UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 13, 2005
CREE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 0-21154 56-1572719
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification Number)
4600 Silicon Drive
Durham, North Carolina 27703
(Address of principal executive offices) (Zip Code)
(919) 313-5300
Registrant's telephone number, including area code
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On April 13, 2005, the Compensation Committee of the Board of Directors of
Cree, Inc. (the "Company") approved accelerating the vesting of certain
"out-of-the money" options to purchase shares of the Company's common stock
granted under its 2004 Long-Term Incentive Compensation Plan, its Equity
Compensation Plan and its 2001 Nonqualified Stock Option Plan. As a result of
the Committee's approval, options to purchase approximately 1.76 million shares
that were subject to vesting at various times from June 2005 through February
2009 became fully vested on April 15, 2005, the effective date of the
acceleration. The affected options have exercise prices ranging from $24.97 to
$71.53 per share, with the shares subject to acceleration having a weighted
average exercise price of $32.95 per share. The last reported sale price of the
Company's common stock on The Nasdaq Stock Market on April 15, 2005 was $24.94.
Under the resolutions approved by the Committee, the terms of each affected
option are deemed amended such that the option became fully vested and
exercisable on April 15, 2005, except that certain options granted within six
months before April 15, 2005 became fully vested but not exercisable until six
months after the date the option was granted. Options held by non-employee
directors are excluded from the acceleration. Any affected options held by
executive officers and other senior management employees that are exercised
prior to the original vesting date will be subject to restrictions prohibiting
sale or other transfer of the shares until the earlier of the original vesting
date or the individual's termination of service.
The purpose of accelerating vesting of the options was to enable the
Company to avoid recognizing future compensation expense associated with these
options upon adoption of Financial Accounting Standards Board Statement No. 123,
"Share-Based Payment (revised 2004)" ("SFAS 123(R)"). Commencing with the
Company's fiscal year that begins June 27, 2005, SFAS 123(R) will require that
the Company recognize compensation expense equal to the fair value of
equity-based compensation awards over the vesting period of each such award. The
aggregate pre-tax expense for the shares subject to acceleration that, absent
the acceleration of vesting, would have been reflected in the Company's
consolidated financial statements beginning in fiscal 2006 is estimated to be a
total of approximately $22.6 million (approximately $11.2 million in fiscal
2006, approximately $8.7 million in fiscal 2007, approximately $2.7 million in
fiscal 2008 and approximately $0.1 million in fiscal 2009).
The acceleration affects options to purchase 150,000 shares held by the
Company's executive officers, with the shares subject to accelerated vesting
under these options having a weighted average exercise price of $31.53 per
share. The following table summarizes the affected options held by the Company's
executive officers:
Number of Shares Subject
Name to Accelerated Vesting Exercise Price Per Share
---- ------------------------ ------------------------
F. Neal Hunter 24,000 $31.24
F. Neal Hunter 16,000 $33.95
Charles M. Swoboda 50,000 $31.24
John W. Palmour, Ph. 30,000 $31.24
Cynthia B. Merrell 30,000 $31.24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CREE, INC.
By: /s/ Charles M. Swoboda
---------------------------------------
Charles M. Swoboda
Chief Executive Officer and President
Date: April 18, 2005