CREE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts and percentages) (Unaudited) Revenue, net Cost of revenue, net Gross profit Gross margin percentage Three Months Ended Six Months Ended December 25, December 26, December 25, December 26, 2011 2010 2011 2010 (Thousands, except per share amounts) $ 304,118 $ 256,983 $ 573,098 $ 525,420 199,000 135,837 369,952 273,745 105,118 121,146 203,146 251,675 34.6 % 47.1 % 35.4 % 47.9 % Operating expenses: Research and development Sales, general and administrative Amortization of acquisition related intangibles Loss on disposal or impairment of long-lived assets Total operating expenses 35,886 49,176 7,367 29,233 33,366 2,706 70,288 94,715 11,292 53,965 62,568 5,412 497 92,926 429 65,734 1,272 177,567 901 122,846 Operating income Operating income percentage 12,192 4.0 % 55,412 21.6 % 25,579 4.5 % 128,829 24.5 % Non-operating income: Interest and other non-operating income, net Income from operations before income taxes 1,689 13,881 2,233 57,645 4,632 30,211 4,187 133,016 Income tax expense Net income $ 1,803 12,078 $ 7,870 49,775 $ 5,314 24,897 $ 25,205 107,811 Earnings per share: Diluted net income per share $ 0.10 $ 0.45 $ 0.22 $ 0.98 Shares used in diluted per share calculation 115,883 109,976 114,239 109,817