|
42,351
|
|
Foreign exchange swap contracts
|
5,816
|
|
28,639
|
|
|
Redemption rights of bonds payable at the option of the Company or the bondholders (note 17)
|
29,173 |
|
15,185 |
|
|
|
$
|
50,026
|
|
86,175
|
|
December 31, 2014
|
|||
Derivative financial
Instruments
|
Nominal amount
___(thousand)__
|
Currency
|
__Maturity date___
|
|
|
|
|
Forward exchange contracts
|
USD 28,000
|
sell USD / buy NTD
|
2015.1.12~2015.2.10
|
Forward exchange contracts
|
USD 1,708
|
sell USD / buy JPY
|
2015.1.26~2015.2.25
|
Forward exchange contracts
|
JPY 72,198
|
buy JPY / sell NTD
|
2015.1.26
|
Foreign exchange swap
contracts
|
USD 36,500
|
Swap in USD/Swap out NTD
|
2015.1.12~2015.3.10
|
(8)
|
Available-for-sale financial assets – noncurrent
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Equity securities
|
$
|
249,380
|
|
313,203
|
|
Less:
unrealized losses
|
(132,459
|
)
|
(93,651
|
)
|
|
|
$
|
116,921
|
|
219,552
|
|
(9)
|
Accounts Receivable, net (including related and non-related parties)
|
|
December 31,
2015
|
December 31,
2014
|
|
|||
|
|
|
||||
Accounts receivable
|
$
|
3,841,894
|
|
3,600,336
|
|
|
Accounts receivable- related parties
|
1,203,388
|
|
1,541,113
|
|
||
Other receivables
|
199,981
|
|
35,850
|
|
||
Less: allowance for doubtful accounts
|
(15,792)
|
|
(6,136)
|
|
||
allowance for sales returns and discounts
|
(102,804
|
)
|
(1,445
|
)
|
||
|
$
|
5,126,667
|
|
5,169,718
|
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Past due 0~30 days
|
$
|
106,271
|
|
66,680
|
|
Past due 31~60 days
|
21,897
|
|
13,205
|
|
|
Past due 61~90 days
|
1,114
|
|
2,803
|
|
|
Past due over 91 days
|
10,058
|
|
2,480
|
|
|
|
$
|
139,340
|
|
85,168
|
|
|
For the year ended December 31,
|
||||||||
|
2015
|
2014
|
2013 (Unaudited)
|
||||||
|
Individually assessed for
impairment |
Collectively assessed for
impairment |
Individually assessed for
impairment |
Collectively assessed for
impairment |
Individually assessed for
impairment |
Collectively assessed for
impairment |
|||
|
|
|
|
|
|
|
|||
Balance on January 1
|
$
|
500
|
|
5,636
|
62,444
|
|
17,557
|
4,093
|
1,700
|
Acquired in business combination
|
|
|
|
|
73,092
|
38,953
|
|||
Recognized (reversal) of impairment loss
|
(500)
|
|
10,156
|
14,915
|
|
(11,921)
|
(14,741)
|
(23,096)
|
|
Write-off
|
-
|
|
-
|
(76,859
|
)
|
-
|
-
|
-
|
|
Balance on December 31
|
$ - |
|
15,792 |
500 |
|
5,636 |
62,444 |
17,557 |
(10)
|
Inventories
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Raw materials
|
$
|
194,989
|
|
180,029
|
|
Work in progress
|
1,386,291
|
|
1,375,414
|
|
|
Finished goods
|
1,422,868
|
|
1,269,720
|
|
|
|
$
|
3,004,148
|
|
2,825,163
|
|
(11)
|
Investments in equity-accounted investees
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Associates
|
$
|
242,381
|
|
232,756
|
|
(a)
|
The financial information for investments accounted for using the equity method that are individually insignificant was as follows:
|
|
December 31,
2015
|
December 31,
2014
|
|
|
|
Carrying amount of individually insignificant associates’ equity
|
$
844,568
|
652,553
|
(b)
|
The aggregate amount of the Company’s share of its associates was as follows:
|
|
2015
|
2014
|
2013
(Unaudited)
|
|||
|
|
|
|
|||
The Company’s share of profits (loss) of associates
|
10,873
|
|
(12,694
|
)
|
(13,997
|
)
|
The Company’s share of other comprehensive income
|
—
|
|
—
|
|
—
|
|
Total
|
10,873
|
|
(12,694
|
)
|
(13,997
|
)
|
(12)
|
Subsidiaries and non-controlling interest
|
(a)
|
Although the Company is presumed to have disposed certain parts of its subsidiary’s shares, it is still deemed to have control over its subsidiary
|
|
2014
|
||
Share portion of Verticil after increment of capital
|
$
|
24,573
|
|
Share portion of Verticil before increment of capital
|
19,837
|
|
|
Capital surplus-difference between the consideration and the carrying amount of subsidiaries acquired or disposed of
|
$ 4,736 |
|
(b)
|
Loss of control over subsidiary
|
(i)
|
Proceeds received from the transaction of disposal of Verticil shares
|
(ii)
|
Loss of control over subsidiary’s assets and liabilities
|
Items
|
Amounts
|
||
Cash and cash equivalents
|
$
|
61,441
|
|
Accounts receivable and other current assets
|
58,042
|
|
|
Accounts payable and other current liabilities
|
(60,979)
|
|
|
Property, plant and equipment (note 13)
|
4,146
|
|
|
Other non-current assets
|
1,205
|
|
|
Derecognized net assets
|
$
|
63,855
|
|
(iii)
|
Disposal gain recognized due to loss of control over the subsidiary
|
The fair value of the remaining share interests
|
$
|
10,199
|
|
Proceeds received
|
25,463
|
|
|
Non-controlling interests
|
43,238
|
|
|
Less: net assets derecognized
|
(63,855
|
)
|
|
|
$
|
15,045
|
|
(iv)
|
Net cash outflows as a result of derecognition of the subsidiary
|
Cash and cash equivalents derecognized
|
$
|
35,978
|
|
(13)
|
Property, plant and equipment
|
|
|
For the year ended December 31, 2015
|
|||||||||||||||||
|
Balance, Beginning
of Year |
Additions
|
Impairment
|
Effect of loss
of control of
Subsidiary
|
Disposal or
Write off
|
Transfer from Construction in progress and
Testing equipment
|
Effect of
change in
exchange rate
|
Balance,
End of Year |
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Cost:
|
|
|
|
|
|
|
|
|
|||||||||||
Land
|
716,511
|
|
736
|
|
—
|
|
-
|
(167,861
|
)
|
—
|
|
—
|
|
549,386
|
|
||||
Buildings
|
3,999,844
|
|
(1,854
|
)
|
—
|
|
-
|
(55,308
|
)
|
—
|
|
100,650
|
|
4,043,332
|
|
||||
Machinery and equipment
|
11,884,142
|
|
90,677
|
|
—
|
|
-
|
(167,216
|
)
|
|
23,534
|
|
12,235,656
|
|
|||||
Other equipment
|
878,819
|
|
41,690
|
|
—
|
|
(12,635
|
)
|
(3,541
|
)
|
|
2,564
|
|
915,604
|
|
||||
Construction in progress and testing equipment
|
194,383
|
|
343,767
|
|
—
|
|
—
|
|
—
|
|
|
2,552
|
|
127,476
|
|
||||
|
17,673,699
|
|
475,016
|
|
—
|
|
(12,635
|
)
|
(393,926
|
)
|
|
129,300
|
|
17,871,454
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated depreciation and impairment loss:
|
|
|
|
|
|
|
|
|
|||||||||||
Land
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Buildings
|
274,399
|
|
117,452
|
|
—
|
|
—
|
|
(13,329)
|
|
—
|
|
5,224
|
|
383,746
|
|
|||
Machinery and equipment
|
7,248,728
|
|
1,855,992
|
|
(2,434)
|
|
—
|
|
(128,445)
|
|
—
|
|
6,398
|
|
8,980,239
|
|
|||
Other equipment
|
703,940
|
|
106,763
|
|
-
|
(8,489)
|
|
(2,717)
|
|
—
|
|
1,028
|
|
800,525
|
|
||||
Construction in progress and testing equipment
|
1,289 |
- |
-
|
- |
- |
- |
52 |
1,341 |
|||||||||||
|
$
|
8,228,356
|
|
2,080,207
|
|
(2,434)
|
|
(8,489)
|
|
(144,491
|
)
|
-
|
12,702
|
|
10,165,851
|
|
|||
Net carrying amounts
|
$
|
9,445,343
|
|
|
|
|
|
|
|
7,705,603
|
|
|
|
For the year ended December 31, 2014
|
|||||||||||||
|
Balance, Beginning
of Year (Unaudited) |
Additions
|
Impairment
|
Disposal or
Write off
|
Transfer from Construction in progress and
Testing equipment
|
Effect of change in
exchange rate
|
Balance,
End of Year |
||||||||
|
|
|
|
|
|
|
|
||||||||
Cost:
|
|
|
|
|
|
|
|
||||||||
Land
|
$
|
167,126
|
|
549,385
|
|
—
|
|
—
|
|
—
|
|
—
|
|
716,511
|
|
Buildings
|
3,219,479
|
|
645,749
|
|
—
|
|
—
|
|
—
|
|
134,616
|
|
3,999,844
|
|
|
Machinery and equipment
|
11,044,244
|
|
215,254
|
|
—
|
|
(95,259)
|
|
690,486
|
|
29,417
|
|
11,884,142
|
|
|
Other equipment
|
805,867
|
|
83,828
|
|
—
|
|
(2,197)
|
|
4,130
|
|
(12,809)
|
|
878,819
|
|
|
Construction in progress and testing equipment
|
67,078
|
|
828,173 |
- - |
- |
(694,616) |
(6,252) |
194,383 |
|||||||
|
$
|
15,303,794
|
|
2,322,389
|
|
-
|
(97,456
|
)
|
-
|
144,972
|
|
17,673,699
|
|
||
Accumulated depreciation and impairment loss:
|
|
|
|
|
|
|
|
||||||||
Land
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
-
|
||
Buildings
|
161,717
|
|
105,903
|
|
—
|
|
—
|
|
—
|
|
6,779
|
|
274,399
|
|
|
Machinery and equipment
|
5,463,695
|
|
1,820,825
|
|
—
|
|
(43,944)
|
|
—
|
|
8,152
|
|
7,248,728
|
|
|
Other equipment
|
584,246
|
|
119,484
|
|
—
|
|
(1,304)
|
|
—
|
|
1,514
|
|
703,940
|
|
|
Construction in progress and testing equipment
|
- |
- |
1,213 |
- |
- |
76 |
1,289 |
||||||||
|
$
|
6,209,658
|
|
2,046,212
|
|
1,213)
|
(45,248
|
)
|
-
|
16,521
|
|
8,228,356
|
|
||
Net carrying amounts
|
$
|
9,094,136
|
|
|
|
|
|
|
9,445,343
|
|
(14)
|
Intangible Assets
|
|
For the year ended December 31, 2015
|
|||||
|
Balance, Beginning
of Year |
Additions
|
Balance,
End of Year |
|||
Cost:
|
|
|
|
|||
Customer Relationship
|
44,153
|
|
—
|
|
44,153
|
|
Core Technology
|
19,962
|
|
—
|
|
19,962
|
|
Patent and royalty
|
29,950
|
|
—
|
|
29,950
|
|
Goodwill
|
8,768
|
|
—
|
|
8,768
|
|
|
102,833
|
|
—
|
|
102,833
|
|
Accumulated amortization:
|
|
|
|
|||
Customer Relationship
|
44,153
|
|
—
|
|
44,153
|
|
Core Technology
|
19,962
|
|
—
|
|
19,962
|
|
Patent and royalty
|
20,231
|
|
1,099
|
|
21,330
|
|
Goodwill
|
—
|
|
—
|
|
—
|
|
|
84,346
|
|
1,099
|
|
85,445
|
|
Net carrying amounts
|
18,487
|
|
|
17,388
|
|
|
For the year ended December 31, 2014
|
|||||
|
Balance, Beginning
of Year (Unaudited) |
Additions
|
Balance,
End of Year |
|||
Cost:
|
|
|
|
|||
Customer Relationship
|
44,153
|
|
—
|
|
44,153
|
|
Core Technology
|
19,962
|
|
—
|
|
19,962
|
|
Patent and royalty
|
29,950
|
|
—
|
|
29,950
|
|
Goodwill
|
8,768
|
|
—
|
|
8,768
|
|
|
102,833
|
|
—
|
|
102,833
|
|
|
|
|
|
|||
Accumulated amortization:
|
|
|
|
|||
Customer Relationship
|
44,153
|
|
—
|
|
44,153
|
|
Core Technology
|
19,962
|
|
—
|
|
19,962
|
|
Patent and royalty
|
19,132
|
|
1,099
|
|
20,231
|
|
Goodwill
|
—
|
|
—
|
|
—
|
|
|
83,247
|
|
1,099
|
|
84,346
|
|
Net carrying amounts
|
19,586
|
|
|
18,487
|
|
|
2015
|
2014
|
2013
(Unaudited)
|
|
|
|
|
Operating cost
|
$—
|
—
|
—
|
Operating expenses
|
1,099
|
1,099
|
7,403
|
(15)
|
Long-term prepayments for rents
|
Location
|
Period
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|
|||
Suzhou Industrial Park Chung Yuan Road
|
2010~2060
|
$
|
61,071
|
|
60,046
|
|
Suzhou Industrial Park Wei Ting Town
Feng Ting Avenue |
2003~2053
|
40,458
|
|
39,914
|
|
|
|
|
$
|
101,529
|
|
99,960
|
|
(16)
|
Short-term borrowings
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Unsecured bank loans
|
$
|
—
|
|
924,629
|
|
Annual interest rates
|
—
|
|
1.84%~2.055%
|
|
(17)
|
Convertible bonds payable
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Aggregate principal amount
|
$
|
3,000,000
|
|
3,000,000
|
|
Unamortized discount
|
(136,275
|
)
|
(179,857
|
)
|
|
Accumulated converted amount
|
(977,600
|
)
|
(977,500
|
)
|
|
Ending balance of bonds payable
|
1,886,125
|
|
1,842,643
|
|
|
Less : Bonds payable – current
|
—
|
|
—
|
|
|
Ending balance of bonds payable – non-current
|
1,886,125
|
|
1,842,643
|
|
|
Embedded derivative component - the value of redemption rights at the option of the Company/bondholders (recorded as current financial assets (liabilities) at fair value through profit or loss)
|
|
|
|||
First domestic
unsecured
convertible bonds
|
(2
|
)
|
34
|
|
|
Second domestic
unsecured
convertible bonds
|
(29,171
|
)
|
(15,185
|
)
|
|
Equity component – conversion right (recorded as capital surplus
–
stock option)
|
197,331
|
|
197,340
|
|
|
2015
|
2014
|
2013
(Unaudited)
|
|||
Embedded derivative component - revaluation profit (loss) on redemption rights at the option of the Company/bondholders (recorded as other gains and losses)
|
(14,022
|
)
|
5,442
|
|
3,466 |
|
Interest expense
|
43,577
|
|
43,091
|
|
5,821
|
|
|
1
st
domestic unsecured
convertible bonds
|
2
nd
domestic unsecured
convertible bonds
|
|
|
|
Offering amount
|
$1,000,000 thousand
|
$2,000,000 thousand
|
Issue date
|
August 16, 2012
|
January 9, 2014
|
Issuance price
|
At par value
|
At par value
|
Face interest rate
|
0%
|
0%
|
Effective rate
|
2.167026%
|
2.34195%
|
Issue period
|
August 16, 2012 to August 16, 2017
|
January 9, 2014 to January 9, 2019
|
|
|
|
Redemption at the option of the Company
|
The Company may redeem the bonds at face value with cash or by converting them into stocks at any time after September 16, 2012 if the closing price of the common shares on TWSE on each trading day during a period of 30 consecutive trading dates exceeds at least 30% of the conversion price or if the outstanding balance of the Bonds is less than 10% of the offering amount.
|
The Company may redeem the bonds at face value with cash or by converting them into stocks at any time after July 9, 2014 if the closing price of the common shares on TWSE on each trading day during a period of 30 consecutive trading dates exceeds at least 30% of the conversion price or if the outstanding balance of the Bonds is less than 10% of the offering amount.
|
Redemption at the option of the holder
|
Each holder has the right to require the Company to redeem the holder’s bonds on August 16, 2014 at a redemption price equal to the principal amount of the bonds with a yield-to-maturity of 1% per annum.
|
Each holder has the right to require the Company to redeem the holder’s bonds on January 9, 2017 at a redemption price equal to the principal amount of the bonds with a yield-to-maturity of 0.5% per annum.
|
Conversion period
|
Unless the bonds are in the lock-out period, each Holder of the bonds will have the right at any time during the period from September 17, 2012, to August 6, 2017, to convert their bonds. The Company should deliver the common shares to the Holder within 5 days after accepting the demand for conversion.
|
Unless the bonds are in the lock-out period, each Holder of the bonds will have the right at any time during the period from February 10, 2014, to December 30, 2018, to convert their bonds. The Company should deliver the common shares to the Holder within 5 days after accepting the demand for conversion.
|
Conversion price on December 31,2015 (note)
|
$23.3
|
$30.08
|
(18)
|
Long-term borrowings
|
|
December 31, 2015
|
|||||
|
Currency
|
Rate
|
Maturity year
|
Amounts
|
||
Unsecured bank loans
|
NTD
|
1.73%~1.8847%
|
2017
|
$
|
1,798,750
|
|
Less:current portions
|
|
|
|
(851,250)
|
||
Total
|
|
|
|
$947,500
|
(19)
|
Operating lease
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Less than one year
|
$
|
28,516
|
|
33,054
|
|
Between one and five years
|
63,194
|
|
59,465
|
|
|
Over five years
|
0
|
9,266
|
|
||
|
$
|
91,710
|
|
101,785
|
|
(20)
|
Employee benefits
|
(a)
|
Defined benefit plans
|
(i)
|
Recognized assets (liabilities) for defined benefit obligations at the reporting date were as follows:
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Present value of the defined benefit obligations
|
$
|
(17,794
|
)
|
(20,594)
|
|
Fair value of plan assets
|
48,859
|
|
47,299
|
|
|
Surplus in the plan
|
31,065
|
|
26,705
|
|
|
Recognized assets for defined benefit obligations
|
$
|
31,065
|
|
26,705
|
|
(ii)
|
Movement in net defined benefit asset (liability)
|
|
Defined benefit obligation
|
Fair value of plan assets
|
Net defined benefit asset
(liability)
|
|||||||||
|
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Balance at January 1,
|
(20,594
|
)
|
(23,677
|
)
|
47,299
|
|
45,251
|
|
26,705
|
|
21,574
|
|
Included in profit or loss
|
|
|
|
|
|
|
||||||
Service cost
|
(115
|
)
|
(199
|
)
|
—
|
|
—
|
|
(115
|
)
|
(199
|
)
|
Interest cost
|
(463
|
)
|
(473
|
)
|
—
|
|
—
|
|
(463
|
)
|
(473
|
)
|
Expected return on plan assets
|
—
|
|
—
|
|
1,075
|
|
802
|
|
1,075
|
|
802
|
|
|
(578
|
)
|
(672
|
)
|
1,075
|
|
802
|
|
497
|
|
130
|
|
Included in OCI
|
|
|
|
|
|
|
||||||
Remeasurement (loss) gain:
|
|
|
|
|
|
|
||||||
Actuarial (loss) gain arising from:
|
|
|
|
|
|
|
||||||
- demographic assumptions
|
(378
|
)
|
48
|
|
—
|
|
—
|
|
(378
|
)
|
48
|
|
- financial assumptions
|
(2,278
|
)
|
918
|
|
—
|
|
—
|
|
(2,278
|
)
|
918
|
|
- experience adjustment
|
2,651
|
|
1,639
|
|
—
|
|
—
|
|
2,651
|
|
1,639
|
|
Return on plan assets excluding interest income
|
—
|
|
—
|
|
187
|
|
296
|
|
187
|
|
296
|
|
|
(5
|
)
|
2,605
|
|
187
|
|
296
|
|
182
|
|
2,901
|
|
Other
|
|
|
|
|
|
|
||||||
Effect of acquisition of subsidiary
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Contributions paid by the employer
|
—
|
|
—
|
|
298
|
|
950
|
|
298
|
|
950
|
|
Benefits paid
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Curtailment settlement gains
|
3,383
|
|
1,150
|
|
—
|
|
—
|
|
3,383
|
|
1,150
|
|
|
3,383
|
|
1,150
|
|
298
|
|
950
|
|
3,681
|
|
2,100
|
|
Balance at December 31, 2015
|
(17,794
|
)
|
(20,594
|
)
|
48,859
|
|
47,299
|
|
31,065
|
|
26,705
|
|
(iii)
|
Plan assets
|
(iv)
|
Defined benefit obligation
|
A.
|
Principal actuarial assumptions
|
|
As of December 31,
|
|||
|
2015
|
2014
|
||
|
|
|
||
Discount rate
|
1.50
|
%
|
2.25
|
%
|
Expected long-term rate of return on plan assets
|
1.50
|
%
|
1.75
|
%
|
Rate of increase in future salary
|
2.00
|
%
|
2.00
|
%
|
B.
|
Sensitivity analysis
|
|
December 31, 2015
|
|||
|
Changes in assumptions
|
|||
|
+0.25%
|
-0.25%
|
||
|
|
|
||
Discount rate 1.50%
|
$
|
(716
|
)
|
753
|
Rate of increase in future salary 2%
|
748
|
|
(714)
|
|
Expected employee turnover
rate 110% |
Expected employee turnover
rate 90% |
||
|
|
|
||
Employee turnover rate 2.12%
|
$
|
(192
|
)
|
195
|
(b)
|
Defined contribution plan
|
(21)
|
Capital and Other Components of Equity
|
(a)
|
Common stock
|
|
|
|||
|
2015
|
2014
|
||
|
|
|
||
(in thousands of shares)
|
|
|
||
Balance on January 1
|
622,830
|
|
532,201
|
|
Capital increase by cash
|
—
|
|
83,000
|
|
Retirement of treasury stock
|
(20,000
|
)
|
—
|
|
Employee stock options exercised
|
387
|
|
1,343
|
|
Conversion of convertible bonds
|
24
|
|
4,956
|
|
Retirement of restricted stock
|
(669
|
)
|
(870
|
)
|
Issuance of restricted employee stock (note 22)
|
—
|
|
2,200
|
|
Balance on December 31
|
602,572
|
|
622,830
|
|
(b)
|
Capital surplus
|
|
December 31,
2015
|
December 31,
2014
|
|||
From common stock
|
$
|
6,131,320
|
|
6,421,797
|
|
From merger
|
360,201
|
|
360,201
|
|
|
1.F
rom
employee stock option
|
40,210
|
|
43,928
|
|
|
2.
From convertible bonds
|
197,331
|
|
197,340
|
|
|
Difference between the consideration and carrying
amount of subsidiaries acquired |
12,221
|
|
12,221
|
|
|
3.
Increase in treasury stock
|
119,303
|
|
-
|
||
From restricted employee stock
|
112,482
|
|
123,109
|
|
|
|
6,973,068
|
|
7,158,596
|
|
(c)
|
Legal reserve
|
(d)
|
Special reserve
|
(e)
|
Distribution of earnings and dividend policy
|
(i)
|
profit sharing to employees: at least 5 percent and not more than 20 percent;
|
(ii)
|
remuneration of directors: no more than 1 percent; and
|
(iii)
|
all or a portion of the remaining balance shall be distributed as shareholders’ dividends.
|
|
For fiscal year 2014
|
For fiscal year 2013
(Unaudited)
|
||||||
|
Appropriation
of earnings
|
Dividends per share
|
Appropriation
of earnings
|
Dividends per
share
|
||||
|
|
|
|
|
||||
Cash dividends to shareholders
|
566,874
|
|
0.91
|
|
669,201
|
|
1.23924677
|
|
Employee bonus
|
85,031
|
|
|
132,241
|
|
|
||
Compensation of directors and supervisors
|
5,669
|
|
|
8,816
|
|
|
||
|
90,700
|
|
|
141,057
|
|
|
(f)
|
Treasury shares
|
|
For the year ended December 31, 2015
|
|||||||
Reason to Reacquire
|
Number of
Shares,
Beginning of
Period
|
Addition
During the
Period
|
Reduction
During the
Period
|
Number of
Shares, End of
Period
|
||||
|
|
|
|
|
||||
Due to the expiration of the restricted employee stock
|
—
|
|
669
|
|
669
|
|
—
|
|
In order to maintain the Company’s credibility and stockholders’ equity
|
—
|
|
39,970
|
|
20,000
|
|
19,970
|
|
|
For the year ended December 31, 2014
|
|||
Reason to Reacquire
|
Number of
Shares,
Beginning of
Period
|
Addition
During the
Period
|
Reduction
During the
Period
|
Number of
Shares, End of
Period
|
|
|
|
|
|
Due to the expiration of the restricted employee stock
|
—
|
870
|
870
|
—
|
(22)
|
Share-based payment
|
(a)
|
Employee stock option plans
|
|
December 31,
2015
|
December 31,
2014
|
|
|
|
Range of exercise price (NT$)
|
10.3~26.5
|
10.3~27.9
|
Weighted-average expected time remaining until expiration (year)
|
1
|
2
|
Plan
|
Grant date
|
Total number of options issued
(in thousands)
|
Contractual life of options |
Vesting Conditions |
Exercise price (per share) (Note 2) |
||
|
|
|
|
|
|
||
2007 Employee stock option plan
|
Dec. 28, 2007 (Note 1)
|
2,500
|
10 years
|
Future 4~8 year
|
$
|
10.3
|
|
|
|
|
|
|
|
||
2012 Employee stock option plan
|
Feb. 10, 2012
|
7,150
|
5 years
|
Future 2~4 year
|
$
|
27.9
|
|
(b)
|
Fair value of stock options
|
|
Plan of 2007
|
Plan of 2012
|
|
|
|
Excise price of stock options (NTD)
|
11.4
|
30.5
|
Expected volatility
|
8.4%
|
42.84%
|
Expected continuing period
|
10 years
|
5 years
|
Risk-free interest rate
|
1.199%
|
1.425%
|
Cash dividend rate
|
0%
|
0%
|
(c)
|
Restricted stock
|
(d)
|
The related employee benefit expenses recognized on employee stock options were $53,317 thousand, $102,592 thousand and $88,581 thousand (Unaudited) for the years ended December 31, 2015, 2014 and 2013, respectively.
|
(23)
|
Revenue
|
(24)
|
The Nature of Expenses
|
(a)
|
Depreciation of property, plant and equipment
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Recognized in cost of sales
|
$
|
1,930,563
|
|
1,904,240
|
1,768,065
|
Recognized in operating expenses(i)
|
149,644
|
141,972
|
202,820
|
||
|
$2,080,207
|
2,046,212
|
1,970,885
|
(b)
|
Amortization of intangible assets
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Recognized in cost of sales
|
$
|
56,862
|
|
25,068
|
10,854
|
Recognized in operating expenses(i)
|
20,416
|
27,429
|
30,046
|
||
|
$77,278
|
52,497
|
40,900
|
(c)
|
Employee benefits expenses
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Salaries and wages
|
$
|
2,107,565
|
|
2,201,815
|
2,380,395
|
Labor and health insurances
|
130,877
|
|
144,555
|
153,995
|
|
Retirement benefits
|
129,128
|
|
124,693
|
119,987
|
|
Other employee benefits
|
64,362
|
56,830
|
82,264
|
||
|
$2,431,932
|
2,527,893
|
2,736,641
|
||
Employee benefits expense summarized by function
|
|
|
|
||
Recognized in cost of sales
|
$
|
1,718,189
|
|
1,823,849
|
2,062,205
|
Recognized in operating expenses(i)
|
713,743
|
704,044
|
674,436
|
||
|
$2,431,932
|
2,527,893
|
2,736,641
|
(i)
|
Operating expenses are inclusive of selling and distribution expenses, general and administrative expenses and research and development expenses.
|
(25)
|
Other Income
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Interest income
|
$
|
32,134
|
|
40,610
|
30,233
|
Gain on bargain purchase
|
-
|
-
|
552,561
|
||
Gain on right of long-term prepared rent transfer
|
-
|
-
|
61,919
|
||
Others
|
43,094
|
28,445
|
20,684
|
||
|
$75,228
|
69,055
|
665,397
|
(26)
|
Other Gains and Losses
|
(27)
|
Finance Costs
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Interest expense
|
$
|
87,214
|
|
134,466
|
170,046
|
Less: Capitalization of interest
|
-
|
(2,078)
|
(4,239)
|
||
|
$87,214
|
132,388
|
165,807
|
(28)
|
Income Taxes
|
(a)
|
The components of income tax expense (benefit) for the years ended December 31, 2015, 2014 and 2013 were as follows:
|
|
For the years ended December 31,
|
||
|
2015
|
2014
|
2013
(Unaudited)
|
|
|
|
|
Current tax expense (benefit)
|
$(11,012)
|
38,584
|
204,884
|
Deferred tax expense (benefit)
|
11,917
|
53,858
|
(709)
|
Income tax expense
|
$905
|
92,442
|
204,175
|
(b)
|
For the years ended December 31, 2015, 2014 and 2013, there were no income tax recognized in other comprehensive income.
|
(c)
|
Reconciliation of the expected income tax expenses calculated based on the ROC statutory income tax rate compared with the actual income tax expenses as reported in the consolidated statements of comprehensive income for the years ended December 31, 2015, 2014 and 2013, was as follows:
|
(d)
|
The components of deferred tax assets and liabilities were as follows:
|
|
Deferred tax assets
|
Deferred tax liabilities
|
Total
|
|||||||
|
December
31, 2015
|
December
31, 2014
|
December
31, 2015
|
December
31, 2014
|
December
31, 2015
|
December
31, 2014
|
|
|||
|
|
|
|
|
|
|
|
|||
Inventories
|
$
|
57,004
|
|
49,271
|
-
|
-
|
57,004
|
49,271
|
|
|
Foreign investment losses (gains) under the equity method
|
111,146
|
|
129,968
|
(122,745)
|
(122,745)
|
(11,599)
|
7,223
|
|
||
Investment tax credits
|
-
|
5,525
|
-
|
-
|
-
|
5,525
|
|
|||
Government grant
|
36,794
|
|
37,866
|
-
|
-
|
36,794
|
37,866
|
|
||
Land value increment provision
|
-
|
-
|
-
|
(17,985)
|
-
|
(17,985)
|
|
|||
Others
|
38,275
|
32,738
|
(1,428)
|
(1,428)
|
36,847
|
31,310
|
|
|||
|
$243,219
|
255,368
|
(124,173)
|
(142,158)
|
119,046
|
113,210
|
|
(e)
|
Changes in deferred tax assets and liabilities were as follows:
|
|
January 1, 2014
|
Recognized
in profit or
loss
|
Effect of
exchange rate
and others
|
December 31, 2014
|
Recognized
in profit or
loss
|
Effect of
exchange rate
and others
|
December 31, 2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Investment tax credits
|
$
|
42,555
|
|
(37,030)
|
|
-
|
5,525
|
|
(5,525)
|
|
-
|
-
|
|||
Inventories
|
56,782
|
|
(7,511)
|
|
-
|
49,271
|
|
7,733
|
|
-
|
57,004
|
|
|||
Foreign investment losses (gains) under the equity method
|
31,687
|
|
(24,464)
|
|
-
|
7,223
|
|
(18,822)
|
|
-
|
(11,599)
|
|
|||
Government grant
|
35,969
|
|
650
|
|
1,247
|
|
37,866
|
|
(840)
|
|
(232)
|
|
36,794
|
|
|
Land value increment provision
|
(17,985)
|
|
-
|
-
|
(17,985)
|
|
-
|
17,985
|
|
-
|
|||||
Others
|
16,813
|
|
14,497
|
|
-
|
31,310
|
|
5,537
|
|
-
|
36,847
|
|
|||
|
$
|
165,821
|
|
(53,858
|
)
|
1,247
|
|
113,210
|
|
(11,917
|
)
|
17,753
|
|
119,046
|
|
(f)
|
Unrecognized deferred tax assets
|
(g)
|
Unrecognized deferred tax liabilities
|
(h)
|
Assessments by the tax authorities
|
(i)
|
The integrated income tax system
|
(29)
|
Earnings per share
|
(a)
|
Basic earnings per share for the years ended December 31, 2015, 2014 and 2013 were calculated as follows:
|
|
For the years ended December 31,
|
||
|
2015
|
2014
|
2013
(Unaudited)
|
|
|
|
|
Profit attributable to Lextar’s stockholders
|
$308,934
|
661,163
|
912,475
|
Weighted-average number of common shares outstanding during the year: (in thousands)
|
|
|
|
Issued common shares at beginning of year
|
622,830
|
523,401
|
430,472
|
Effect of issuance of shares due to merger
|
|
|
77,758
|
Effect of retirement of treasury stock due to merger
|
|
|
(13,262)
|
Effect of retirement of treasury stock
|
(8,098)
|
-
|
|
Effect of conversion of convertible bonds payable
|
23
|
4,231
|
17,545
|
Effect of issuance of employee stock options
|
340
|
1,082
|
350
|
Effect of issuance of restricted shares
|
(273)
|
1,036
|
|
Effect of capital increase by cash
|
-
|
7,050
|
-
|
Weighted-average number of common shares (basic)
|
614,822
|
536,800
|
512,863
|
Basic earnings per share (NT$)
|
$0.50
|
1.23
|
1.78
|
(b)
|
Diluted earnings per share for the years ended December 31, 2015, 2014 and 2013 was calculated as follows:
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Profit attributable to Lextar’s shareholders (basic)
|
$
|
308,934
|
|
661,163
|
912,475
|
The interest of convertible bonds payable
|
419
|
35,766
|
4,831
|
||
Profit attributable to Lextar’s stockholders (diluted)
|
$ 309,353 |
696,929 |
917,306 |
||
Weighted-average number of common shares
outstanding during the year (including the effect of dilutive potential common stock): (in thousands) |
|
|
|
||
Weighted-average number of common shares (basic)
|
614,822
|
|
536,800
|
512,863
|
|
Effect of convertible bonds payable
|
997
|
|
61,752
|
10,306
|
|
Effect of employee stock bonus
|
3,784
|
|
4,745
|
4,781
|
|
Effect of restricted shares
|
4,272
|
|
4,601
|
1,102
|
|
Effect of issuance of employee stock options
|
169
|
413
|
1,225
|
||
Weighted-average number of common shares (diluted)
|
624,044 |
608,311 |
530,277 |
||
Diluted earnings per share (NT$)
|
$0.50
|
1.15
|
1.73
|
(30)
|
Financial Instruments
|
(a)
|
Fair value and carrying amount
|
|
December 31, 2015
|
December 31, 2014
|
||
|
Carrying
Amount |
Fair Value |
Carrying
Amount |
Fair Value |
|
|
|
|
|
Financial assets:
|
|
|
|
|
Available-for-sale financial assets-noncurrent
|
116,921
|
116,921
|
219,552
|
219,552
|
Foreign currency forward contracts
|
1,875
|
1,875
|
206
|
206
|
Refundable deposits
|
17,800
|
17,800
|
23,800
|
23,800
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
Long-term borrowings (including current installments)
|
1,798,750
|
1,808,628
|
1,800,000
|
1,811,732
|
Convertible bonds payable
|
1,886,125
|
1,943,468
|
1,842,643
|
1,906,989
|
Redemption rights of convertible bonds payable
|
29,173
|
29,173
|
15,185
|
15,185
|
Foreign currency forward and swap contracts
|
20,853
|
20,853
|
70,990
|
70,990
|
(b)
|
Valuation techniques and assumptions applied in fair value measurement
|
(c)
|
Fair value measurements recognized in the consolidated statements of financial position
|
(i)
|
Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets accessible to the entity at the measurement date.
|
(ii)
|
Level 2 inputs: Other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
|
(iii)
|
Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
Assets:
|
|
|
|
|
Financial assets measured at fair value through profit or loss
|
$ - |
- |
1,875
|
1,875
|
Available-for-sale financial assets
|
106,722
|
-
|
-
|
106,722
|
Liabilities:
|
|
|
|
|
Financial liabilities measured at fair value through profit or loss
|
- |
- |
(50,026)
|
(50,026)
|
|
|
|
|
|
December 31, 2014
|
|
|
|
|
Assets:
|
|
|
|
|
Financial assets measured at fair value through profit or loss
|
$ - |
- |
240
|
240
|
Available-for-sale financial assets
|
219,552
|
-
|
-
|
219,552
|
Liabilities:
|
|
|
|
|
Financial liabilities measured at fair value through profit or loss
|
- |
- |
(86,175)
|
(86,175)
|
(d)
|
Reconciliation for recurring fair value measurements categorized within Level 3
|
|
Forward
Exchange
|
Convertible
Bonds
|
Available-for-
Sale financial
Assets
|
|
||||
|
|
|
|
|
||||
Balance at January 1, 2013 (Unaudited)
|
$
|
(3,745
|
)
|
(4,625)
|
|
-
|
||
Net realized/unrealized gains included in:
|
|
|
|
|||||
Profit or loss (Unaudited)
|
(44,950)
|
|
3,466
|
|
-
|
|||
Purchases (Unaudited)
|
25,089
|
|
1,493
|
|
-
|
|||
Disposals (Unaudited)
|
-
|
-
|
-
|
|||||
Balance at December 31, 2013 (Unaudited)
|
(23,606
|
)
|
334
|
|
-
|
|||
Net realized/unrealized gains included in:
|
|
|
|
|||||
Profit or loss
|
(133,623)
|
|
5,442
|
|
-
|
|||
Purchases
|
86,445
|
|
-
|
74,022
|
|
|||
Redemption
|
-
|
(20,927
|
)
|
-
|
||||
Balance at December 31, 2014
|
(70,784
|
)
|
(15,151
|
)
|
74,022
|
|
||
Net realized/unrealized gains included in:
|
|
|
|
|||||
Profit or loss
|
(41,904)
|
|
(14,022)
|
|
-
|
|||
Purchases
|
93,710
|
|
-
|
-
|
||||
Redemption
|
-
|
-
|
(74,022
|
)
|
||||
Balance at December 31, 2015
|
$
|
(18,978
|
)
|
(29,173
|
)
|
-
|
(e)
|
Description of valuation processes for fair value measurements categorized within Level 3
|
(31)
|
Financial Risk Management
|
(a)
|
Risk management framework
|
(b)
|
Financial risk information
|
(i)
|
Credit risk
|
(ii)
|
Liquidity risk
|
|
Contractual
cash flows
|
1/1/2016
|
1/1/2017
|
2019 and~
thereafter |
|||||
|
|
|
|
|
|||||
December 31, 2015
|
|
|
|
|
|||||
Non-derivative financial liabilities:
|
|
|
|
|
|||||
Short-term and long-term borrowings (including convertible bonds payable)
|
$
|
3,852,839
|
|
876,568
|
|
978,271
|
|
1,998,000
|
|
Accounts payable
|
3,315,209
|
|
3,315,209
|
|
-
|
-
|
|||
Accrued expense & other current liabilities
|
986,757
|
|
986,757
|
|
- |
- |
|||
Derivative financial liabilities
|
|
|
|
|
|||||
Outflow
|
3,358,137
|
|
3,358,137
|
|
-
|
-
|
|||
Inflow
|
(3,339,159
|
)
|
(3,339,159
|
)
|
-
|
-
|
|||
|
$
|
8,173,783
|
|
5,197,512
|
|
978,271
|
|
1,998,000
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|||||
December 31, 2014
|
|
|
|
|
|||||
Non-derivative financial liabilities:
|
|
|
|
|
|||||
Short-term and long-term borrowings (including convertible bonds payable)
|
$
|
4,825,545
|
|
971,512
|
|
877,447
|
|
2,976,586
|
|
Accounts payable
|
3,167,083
|
|
3,167,083
|
|
-
|
-
|
|||
Accrued expense & other current liabilities
|
1,293,924
|
|
1,293,924
|
|
- |
- |
|||
Derivative financial liabilities
|
|
|
|
|
|||||
Outflow
|
2,116,675
|
|
2,116,675
|
|
-
|
-
|
|||
Inflow
|
(2,045,891
|
)
|
(2,045,891
|
)
|
-
|
-
|
|||
|
$
|
9,357,336
|
|
5,503,303
|
|
877,447
|
|
2,976,586
|
|
(iii)
|
Market risk
|
A.
|
Currency risk
|
a.
|
The Company’s significant exposure to foreign currency risk was as follows:
|
|
Foreign
currency amounts |
Exchange
rate |
NTD
|
Financial assets
|
|
|
|
Monetary items
|
|
|
|
USD
|
186,152
|
31.766
|
5,913,318
|
CNY
|
319
|
5.1223
|
1,633
|
Non-monetary items
|
|
|
|
Forward Exchange Agreement
|
|
|
|
& Exchange rate SWAP
|
|
|
|
USD
|
6
|
31.766
|
206
|
Financial liabilities
|
|
|
|
Monetary items
|
|
|
|
USD
|
107,261
|
31.766
|
3,407,253
|
JPY
|
508,305
|
0.2659
|
135,159
|
CNY
|
19
|
5.1223
|
96
|
Non-monetary items
|
|
|
|
Forward Exchange Agreement
|
|
|
|
& Exchange rate SWAP
|
|
|
|
USD
|
2,203
|
31.766
|
69,980
|
JPY
|
3,798
|
0.2659
|
1,010
|
b.
|
Sensitivity analysis
|
B.
|
Interest rate risk
|
C.
|
Equity price risk
|
(32)
|
Capital management
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Total liabilities
|
$
|
8,417,122
|
|
9,453,729
|
|
Total liabilities and equity
|
22,393,838
|
|
24,290,276
|
|
|
Debt-to-equity ratio
|
38
|
%
|
39
|
%
|
(33)
|
Investing and financing activities not affecting current cash flow
|
(a)
|
For conversion of convertible bonds to common stocks, please refer to note 17.
|
(b)
|
For retirement of treasury stock, please refer to note 21.
|
(c)
|
For issuance of restricted stocks to employees, please refer to note 22.
|
(34)
|
Related-party transactions
|
(a)
|
Compensation to executive officers
|
|
For the years ended December 31,
|
||||
|
2015
|
2014
|
2013
(Unaudited)
|
||
|
|
|
|
||
Short-term employee benefits
|
$
|
39,755
|
|
43,547
|
50,635
|
Post-employment benefits
|
316
|
|
324
|
301
|
|
Termination benefits
|
-
|
-
|
-
|
||
Employee bonuses
|
2,229
|
|
5,408
|
4,518
|
|
Share-based payments
|
17,375
|
30,834
|
14,560
|
||
|
$59,675
|
80,113
|
70,014
|
(b)
|
Except as disclosed in the consolidated financial statements and other notes, the significant related party transactions were as follows:
|
1.
|
Sales
|
2.
|
Purchases
|
|
Purchases |
Accounts payable
to related parties |
|||||||
|
For the years ended December 31,
|
December 31,
|
|||||||
|
2015
|
2014
|
2013
(Unaudited)
|
2015
|
2014
|
||||
|
|
|
|
|
|
||||
Entities with significant influence over the Company
|
$
|
34,838
|
|
25,254
|
|
5,451
|
|
15,861
|
4,914
|
Associates
|
178
|
|
6,433
|
|
7,052
|
|
-
|
-
|
|
Other related parties
|
34,858
|
|
-
|
399,697
|
|
13,983
|
-
|
||
|
$
|
69,874
|
|
31,687
|
|
412,200
|
|
29,844
|
4,914
|
3.
|
Acquisition and disposal of property, plant and equipment and others
|
|
For the years ended December 31,
|
||
|
2015
|
2014
|
2013
(Unaudited)
|
|
|
|
|
Entities with significant influence over the Company
|
$ - |
31,778 |
45,989 |
|
December 31,
2015
|
December 31,
2014
|
|
|
|
Entities with significant influence over the Company
|
$32
|
41,072
|
(35)
|
Pledged assets
|
Pledged assets |
Object
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|
|||
Machinery and equipment
|
Long-term borrowings
|
$ -
|
1,475,269
|
|
||
Other financial assets (classified under other non-current financial assets)
|
Guarantee for land lease and collateral for provisional attachment
|
17,800
|
|
23,800
|
|
|
|
|
$
|
17,800
|
|
1,499,069
|
|
(36)
|
Commitments and contingencies
|
(a)
|
The aggregated unpaid amounts of contracts pertaining to the purchase of equipment were as follows:
|
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|
|||
Acquisition of equipment
|
NTD
|
$
|
695,034
|
|
625,693
|
|
(b)
|
The amount of guarantee notes issued of credit as collateral for the bank loans were as follows:
|
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|
|||
Guarantee notes issued
|
USD
|
$
|
47,700
|
|
181,500
|
|
Guarantee notes issued
|
NTD
|
$
|
4,300,000
|
|
4,700,000
|
|
(c)
|
As of December 31, 2014, the Company provided endorsement guarantee for operation and bank loans amounting to USD73,000 thousand, respectively.
|
(d)
|
Guarantee notes issued for customs were as follows:
|
|
|
December 31,
2015
|
December 31,
2014
|
|
|
|
|
|
|
Guarantees for customs
|
CNY
|
$
-
|
13,500
|
|
(e)
|
The Company entered into patent license agreements with Toyoda Gosei Co., Ltd. According to the agreements, the Company shall pay a certain amount of royalty based on the sales.
|
(f)
|
The Company disagreed with the pursuit of assessment on the income tax returns in 2010 and 2011, and requested for a reexamination. The tax effect of the reexamination is $5,065 thousand. Please refer to note 28.
|
(g)
|
The Company entered into supply agreements and patent license agreements with Cree Inc. According to the agreements, the Company shall keep a sufficient supply of capacity, and shall pay a certain amount of royalty based on the sales of products authorized.
|
(37)
|
Geographic and Other Revenue Information
|
(a)
|
Geographic information
|
1.
|
Net revenue
|
2.
|
Consolidated noncurrent assets
|
|
December 31,
2015
|
December 31,
2014
|
|||
|
|
|
|||
Taiwan
|
$
|
4,945,595
|
|
6,632,337
|
|
PRC
|
3,194,000
|
|
3,168,046
|
|
|
|
$
|
8,139,596
|
|
9,800,383
|
|
(i)
|
Noncurrent assets are not inclusive of financial instruments, deferred tax, and pension-related assets.
|
|
For the years ended December 31
|
||||||||
|
2015
|
%
|
2014
|
%
|
2013
(Unaudited)
|
%
|
|||
|
|
|
|
|
|
|
|||
AU Optronics Corp and its subsidiaries
|
$
|
2,731,407
|
|
19
|
3,718,585
|
26
|
2,358,812
|
17
|
|
OSRAM Company
|
1,981,016
|
14
|
2,252,989
|
15
|
2,261,493
|
|
17
|
||
|
$4,712,423
|
33
|
5,971,574
|
41
|
4,620,305
|
|
34
|
(38)
|
Subsequent events
|
(a)
|
During the time from January to June in 2016, the Company bought back 20,000 thousand shares as treasury stock, with the average price of $16 per share, amounting to $319,989 thousand.
|
(b)
|
On April 19, 2016, the board of directors of the Company approved a resolution to allow the Company to issue 50,000 thousand new shares for restricted employee stock options without charge. The resolution has already been approved in the shareholders’ meeting on June 3, 2016, but has yet to be submitted to the authority. Please refer to the Market Observation Post System for related information.
|
(c)
|
The Company entered into a syndicated loan amounting to $3 billion with 7 banks in July 2016. The syndicated loan is led by Bank of Taiwan. As of the report date, the credit line of the syndicated loan has not yet been used.
|