10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2014

or

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-21154

CREE, INC.

(Exact name of registrant as specified in its charter)

North Carolina	56-1572719
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4600 Silicon Drive Durham, North Carolina	27703
(Address of principal executive offices)	(Zip Code)

(919) 407-5300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ X ] No [    ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ X ] No [    ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [X]	Accelerated filer [    ]
Non-accelerated filer [    ]  (Do not check if a smaller reporting company)	Smaller reporting company [    ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ] No[ X]

The number of shares outstanding of the registrant’s common stock, par value $0.00125 per share, as of April 16, 2014, was 121,938,248.

CREE, INC.

FORM 10-Q

For the Quarterly Period Ended March 30, 2014

INDEX

Description		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of March 30, 2014 (unaudited) and June 30, 2013	3
	Consolidated Statements of Income for the three and nine months ended March 30, 2014 (unaudited) and March 31, 2013 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended March 30, 2014 (unaudited) and March 31, 2013 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended March 30, 2014 (unaudited) and March 31, 2013 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
SIGNATURE		47
EXHIBIT INDEX		48

2

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements

CREE, INC.

CONSOLIDATED BALANCE SHEETS

	March 30, 2014		June 30, 2013
	(unaudited)
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents		$268,838		$190,069
Short-term investments	954,573		833,846
Total cash, cash equivalents and short-term investments	1,223,411		1,023,915
Accounts receivable, net	222,333		192,507
Inventories	251,234		197,001
Deferred income taxes	25,740		26,125
Prepaid expenses and other current assets	59,352		76,218
Total current assets	1,782,070		1,515,766
Property and equipment, net	575,945		542,833
Intangible assets, net	343,647		357,525
Goodwill	616,345		616,345
Other assets	45,041		19,941
Total assets		$3,363,048		$3,052,410
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade		$159,230		$121,441
Accrued salaries and wages	44,030		41,407
Income taxes payable	16,060		1,315
Other current liabilities	44,400		43,248
Total current liabilities	263,720		207,411
Long-term liabilities:
Deferred income taxes	27,249		25,504
Other long-term liabilities	40,691		12,843
Total long-term liabilities	67,940		38,347
Commitments and contingencies (Note 11)
Shareholders’ equity:
Preferred stock, par value $0.01; 3,000 shares authorized at March 30, 2014 and June 30, 2013; none issued and outstanding	—		—
Common stock, par value $0.00125; 200,000 shares authorized at March 30, 2014 and June 30, 2013; 121,930 and 119,623 shares issued and outstanding at March 30, 2014 and June 30, 2013, respectively	151		148
Additional paid-in-capital	2,162,798		2,025,764
Accumulated other comprehensive income, net of taxes	10,117		8,244
Retained earnings	858,322		772,496
Total shareholders’ equity	3,031,388		2,806,652
Total liabilities and shareholders’ equity		$3,363,048		$3,052,410

The accompanying notes are an integral part of the consolidated financial statements.

3

CREE, INC.

(UNAUDITED)

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
	(In thousands, except per share amounts)
Revenue, net		$405,259		$348,934		$1,211,351		$1,010,973
Cost of revenue, net	255,265		215,924		754,822		628,438
Gross profit	149,994		133,010		456,529		382,535
Operating expenses:
Research and development	46,626		39,036		132,805		116,524
Sales, general and administrative	65,368		62,140		197,589		174,885
Amortization of acquisition-related intangibles	7,257		7,719		21,800		23,108
Loss on disposal or impairment of long-lived assets	364		863		1,781		2,385
Total operating expenses	119,615		109,758		353,975		316,902
Operating income	30,379		23,252		102,554		65,633
Non-operating income, net	3,152		2,512		9,373		8,378
Income before income taxes	33,531		25,764		111,927		74,011
Income tax expense	5,367		3,607		17,585		15,328
Net income		$28,164		$22,157		$94,342		$58,683
Earnings per share:
Basic		$0.23		$0.19		$0.78		$0.51
Diluted		$0.23		$0.19		$0.77		$0.50
Weighted average shares used in per share calculation:
Basic	121,535		116,682		120,677		116,059
Diluted	123,695		118,608		123,140		116,768

The accompanying notes are an integral part of the consolidated financial statements.

4

CREE, INC.

(UNAUDITED)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended						Nine Months Ended
	March 30, 2014			March 31, 2013			March 30, 2014			March 31, 2013
	(In thousands)
Net income		$28,164			$22,157			$94,342			$58,683
Other comprehensive income:
Currency translation (loss) gain, net of tax benefit (expense) of $0, $90, $0 and ($1), respectively	(163		)	(145		)	(28		)	5
Net unrealized gain (loss) on available-for-sale securities, net of tax (expense) of ($126), ($75), ($1,191) and ($22), respectively	191			67			1,901			(17		)
Other comprehensive income (loss)	28			(78		)	1,873			(12		)
Comprehensive income		$28,192			$22,079			$96,215			$58,671

The accompanying notes are an integral part of the consolidated financial statements.

5

CREE, INC.

(UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	March 30, 2014			March 31, 2013
	(In thousands)
Cash flows from operating activities:
Net income		$94,342			$58,683
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	120,219			114,370
Stock-based compensation	46,261			40,945
Excess tax benefit from share-based payment arrangements	(18,396		)	(3,636		)
Loss on disposal or impairment of long-lived assets	1,781			2,385
Amortization of premium/discount on investments	7,674			7,075
Changes in operating assets and liabilities:
Accounts receivable, net	(29,829		)	(29,624		)
Inventories	(53,511		)	(6,866		)
Prepaid expenses and other assets	13,008			(6,472		)
Accounts payable, trade	29,016			33,495
Accrued salaries and wages and other liabilities	17,605			13,715
Net cash provided by operating activities	228,170			224,070
Cash flows from investing activities:
Purchases of property and equipment	(119,614		)	(55,406		)
Purchases of available-for-sale investments	(510,401		)	(533,884		)
Proceeds from maturities of available-for-sale investments	365,005			297,740
Proceeds from sale of property and equipment	117			301
Proceeds from sale of available-for-sale investments	22,387			36,089
Purchases of patent and licensing rights	(14,755		)	(15,794		)
Net cash used in investing activities	(257,261		)	(270,954		)
Cash flows from financing activities:
Net proceeds from issuance of common stock	89,476			43,352
Excess tax benefit from share-based payment arrangements	18,396			3,636
Repurchases of common stock	(107		)	(638		)
Net cash provided by financing activities	107,765			46,350
Effects of foreign exchange changes on cash and cash equivalents	95			87
Net increase (decrease) in cash and cash equivalents	78,769			(447		)
Cash and cash equivalents:
Beginning of period	190,069			178,885
End of period		$268,838			$178,438

The accompanying notes are an integral part of the consolidated financial statements.

6

CREE, INC.

(UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Basis of Presentation and Changes in Significant Accounting Policies

Overview

Cree, Inc. (the Company) is a leading innovator of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. The Company's products are targeted for applications such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems.

The Company develops and manufactures semiconductor materials and devices primarily based on silicon carbide (SiC), gallium nitride (GaN) and related compounds. In many cases, the properties of SiC and GaN offer technical advantages over traditional silicon, gallium arsenide (GaAs) and other materials used for electronic applications.

The Company's LED products consist of LED components, LED chips and SiC materials. The Company's success in selling LED products depends upon its ability to offer innovative products and to enable its customers to develop and market LED-based products that successfully compete against other LED-based products and drive LED adoption against traditional lighting products.

The Company's lighting products primarily consist of LED lighting systems. The Company designs, manufactures and sells lighting fixtures and lamps for the commercial, industrial and consumer markets.

In addition, the Company develops, manufactures and sells power and RF devices. The Company's power products are made from SiC and provide increased efficiency, faster switching speeds and reduced system size and weight over comparable silicon-based power devices. The Company's RF devices are made from GaN and provide improved efficiency, bandwidth and frequency of operation as compared to silicon or GaAs.

The majority of the Company's products are manufactured at its production facilities located in North Carolina, Wisconsin and China. The Company also uses contract manufacturers for certain aspects of product fabrication, assembly and packaging. The Company operates research and development facilities in North Carolina, California, Wisconsin, India and China (including Hong Kong).

Cree, Inc. is a North Carolina corporation established in 1987 and is headquartered in Durham, North Carolina.

As of March 30, 2014, the Company has three reportable segments:

• LED Products

• Lighting Products

• Power and RF Products

For financial results by reportable segment, please refer to Note 12 "Reportable Segments."

Basis of Presentation

The consolidated balance sheet at March 30, 2014, the consolidated statements of income for the three and nine months ended March 30, 2014 and March 31, 2013, the consolidated statements of comprehensive income for the three and nine months ended March 30, 2014 and March 31, 2013, and the consolidated statements of cash flows for the nine months ended March 30, 2014 and March 31, 2013 (collectively, the consolidated financial statements) have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows at March 30, 2014, and for all periods presented, have been made. All intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 30, 2013 has been derived from the audited financial statements as of that date. The nine month period ended March 30, 2014 includes one less week as compared to the nine month period ended March 31, 2013.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 (fiscal 2013).

7

The results of operations for the three and nine months ended March 30, 2014 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 29, 2014 (fiscal 2014).

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual amounts could differ materially from those estimates.

Certain fiscal 2013 amounts in the accompanying consolidated financial statements have been reclassified to conform to the fiscal 2014 presentation. These reclassifications had no effect on previously reported consolidated net income or shareholders’ equity.

New Accounting Standards

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists. The ASU provides guidance regarding the presentation in the statement of financial position of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryfoward exists. The ASU generally provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The ASU applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date, and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company early adopted this guidance beginning with the first quarter of fiscal 2014. The Company's adoption of this guidance did not have a significant impact on its consolidated financial statements.

Note 2.    Acquisitions

On August 17, 2011, the Company entered into a Stock Purchase Agreement with all of the shareholders of Ruud Lighting, Inc. (Ruud Lighting). Pursuant to the terms of the Stock Purchase Agreement and concurrently with the execution of the Stock Purchase Agreement, the Company acquired all of the outstanding share capital of Ruud Lighting in exchange for consideration consisting of 6.1 million shares of the Company's common stock valued at approximately $211.0 million and $372.2 million cash, subject to certain post-closing adjustments. Following the acquisition, the Company recorded certain post-closing purchase price adjustments resulting in a $2.3 million reduction to the purchase price and a total purchase price of approximately $666.0 million. See Note 11 “Commitments and Contingencies” for a discussion of the amounts received from the Stock Purchase Agreement escrow funds. The acquisition allowed the Company to expand its product portfolio into outdoor LED lighting.

Prior to the Company completing its acquisition of Ruud Lighting, Ruud Lighting completed the re-acquisition of its e-conolight business by purchasing all of the membership interests of E-conolight LLC (E-conolight). Ruud Lighting previously sold its e-conolight business in March 2010 and had been providing operational services to E-conolight since that date. In connection with the stock purchase transaction with Ruud Lighting, the Company funded Ruud Lighting's re-acquisition of E-conolight and repaid Ruud Lighting's outstanding debt in the aggregate amount of approximately $85.0 million.

The assets, liabilities and operating results of Ruud Lighting have been included in the Lighting Products segment of the Company’s consolidated financial statements from the date of acquisition and are reflected in all periods presented in the accompanying unaudited consolidated financial statements.

8

Note 3.    Financial Statement Details

Accounts receivable, net

The following table summarizes the components of accounts receivable, net (in thousands):

	March 30, 2014			June 30, 2013
Billed trade receivables		$254,274			$220,307
Unbilled contract receivables	1,427			1,171
	255,701			221,478
Allowance for sales returns, discounts and other incentives	(31,111		)	(26,500		)
Allowance for bad debts	(2,257		)	(2,471		)
Total accounts receivable, net		$222,333			$192,507

Inventories

The following table summarizes the components of inventories (in thousands):

	March 30, 2014		June 30, 2013
Raw material		$84,302		$62,253
Work-in-progress	81,846		68,146
Finished goods	85,086		66,602
Total inventories		$251,234		$197,001

Other current liabilities

The following table summarizes the components of other current liabilities (in thousands):

	March 30, 2014		June 30, 2013
Accrued taxes		$17,812		$21,436
Accrued professional fees	7,390		4,493
Accrued warranty	5,602		5,259
Accrued other	13,596		12,060
Total other current liabilities		$44,400		$43,248

Accumulated other comprehensive income, net of taxes

The following table summarizes the components of accumulated other comprehensive income, net of taxes (in thousands):

	March 30, 2014		June 30, 2013
Currency translation gain		$8,464		$8,492
Net unrealized gain (loss) on available-for-sale securities	1,653		(248		)
Total accumulated other comprehensive income, net of taxes		$10,117		$8,244

9

Non-operating income, net

The following table summarizes the components of non-operating income, net (in thousands):

	Three Months Ended					Nine Months Ended
	March 30, 2014			March 31, 2013		March 30, 2014		March 31, 2013
Foreign currency (loss) gain, net		($368	)		$296		$109		$424
Gain on sale of investments, net	15			48		25		84
Interest income, net	3,415			2,018		8,562		5,756
Other, net	90			150		677		2,114
Total non-operating income, net		$3,152			$2,512		$9,373		$8,378

Reclassifications out of accumulated other comprehensive income

The following table summarizes the amounts reclassified out of accumulated other comprehensive income (in thousands):

Accumulated Other Comprehensive Income Component	Amount Reclassified from Accumulated Other Comprehensive Income								Affected Line Item in the Statement of Income
	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net unrealized gain on available-for-sale securities, net of tax expense		$15		$43		$25		$80	Non-operating income, net
	15		43		25		80		Income before income taxes
	2		6		4		17		Income tax expense
		$13		$37		$21		$63	Net income

Note 4.    Investments

Short-term investments consist of municipal bonds, corporate bonds, U.S. agency securities, non-U.S. certificates of deposit and non-U.S. government securities. All marketable investments are classified as available-for-sale.

10

The following tables summarize marketable investments (in thousands):

	March 30, 2014
	Amortized     Cost		Gross Unrealized     Gains		Gross Unrealized     Losses			Estimated Fair  Value
Municipal bonds		$306,484		$1,598		($289	)		$307,793
Corporate bonds	227,500		1,742		(574		)	228,668
U.S. agency securities	27,095		189		—			27,284
Non-U.S. certificates of deposit	383,758		—		—			383,758
Non-U.S. government securities	7,045		25		—			7,070
Total		$951,882		$3,554		($863	)		$954,573
	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Municipal bonds		$250,206		$817		($1,314	)		$249,709
Corporate bonds	192,147		1,678		(1,765		)	192,060
U.S. agency securities	39,288		186		—			39,474
Non-U.S. certificates of deposit	345,000		—		—			345,000
Non-U.S. government securities	7,608		14		(19		)	7,603
Total		$834,249		$2,695		($3,098	)		$833,846

The following tables present the gross unrealized losses and estimated fair value of the Company's investment securities, aggregated by investment type and the length of time that individual investment securities have been in a continuous unrealized loss position (in thousands, except numbers of securities):

	March 30, 2014
	Less than 12 Months					Greater than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds		$61,656		($289	)		$—		$—			$61,656		($289	)
Corporate bonds	82,888		(536		)	1,979		(38		)	84,867		(574		)
Non-U.S. government securities	—		—			—		—			—		—
Total		$144,544		($825	)		$1,979		($38	)		$146,523		($863	)
Number of securities with an unrealized loss			71					1					72
	June 30, 2013
	Less than 12 Months					Greater than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds		$126,926		($1,314	)		$—		$—			$126,926		($1,314	)
Corporate bonds	102,010		(1,765		)	—		—			102,010		(1,765		)
Non-U.S. government securities	5,534		(19		)	—		—			5,534		(19		)
Total		$234,470		($3,098	)		$—		$—			$234,470		($3,098	)
Number of securities with an unrealized loss			123					—					123

The Company utilizes specific identification in computing realized gains and losses on the sale of investments. Realized gains from the sale of investments for the nine months ended March 30, 2014 of $25 thousand were included in "Non-operating income,

11

net" and unrealized gains and losses are included as a separate component of equity, net of tax, unless the loss is determined to be other-than-temporary.

The Company evaluates its investments for possible impairment or a decline in fair value below cost basis that is deemed to be other-than-temporary on a periodic basis. It considers such factors as the length of time and extent to which the fair value has been below the cost basis, the financial condition of the investee, and its ability and intent to hold the investment for a period of time that may be sufficient for an anticipated full recovery in market value. Accordingly, the Company considers declines in its securities to be temporary in nature, and does not consider its securities to be impaired as of March 30, 2014 and June 30, 2013.

The contractual maturities of marketable investments as of March 30, 2014 were as follows (in thousands):

	Within One     Year		After One, Within Five     Years		After Five, Within Ten     Years		After Ten     Years		Total
Municipal bonds		$70,398		$213,400		$23,995		$—		$307,793
Corporate bonds	33,506		176,288		18,874		—		228,668
U.S. agency securities	8,083		19,201		—		—		27,284
Non-U.S. certificates of deposit	383,758		—		—		—		383,758
Non-U.S. government securities	4,054		3,016		—		—		7,070
Total		$499,799		$411,905		$42,869		$—		$954,573

Note 5.    Fair Value of Financial Instruments

Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is categorized into three levels based on the reliability of inputs as follows:

• 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.

The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents and short-term investments. As of March 30, 2014, financial assets utilizing Level 1 inputs included money market funds. Financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, U.S. agency securities, non-U.S. certificates of deposit and non-U.S. government securities. Level 2 assets are valued using a third-party pricing services consensus price, which is a weighted average price based on multiple sources. These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility. The Company does not have any financial assets requiring the use of Level 3 inputs. There were no transfers between Level 1 and Level 2 during the nine months ended March 30, 2014.

12

The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy (in thousands):

	March 30, 2014								June 30, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Non-U.S. certificates of deposit	$	—	$	12,163	$	—	$	12,163	$	—	$	—	$	—	$	—
Municipal bonds	—		—		—		—		—		2,009		—		2,009
Money market funds	67,553		—		—		67,553		12,589		—		—		12,589
Total cash equivalents	67,553		12,163		—		79,716		12,589		2,009		—		14,598
Short-term investments:
Municipal bonds	—		307,793		—		307,793		—		249,709		—		249,709
Corporate bonds	—		228,668		—		228,668		—		192,060		—		192,060
U.S. agency securities	—		27,284		—		27,284		—		39,474		—		39,474
Non-U.S. certificates of deposit	—		383,758		—		383,758		—		345,000		—		345,000
Non-U.S. government securities	—		7,070		—		7,070		—		7,603		—		7,603
Total short-term investments	—		954,573		—		954,573		—		833,846		—		833,846
Total assets		$67,553		$966,736		$—		$1,034,289		$12,589		$835,855		$—		$848,444

Note 6.    Intangible Assets

The following table presents the components of intangible assets, net (in thousands):

	March 30, 2014							June 30, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Customer relationships		$137,440		($65,131	)		$72,309		$137,440		($59,611	)		$77,829
Developed technology	162,760		(68,260		)	94,500		162,760		(53,476		)	109,284
Non-compete agreements	10,244		(5,507		)	4,737		10,244		(4,037		)	6,207
Trade names, finite-lived	520		(510		)	10		520		(493		)	27
Patent and licensing rights	129,599		(40,388		)	89,211		116,147		(34,849		)	81,298
Total intangible assets with finite lives	440,563		(179,796		)	260,767		427,111		(152,466		)	274,645
Trade names, indefinite-lived	82,880					82,880		82,880					82,880
Total intangible assets		$523,443		($179,796	)		$343,647		$509,991		($152,466	)		$357,525

Total amortization of intangible assets recognized during the three and nine months ended March 30, 2014 was $9.5 million and $28.3 million, respectively. For the three and nine months ended March 31, 2013, total amortization of intangible assets recognized was $9.4 million and $28.2 million, respectively.

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Total future amortization expense of finite-lived intangible assets is estimated to be as follows (in thousands):

Fiscal Year Ending
June 29, 2014 (remainder of fiscal 2014)		$9,035
June 28, 2015	33,973
June 26, 2016	33,686
June 25, 2017	31,702
June 24, 2018	30,534
Thereafter	121,837
Total		$260,767

Note 7.    Shareholders’ Equity

As of March 30, 2014, pursuant to an extension of the stock repurchase program authorized by the Board of Directors, the Company is authorized to repurchase shares of its common stock having an aggregate purchase price not exceeding $200 million for all purchases from June 20, 2013 through the expiration of the program on June 29, 2014. During the nine months ended March 30, 2014, there were no repurchases of common stock by the Company under the share repurchase program.

Note 8.    Earnings Per Share

The following table presents the computation of basic earnings per share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net income		$28,164		$22,157		$94,342		$58,683
Weighted average common shares	121,535		116,682		120,677		116,059
Basic earnings per share	$0.23			$0.19	$0.78			$0.51

The following computation reconciles the differences between the basic and diluted earnings per share presentations (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net income		$28,164		$22,157		$94,342		$58,683
Weighted average common shares - basic	121,535		116,682		120,677		116,059
Dilutive effect of stock options, nonvested shares and ESPP purchase rights	2,160		1,926		2,463		709
Weighted average common shares - diluted	123,695		118,608		123,140		116,768
Diluted earnings per share	$0.23			$0.19	$0.77			$0.50

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted earnings per share. For the three and nine months ended March 30, 2014, there were 3.1 million and 2.4 million, respectively, of potential common shares not included in the calculation of diluted earnings per share because their effect was anti-dilutive. For the three and nine months March 31, 2013, there were 2.2 million and 8.7 million, respectively, of potential common shares not included in the calculation of diluted earnings per share because their effect was anti-dilutive.

Note 9.   Stock-Based Compensation

Prior to the second quarter of fiscal 2014, the Company had one equity-based compensation plan, the 2004 Long-Term Incentive Compensation Plan (2004 LTIP), from which stock-based compensation awards could be granted to employees and directors. The Company’s 2013 Long-Term Incentive Compensation Plan (2013 LTIP) became effective in the second quarter of fiscal 2014,

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and replaced the 2004 LTIP as the sole plan for providing stock-based compensation awards to employees and directors on January 1, 2014. The 2004 LTIP has been terminated as to future grants although outstanding awards under the 2004 LTIP will continue to be governed by that plan. In addition, the Company has other equity-based compensation plans that have been terminated so that no future grants can be made under those plans, but under which options are currently outstanding.

Prior to fiscal 2013, the Company’s stock-based awards had been service-based only.  Beginning in fiscal 2013, the Company issued grants of awards that also contain performance-based conditions.  Performance-based conditions are generally tied to future financial and/or operating performance of the Company. The compensation expense with respect to performance-based grants is recognized if the Company believes it is probable that the performance condition will be achieved. The Company reassesses the probability of the achievement of the performance condition at each reporting period, and adjusts the compensation expense for subsequent changes in the estimate or actual outcome.

The Company also has an Employee Stock Purchase Plan (ESPP) that provides employees with the opportunity to purchase common stock at a discount. The ESPP limits employee contributions to 15% of each employee’s compensation (as defined in the plan). The ESPP allows employees to purchase shares at a 15% discount to the fair market value of common stock on the purchase date during the twelve-month participation period, divided into two equal six-month purchase periods, and provides a look-back feature. At the end of each six-month period in April and October, employees participating in the plan purchase the Company's common stock through the ESPP at a 15% discount to the fair market value of the common stock on the first day of the twelve-month participation period or the purchase date, whichever is lower. The plan also provides for an automatic reset feature to start participants on a new twelve-month participation period if the stock price declines during the first six-month purchase period.

Stock Option Awards

The following table summarizes option activity during the nine months ended March 30, 2014 (in thousands, except per share data):

	Number of Shares		Weighted Average Exercise Price
Outstanding at June 30, 2013	8,657			$35.67
Granted	2,969		55.21
Exercised	(2,260	)	36.28
Forfeited or expired	(300	)	40.20
Outstanding at March 30, 2014	9,066			$41.77

Restricted Stock Awards and Units

A summary of nonvested restricted stock awards (RSAs) and restricted stock unit awards (RSUs) outstanding as of March 30, 2014, and changes during the nine months then ended, are as follows (in thousands, except per share data):

	Number of   RSAs/RSUs		Weighted Average  Grant-Date Fair Value
Nonvested at June 30, 2013	647			$33.80
Granted	527		54.76
Vested	(252	)	33.09
Forfeited	(22	)	40.37
Nonvested at March 30, 2014	900			$46.11

Stock-Based Compensation Valuation and Expense

The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term.

The Company currently uses the Black-Scholes option-pricing model to estimate the fair value of the Company's stock option and ESPP awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option

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exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements.

For RSAs and RSUs, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term.

Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.

Total stock-based compensation expense was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Income Statement Classification:
Cost of goods sold		$3,129		$2,334		$8,357		$6,875
Research and development	3,912		3,441		11,453		10,445
Sales, general and administrative	8,970		8,140		26,451		23,625
Total		$16,011		$13,915		$46,261		$40,945

Note 10.   Income Taxes

The variation between the Company's effective income tax rate and the U.S. statutory rate of 35% is due to a percentage of the Company's projected income for the full year being derived from international locations with lower tax rates than the U.S. and the impact of tax credits available in the current year. A change in the mix of pretax income of the Company's various tax jurisdictions can have a material impact on the Company's periodic effective tax rate.

During the second quarter of fiscal 2014, the Company was notified by the Internal Revenue Service that it had been allocated up to $30 million of federal tax credits as part of the American Recovery and Reinvestment Act of 2009 - Phase II (Internal Revenue Code Section 48C). This $30 million allocation is in addition to the $39 million previously allocated to the Company in the third quarter of fiscal 2010. The $30 million allocation was based upon the Company's plan to place into service approximately $100 million of qualified equipment at its U.S. manufacturing locations from fiscal 2013 through fiscal 2017. Property placed into service during fiscal 2013 generated $15 million of the potential $30 million Internal Revenue Code Section 48C credit. The remaining $15 million of Internal Revenue Code Section 48C credit was generated during the first three quarters of fiscal 2014. The tax benefit (net of related basis adjustments) will be amortized into income over the useful life (five years) of the underlying equipment that was placed in service to generate these credits. In fiscal 2014, the Company anticipates it will recognize an income tax benefit of approximately $5.2 million related to this award; of this amount, $0.7 million and $4.4 million have been recorded as tax benefits in the three and nine months ended March 30, 2014, respectively.

U.S. GAAP requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement.

As of June 30, 2013, the Company's liability for unrecognized tax benefits was $2.7 million. The Company recognized an $18.0 million increase to the liability for unrecognized tax benefits due to uncertainty regarding a change in tax depreciation methodology adopted in the first quarter of fiscal 2014. In addition, there was a $2.3 million decrease to the amount of unrecognized tax benefits following the settlement of prior year tax audits and statute expirations. As a result, the total liability for unrecognized tax benefits as of March 30, 2014 was $18.4 million. If any portion of this $18.4 million is recognized, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution and/or closure of audits is highly uncertain, the Company believes it is reasonably possible that approximately $0.2 million of gross unrecognized tax benefits will change in the next 12 months as a result of pending audit settlements or statute requirements.

The Company files U.S. federal, U.S. state and foreign tax returns. For U.S. federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2011. For U.S. state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2010. For foreign purposes, the Company is generally no longer subject to examination

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for tax periods 2003 and prior. Certain carryforward tax attributes generated in prior years remain subject to examination and adjustment. During the third quarter of fiscal 2014, the Company settled its examination with the German Federal Central Tax Office for the fiscal year ended June 29, 2008 through the fiscal year ended June 27, 2010, resulting in an immaterial amount of additional tax expense.

Note 11.    Commitments and Contingencies

Warranties

The following table summarizes the changes in the Company's product warranty liabilities (in thousands):

	Nine Months Ended
	March 30, 2014
Balance at beginning of period		$6,171
Warranties accrued in current period	3,019
Changes in estimates for pre-existing warranties	907
Expenditures	(3,449		)
Balance at end of period		$6,648

Product warranties are estimated and recognized at the time the Company recognizes revenue. The warranty periods range from 90 days to 10 years. The Company accrues warranty liabilities at the time of sale, based on historical and projected incident rates and expected future warranty costs. The warranty reserves, which are primarily related to Lighting Products, are evaluated on a quarterly basis based on various factors including historical warranty claims, assumptions about the frequency of warranty claims, and assumptions about the frequency of product failures derived from quality testing, field monitoring and the Company's reliability estimates. As of March 30, 2014, $1.0 million of the Company's product warranty liabilities were classified as long-term.

Litigation

The Company is currently a party to various legal proceedings, including those described in the Company's Annual Report on Form 10-K for fiscal 2013. The following is provided as an update to the Company's legal proceedings as contained in that report. Unless otherwise indicated, the potential losses for claims against the Company in these matters are not reasonably estimable.

Cooper Lighting Litigation

Ruud Lighting, Inc. filed a complaint for patent infringement against Cooper Lighting, LLC in the U.S. District Court for the Eastern District of Wisconsin on April 2, 2010. The complaint as amended seeks injunctive relief and damages for infringement of two U.S. patents owned by Ruud Lighting: No. 7,686,469, entitled "LED Lighting Fixture"; and No. 7,891,835, entitled “Light-Directed Apparatus with Protected Reflector-Shield and Lighting Fixture Utilizing Same.” On May 23, 2012, Ruud Lighting filed a second complaint for patent infringement against Cooper Lighting, LLC in the U.S. District Court for the Eastern District of Wisconsin. The complaint seeks injunctive relief and damages for infringement of a third U.S. patent owned by Ruud Lighting, No. 7,952,262, entitled “Modular LED Unit Incorporating Interconnected Heat Sinks Configured To Mount and Hold Adjacent LED Modules." In each of these actions Cooper Lighting has filed an answer and counterclaims in which it denies any infringement and seeks a declaratory judgment that the asserted claims of the patents are invalid. On February 19, 2013, the Company, as successor-in-interest to Ruud Lighting, Inc., filed a third complaint for patent infringement against Cooper Lighting in the U.S. District Court for the Eastern District of Wisconsin. The complaint seeks injunctive relief and damages for infringement of two U.S. patents owned by the Company, No. 8,282,239, entitled “Light-Directing Apparatus with Protected Reflector-Shield and Lighting Fixture Utilizing Same” and No. 8,070,306, entitled “LED Lighting Fixture.”

Cooper Lighting, LLC filed a complaint for patent infringement against the Company and Ruud Lighting, Inc. in the U.S. District Court for the Northern District of Georgia on September 7, 2012. The complaint seeks injunctive relief and damages for infringement of one U.S. patent owned by Cooper Lighting, LLC: No. 8,210,722, entitled "LED Device for Wide Beam Generation." The Company has filed an answer in which it denies any infringement and asserts that the patent is invalid as well as other defenses.

Illumination Management Solutions, Inc., a subsidiary of Cooper Lighting, LLC, filed a complaint for patent infringement against Ruud Lighting in the U.S. District Court for the Eastern District of Texas on June 7, 2010. The action was later transferred to the U.S. District Court for the Eastern District of Wisconsin. As amended in January 2012, the complaint alleged that Ruud Lighting is infringing two U.S. patents owned by Illumination Management Solutions, No. 7,674,018 and No. 7,993,036, each entitled "LED Device for Wide Beam Generation." It also alleged that Ruud Lighting and its then president, Alan Ruud, who served on the plaintiff's board of directors in 2006 and 2007 when Ruud Lighting was a shareholder of the plaintiff, conspired to misuse confidential information obtained from the plaintiff to file patent applications and to obtain patents assigned to Ruud Lighting.

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The complaint sought injunctive relief, damages and ownership of the patent applications and patents alleged to have been wrongfully filed and obtained. The court in October 2012 granted partial summary judgment in favor of Ruud Lighting, finding that most of the accused products did not infringe either of the asserted patents. The court in February 2013 entered final judgment in which the court 1) dismissed the claims relating to most of the accused products, finding that they did not infringe either of the asserted patents; 2) dismissed with prejudice and with the consent of the parties the claims with respect to the remaining accused products; 3) severed the conspiracy claim, which was subsequently voluntarily dismissed; and 4) dismissed the remaining claims and counterclaims without prejudice. In March 2013, the plaintiffs filed a notice of appeal from this judgment to the U.S. Court of Appeals for the Federal Circuit.

Ruud Lighting is a defendant in an action commenced by Illumination Management Solutions in the U.S. District Court for the Central District of California on June 8, 2010 and later transferred to the U.S. District Court for the Eastern District of Wisconsin. As amended in January 2013, the complaint names as defendants Ruud Lighting and two of its employees, Alan Ruud and Christopher Ruud, and asserts that the defendants engaged in wrongful acts arising out of the relationship between the plaintiff and Ruud Lighting in 2006 and 2007 when Ruud Lighting was a shareholder of the plaintiff and Alan Ruud served on the plaintiff's board of directors. The complaint alleges that the defendants breached fiduciary duties and otherwise acted improperly by pursuing a plan to compete with the plaintiff and that the defendants misused information obtained from the plaintiff as fiduciaries and subject to a non-disclosure agreement. These allegedly wrongful acts included filing patent applications and obtaining patents assigned to Ruud Lighting on inventions claimed by the plaintiff. The complaint also alleges that Ruud Lighting: 1) marketed its LED products without reference to certain optical technology claimed by the plaintiff, thereby breaching a marketing agreement with the plaintiff and engaging in unfair competition and false advertising; and 2) breached the marketing agreement by failing to give the plaintiff a right of first refusal to integrate the plaintiff's optical technology into Ruud Lighting LED products. The complaint further alleges that the plaintiff is entitled to a correction of the inventors named in one or more patents to add a founder of the plaintiff as an inventor. The complaint seeks to recover damages, all profits and other gains realized by defendants as a result of the acts complained of, attorneys' fees, ownership of any interest in the patent applications and patents alleged to have been wrongfully filed and obtained, and correction of the named inventors on one or more patents.

In September 2013, the Company and the Cooper Lighting and Illumination Management Solutions parties reached a binding term sheet agreement to settle all six cases. This non-cash settlement agreement provided for a royalty-free cross license of all of the patents-in-suit in the six cases for the life of the patents; a royalty-free cross license of each of the Company’s and Cooper Lighting’s LED luminaire patent portfolios for seven years (with carve-outs of the Company’s LED chip, LED component and LED replacement lamp patents from the cross license, as well as carve-outs for certain LED luminaires of Cooper Lighting that are not for general illumination); and a supply agreement, with no minimum purchase commitment and with a seven year term, whereby the Company may sell Cooper Lighting LED components and modules. The Company recorded a $17.4 million non-cash litigation settlement charge and related obligation in the first quarter of fiscal 2014, representing the current estimated fair value of the patent licenses to be provided to the Cooper Lighting and Illumination Management Solutions parties in excess of the fair value patent license rights to be received by the Company under the terms of the cross license agreement. This $17.4 million obligation will be amortized into income over the remainder of the seven year license period. The parties executed the definitive agreements to effect this binding agreement in February 2014, and the six cases have been dismissed with prejudice by the parties.

In conjunction with the September 2013 settlement with the Cooper Lighting and Illumination Management Solutions parties, the Company also recorded a $17.4 million offset to the non-cash litigation charge to reflect the amount receivable by the Company from the Stock Purchase Agreement escrow funds, including cash and common stock consideration, pursuant to a letter agreement approved by the Audit Committee, which the Company entered into during September 2013 with Christopher Ruud, acting as the Seller Representative for the former Ruud Lighting shareholders. The escrow consideration was provided to the Company during the third quarter of fiscal 2014 upon the execution of the final settlement agreement with the Cooper Lighting and Illumination Management Solutions parties.

Lighting Science Group Litigation

Lighting Science Group Corporation (“LSG”) filed a complaint for patent infringement against the Company in the U.S. District Court for the Middle District of Florida on April 10, 2013.  The complaint sought injunctive relief and damages for alleged infringement of U.S. patent No. 8.201,968, entitled “Low Profile Light." In March 2014, the Company and LSG executed a settlement agreement, which settlement permitted LSG to return certain LED component parts that LSG had purchased from the Company for partial credit, and provided the Company with a worldwide, non-exclusive, non-transferable, fully paid-up license under the patent-in-suit, and any and all parents, continuations, continuations-in-part, divisions, substitutions, extensions, reissues, and reexaminations thereof, and any and all foreign counterparts of the patent-in-suit. This settlement agreement ended the litigation between the parties.

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Note 12. Reportable Segments

The Company's operating and reportable segments are:

• LED Products

• Lighting Products

• Power and RF Products

Reportable Segments Description

The Company's LED Products segment includes LED chips, LED components and SiC materials. The Company's Lighting Products segment primarily consists of LED lighting systems. The Company's Power and RF Products segment includes power devices and RF devices.

Financial Results by Reportable Segment

The table below reflects the results of the Company's reportable segments as reviewed by the Chief Operating Decision Maker (CODM) for the three and nine months ended March 30, 2014 and March 31, 2013. The Company's CODM is the Chief Executive Officer. The Company uses substantially the same accounting policies to derive the segment results reported below as those used in the Company's consolidated financial statements.

The Company's CODM does not review inter-segment revenue when evaluating segment performance and allocating resources to each segment. Thus, inter-segment revenue is not included in the segment revenues presented in the table below. As such, total segment revenue in the table below is equal to the Company's consolidated revenue.

The Company's CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the consolidated statements of income must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated income before income taxes.

In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment's cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated.

Unallocated costs in the table below consist primarily of manufacturing employees' stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans, matching contributions under the Company's 401(k) plan and acquisition related costs. These costs are not allocated to the reportable segments’ gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources.

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Revenues, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):

	Three Months Ended						Nine Months Ended
	March 30, 2014			March 31, 2013			March 30, 2014			March 31, 2013
Revenues:
LED Products		$201,119			$195,561			$634,164			$584,070
Lighting Products	176,691			130,659			498,265			361,446
Power and RF Products	27,449			22,714			78,922			65,457
Total revenue		$405,259			$348,934			$1,211,351			$1,010,973
Gross Profit and Gross Margin:
LED Products gross profit		$91,634			$85,728			$290,931			$245,381
LED Products gross margin	45.6		%	43.8		%	45.9		%	42.0		%
Lighting Products gross profit	48,487			39,966			136,731			115,449
Lighting Products gross margin	27.4		%	30.6		%	27.4		%	31.9		%
Power and RF Products gross profit	15,675			12,033			44,452			35,253
Power and RF Products gross margin	57.1		%	53.0		%	56.3		%	53.9		%
Total segment gross profit	155,796			137,727			472,114			396,083
Unallocated costs	(5,802		)	(4,717		)	(15,585		)	(13,548		)
Consolidated gross profit		$149,994			$133,010			$456,529			$382,535
Consolidated gross margin	37.0		%	38.1		%	37.7		%	37.8		%

Assets by Reportable Segment

Inventories are the only assets reviewed by the Company's CODM when evaluating segment performance and allocating resources to the segments. The following table sets forth the Company's inventories by reportable segment at March 30, 2014 and June 30, 2013.

Unallocated inventories in the table below consist primarily of manufacturing employees' stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under the Company's 401(k) plan. These costs are not allocated to the reportable segments’ inventories because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources.

The Company does not allocate assets other than inventories to the reportable segments because the Company's CODM does not review them when assessing segment performance and allocating resources. The CODM reviews all of the Company's assets other than inventories on a consolidated basis.

Inventories for each of the Company's segments are as follows (in thousands):

	March 30, 2014		June 30, 2013
LED Products	$	107,392	$	99,835
Lighting Products	133,067		87,546
Power and RF Products	6,997		6,593
Total segment inventories	247,456		193,974
Unallocated inventories	3,778		3,027
Consolidated inventories	$	251,234	$	197,001

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information set forth in this Quarterly Report on Form 10-Q contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All information contained in this report relative to future markets for our products and trends in and anticipated levels of revenue, gross margins and expenses, as well as other statements containing words such as “believe,” “project,” “may,” “will,” “anticipate,” “target,” “plan,” “estimate,” “expect” and “intend” and other similar expressions constitute forward-looking statements. These forward-looking statements are subject to business, economic and other risks and uncertainties, both known and unknown, and actual results may differ materially from those contained in the forward-looking statements. Any forward-looking statements we make are as of the date made, and except as required under the U.S. federal securities laws and the rules and regulations of the Securities and Exchange Commission (the SEC), we have no duty to update them if our views later change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report. Examples of risks and uncertainties that could cause actual results to differ materially from historical performance and any forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part II, Item 1A of this Quarterly Report.

The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements, including a brief discussion of our business and products, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended June 30, 2013. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.

Overview

Cree, Inc. (Cree, we, our, or us) is a leading innovator of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. Our products are targeted for applications such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems.

We develop and manufacture semiconductor materials and devices primarily based on silicon carbide (SiC), gallium nitride (GaN) and related compounds. In many cases, the properties of SiC and GaN offer technical advantages over traditional silicon, gallium arsenide (GaAs) and other materials used for electronic applications.

Our LED products consist of LED components, LED chips and SiC materials. Our success in selling LED products depends upon our ability to offer innovative products and to enable our customers to develop and market LED-based products that successfully compete against other LED-based products and drive LED adoption against traditional lighting products.

Our lighting products primarily consist of LED lighting systems. We design, manufacture and sell lighting fixtures and lamps for the commercial, industrial and consumer markets.

In addition, we develop, manufacture and sell power and RF devices. Our power products are made from SiC and provide increased efficiency, faster switching speeds and reduced system size and weight over comparable silicon-based power devices. Our RF devices are made from GaN and provide improved efficiency, bandwidth and frequency of operation as compared to silicon or GaAs.

The majority of our products are manufactured at our production facilities located in North Carolina, Wisconsin and China. We also use contract manufacturers for certain aspects of product fabrication, assembly and packaging. We operate research and development facilities in North Carolina, California, Wisconsin, India and China (including Hong Kong).

Cree, Inc. is a North Carolina corporation established in 1987, and our headquarters are in Durham, North Carolina.

Reportable Segments

As of March 30, 2014, we have three reportable segments:

• LED Products

• Lighting Products

• Power and RF Products

For further information about our reportable segments, please refer to Note 12 "Reportable Segments" in our consolidated financial statements included in Item 1 of this Quarterly Report.

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Industry Dynamics and Trends

There are a number of industry factors that affect our business which include, among others:

• Overall Demand for Products and Applications using LEDs. Our potential for growth depends significantly on the adoption of LEDs within the general lighting market and our ability to affect this rate of adoption. Although the market for LED lighting has grown in recent years, adoption of LEDs for general lighting is relatively low and faces significant challenges before widespread adoption. Demand also fluctuates based on various market cycles, a continuously evolving LED industry supply chain, and demand dynamics in the market. These uncertainties make demand difficult to forecast for us and our customers.

• Intense and Constantly Evolving Competitive Environment. Competition in the LED and lighting industry is intense. Many companies have made significant investments in LED development and production equipment. Traditional lighting companies and new entrants are investing in LED-based lighting products as LED adoption has gained momentum. Traditional lighting companies have taken steps to try and limit access to their sales channels, including lighting agents and distributors. 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 to LED-based solutions. To remain competitive, market participants must continuously increase product performance and reduce costs. To address these competitive pressures, we have invested in R&D activities to support new product development to deliver higher levels of performance and lower costs to differentiate our products in the market.

• Technological Innovation and Advancement. Innovations and advancements in LED, power and RF technologies continue to expand the potential commercial application for our products, particularly in the general illumination, power electronics and wireless markets. 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.

• Regulatory Actions Concerning Energy Efficiency. Many countries have already instituted or have announced plans to institute government regulations and programs designed to encourage or mandate increased energy efficiency, even in some cases banning forms of incandescent lighting, which are advancing the adoption of more energy efficient lighting solutions such as LEDs. Government agencies are also involved in setting standards for LED lighting, which can affect market acceptance and the availability of rebates from government agencies or third parties such as utilities. While this trend is generally positive, these regulations are affected by changing political priorities and evolving technical standards which can modify or limit the effectiveness of these new regulations.

• 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 commonly occurs.

Financial Results

The following is a summary of our financial results for the nine months ended March 30, 2014:

• Revenues increased to $1.2 billion for the nine months ended March 30, 2014 from $1.0 billion for the nine months ended March 31, 2013.

• For the nine months ended March 30, 2014, gross margins remained consistent at 37.7% compared to 37.8% for the nine months ended March 31, 2013. For the nine months ended March 30, 2014, gross profit increased to $456.5 million from $382.5 million for the nine months ended March 31, 2013.

• Operating income increased to $102.6 million for the nine months ended March 30, 2014 from $65.6 million for the nine months ended March 31, 2013. Net income per diluted share increased to $0.77 for the nine months ended March 30, 2014 from $0.50 for the nine months ended March 31, 2013.

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• Combined cash, cash equivalents and short-term investments increased to $1.2 billion at March 30, 2014 compared to $1.0 billion at June 30, 2013. Cash provided by operating activities was $228.2 million for the nine months ended March 30, 2014, compared to $224.1 million for the nine months ended March 31, 2013.

• Inventories increased to $251.2 million at March 30, 2014 compared to $197.0 million at June 30, 2013.

Business Outlook

We project that the markets for our products will remain highly competitive during fiscal 2014. We anticipate focusing on the following key areas, among others, in response to this competitive environment:

• Lead with innovation and drive to cost parity. We continue to work on developing new LEDs, LED lighting systems, and Power and RF devices to deliver improved value that approaches cost parity with existing technology and solutions. We believe that as our technology approaches cost parity, the market for these products will expand significantly.

• Build the Cree brand. We are working to build the Cree brand in both the commercial and consumer lighting segments by expanding our product offerings and continuing to invest in marketing the value of the Cree LED bulb and LED lighting directly to the end user. The level of investment will vary from quarter to quarter to optimize new product introductions, utility rebates, channel opportunities and seasonal trends.

• Focus on select market segments to drive LED adoption. In addition to our broad sales strategies, we are focused on a number of market segments where we can upgrade existing lighting and drive LED adoption with a combination of new product offerings, short payback, expanded services and innovative channel approaches.

• Translate product innovation into revenue and profit growth. We target revenue growth from new products and increased LED adoption and profit growth from the combination of higher sales, lower cost products and operating expense leverage.

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Results of Operations

The following table sets forth certain consolidated statement of income data for the periods indicated (in thousands, except per share amounts and percentages):

	Three Months Ended								Nine Months Ended
	March 30, 2014				March 31, 2013				March 30, 2014				March 31, 2013
	Dollars		% of Revenue		Dollars		% of Revenue		Dollars		% of Revenue		Dollars		% of Revenue
Revenue, net		$405,259	100	%		$348,934	100	%		$1,211,351	100	%		$1,010,973	100	%
Cost of revenue, net	255,265		63	%	215,924		62	%	754,822		62	%	628,438		62	%
Gross profit	149,994		37	%	133,010		38	%	456,529		38	%	382,535		38	%
Research and development	46,626		12	%	39,036		11	%	132,805		11	%	116,524		12	%
Sales, general and administrative	65,368		16	%	62,140		18	%	197,589		16	%	174,885		17	%
Amortization of acquisition-related intangibles	7,257		2	%	7,719		2	%	21,800		2	%	23,108		2	%
Loss on disposal or impairment of long-lived assets	364		—	%	863		—	%	1,781		—	%	2,385		—	%
Operating income	30,379		7	%	23,252		7	%	102,554		8	%	65,633		6	%
Non-operating income, net	3,152		1	%	2,512		1	%	9,373		1	%	8,378		1	%
Income before income taxes	33,531		8	%	25,764		7	%	111,927		9	%	74,011		7	%
Income tax expense	5,367		1	%	3,607		1	%	17,585		1	%	15,328		2	%
Net income		$28,164	7	%		$22,157	6	%		$94,342	8	%		$58,683	6	%
Basic earnings per share	$0.23					$0.19			$0.78					$0.51
Diluted earnings per share	$0.23					$0.19			$0.77					$0.50

Revenues

Revenues for the three and nine months ended March 30, 2014 and March 31, 2013 were comprised of the following (in thousands, except percentages):

	Three Months Ended										Nine Months Ended
	March 30, 2014			March 31, 2013			Change				March 30, 2014			March 31, 2013			Change
LED Products		$201,119			$195,561			$5,558	3	%		$634,164			$584,070			$50,094	9	%
Percent of revenue	49		%	56		%					52		%	58		%
Lighting Products	176,691			130,659			46,032		35	%	498,265			361,446			136,819		38	%
Percent of revenue	44		%	37		%					41		%	36		%
Power and RF Products	27,449			22,714			4,735		21	%	78,922			65,457			13,465		21	%
Percent of revenue	7		%	7		%					7		%	6		%
Total revenue		$405,259			$348,934			$56,325	16	%		$1,211,351			$1,010,973			$200,378	20	%

Our consolidated revenue increased 16% to $405.3 million for the three months ended March 30, 2014 from $348.9 million for the three months ended March 31, 2013. For the nine months ended March 30, 2014, our consolidated revenue increased 20% to $1.2 billion from $1.0 billion for the nine months ended March 31, 2013. The year-over-year increase was due to higher sales across all three of our business segments, but driven primarily by strong sales in the Lighting Products segment.

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LED Products Segment Revenue

LED Products revenue represents the largest portion of our revenue with 49% and 56% of our total revenues for the three months ended March 30, 2014 and March 31, 2013, respectively.    

LED Products revenue increased 3% to $201.1 million for the three months ended March 30, 2014 from $195.6 million for the three months ended March 31, 2013, and 9% to $634.2 million for the nine months ended March 30, 2014 from $584.1 million for the nine months ended March 31, 2013. The increase in revenue was the result of an overall increase in the number of units sold, primarily from our newer products, partially offset by a decline in selling prices. The average selling prices for our LED products decreased for the three and nine months ended March 30, 2014 as compared to the three and nine months ended March 31, 2013 due primarily to market downward pricing pressure and sales of new lower cost products.

Lighting Products Segment Revenue

Lighting Products revenue represents 44% and 37% of our total revenues for the three months ended March 30, 2014 and March 31, 2013, respectively.

Lighting Products revenue increased 35% to $176.7 million for the three months ended March 30, 2014 from $130.7 million for the three months ended March 31, 2013, and 38% to $498.3 million for the nine months ended March 30, 2014 from $361.4 million for the nine months ended March 31, 2013. The increase in revenue was the result of an overall increase in the number of units sold. The increased volume was partially offset by a reduction in selling prices primarily due to sales of new lower cost products.

Power and RF Products Segment Revenue

Power and RF Products revenue represents 7% of our total revenues for both the three months ended March 30, 2014 and March 31, 2013.

Power and RF Products revenue increased 21% to $27.4 million for the three months ended March 30, 2014 from $22.7 million for the three months ended March 31, 2013, and 21% to $78.9 million for the nine months ended March 30, 2014 from $65.5 million for the nine months ended March 31, 2013. The increase in revenue was primarily the result of higher sales of RF products. The increased volume was partially offset by a reduction in selling prices primarily due to sales of new lower cost products.

Gross Profit and Gross Margin

Gross profit and gross margin for the three and nine months ended March 30, 2014 and March 31, 2013 were comprised of the following (in thousands, except percentages):

	Three Months Ended											Nine Months Ended
	March 30, 2014			March 31, 2013			Change					March 30, 2014			March 31, 2013			Change
LED Products gross profit		$91,634			$85,728			$5,906		7	%		$290,931			$245,381			$45,550		19	%
LED Products gross margin	45.6		%	43.8		%						45.9		%	42.0		%
Lighting Products gross profit	48,487			39,966			8,521			21	%	136,731			115,449			21,282			18	%
Lighting Products gross margin	27.4		%	30.6		%						27.4		%	31.9		%
Power and RF Products gross profit	15,675			12,033			3,642			30	%	44,452			35,253			9,199			26	%
Power and RF Products gross margin	57.1		%	53.0		%						56.3		%	53.9		%
Unallocated costs	(5,802		)	(4,717		)	(1,085		)	23	%	(15,585		)	(13,548		)	(2,037		)	15	%
Consolidated gross profit		$149,994			$133,010			$16,984		13	%		$456,529			$382,535			$73,994		19	%
Consolidated gross margin	37.0		%	38.1		%						37.7		%	37.8		%

Our consolidated gross profit increased 13% to $150.0 million for the three months ended March 30, 2014 from $133.0 million for the three months ended March 31, 2013. Our consolidated gross margin decreased to 37.0% for the three months ended March 30, 2014 from 38.1% for the three months ended March 31, 2013. For the nine months ended March 30, 2014, our consolidated gross profit increased 19% to $456.5 million from $382.5 million for the nine months ended March 31, 2013. For the nine months ended March 30, 2014, our consolidated gross margin decreased to 37.7% from 37.8% for the nine months ended March 31, 2013.

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LED Products Segment Gross Profit and Gross Margin

LED Products gross profit increased 7% to $91.6 million for the three months ended March 30, 2014 from $85.7 million for the three months ended March 31, 2013, and increased 19% to $290.9 million for the nine months ended March 30, 2014 from $245.4 million for the nine months ended March 31, 2013. LED Products gross margin increased to 45.6% for the three months ended March 30, 2014 from 43.8% for the three months ended March 31, 2013, and increased to 45.9% for the nine months ended March 30, 2014 from 42.0% for the nine months ended March 31, 2013. LED Products gross profit and gross margin increased due to higher revenue, factory cost reductions, the introduction of new lower cost products and higher factory utilization. These benefits more than offset the decline in the average selling prices for the three and nine months ended March 30, 2014 as compared to the three and nine months ended March 31, 2013.

Lighting Products Segment Gross Profit and Gross Margin

Lighting Products gross profit increased 21% to $48.5 million for the three months ended March 30, 2014 from $40.0 million for the three months ended March 31, 2013, and increased 18% to $136.7 million for the nine months ended March 30, 2014 from $115.4 million for the nine months ended March 31, 2013. Lighting Products gross margin decreased to 27.4% for the three months ended March 30, 2014 from 30.6% for the three months ended March 31, 2013, and decreased to 27.4% for the nine months ended March 30, 2014 from 31.9% for the nine months ended March 31, 2013. Lighting Products gross profit increased for both the three and nine months ended March 30, 2014 as compared to the three and nine months ended March 31, 2013 due to growth in LED lighting products sales. Lighting Products gross margin decreased for both the three and nine months ended March 30, 2014 as compared to the three and nine months ended March 31, 2013 due to changes in product mix driven primarily by higher sales of consumer lighting products, which have lower gross margins.

Power and RF Products Segment Gross Profit and Gross Margin

Power and RF Products gross profit increased 30% to $15.7 million for the three months ended March 30, 2014 from $12.0 million for the three months ended March 31, 2013, and increased 26% to $44.5 million for the nine months ended March 30, 2014 from $35.3 million for the nine months ended March 31, 2013. Power and RF Products gross margin increased to 57.1% for the three months ended March 30, 2014 from 53.0% for the three months ended March 31, 2013, and increased to 56.3% for the nine months ended March 30, 2014 from 53.9% for the nine months ended March 31, 2013. Power and RF Products gross profit and gross margin increased due primarily to higher revenue, factory cost reductions, increased factory utilization and introduction of new lower cost products. These benefits more than offset the decline in the average selling prices for the three and nine months ended March 30, 2014 as compared to the three and nine months ended March 31, 2013.

Unallocated Costs

Unallocated costs were $5.8 million and $4.7 million for the three months ended March 30, 2014 and March 31, 2013, respectively. For the nine months ended March 30, 2014 and March 31, 2013, unallocated costs were $15.6 million and $13.5 million, respectively. These costs consist primarily of manufacturing employees' stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under our 401(k) plan. These costs are not allocated to the reportable segments' gross profit because our CODM does not review them regularly when evaluating segment performance and allocating resources. The increase of $1.1 million for the three months ended March 30, 2014 and $2.0 million for the nine months ended March 30, 2014 is primarily attributable to higher incentive and stock-based compensation incurred as a result of improved business performance in fiscal 2014 as compared to fiscal 2013.

Research and Development

Research and development expenses include costs associated with the development of new products, enhancements of existing products and general technology research. These costs consist primarily of employee salaries and related compensation costs, occupancy costs, consulting costs and the cost of development equipment and supplies.

The following sets forth our research and development expenses in dollars and as a percentage of revenues (in thousands, except percentages):

	Three Months Ended										Nine Months Ended
	March 30, 2014			March 31, 2013			Change				March 30, 2014			March 31, 2013			Change
Research and development		$46,626			$39,036			$7,590	19	%		$132,805			$116,524			$16,281	14	%
Percent of revenues	12		%	11		%					11		%	12		%

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Research and development expenses for the three months ended March 30, 2014 increased 19% to $46.6 million from $39.0 million for the three months ended March 31, 2013. For the nine months ended March 30, 2014, research and development expenses increased 14% to $132.8 million from $116.5 million for the nine months ended March 31, 2013. These increases were primarily due to increased spending on research and development activities focused on new LED lighting products. Our research and development expenses vary significantly from quarter to quarter based on a number of factors, including the timing of new product introductions and the number and nature of our ongoing research and development activities. We anticipate that in general our research and development expenses will continue to increase over time to support future growth.

Sales, General and Administrative

Sales, general and administrative expenses were comprised primarily of costs associated with our sales and marketing personnel and our executive and administrative personnel (for example, finance, human resources, information technology and legal) and consist of 1) salaries and related compensation costs, 2) consulting and other professional services (such as litigation and other outside legal counsel fees, audit and other compliance costs), 3) marketing and advertising expenses, 4) facilities and insurance costs and 5) travel and other costs. The following table sets forth our sales, general and administrative expenses in dollars and as a percentage of revenues (in thousands, except percentages):

	Three Months Ended										Nine Months Ended
	March 30, 2014			March 31, 2013			Change				March 30, 2014			March 31, 2013			Change
Sales, general and administrative		$65,368			$62,140			$3,228	5	%		$197,589			$174,885			$22,704	13	%
Percent of revenues	16		%	18		%					16		%	17		%

Sales, general and administrative expenses for the three months ended March 30, 2014 increased 5% to $65.4 million from $62.1 million for the three months ended March 31, 2013. For the nine months ended March 30, 2014, sales, general and administrative expenses increased 13% to $197.6 million from $174.9 million for the nine months ended March 31, 2013. These increases were primarily due to an increase in spending on sales and marketing for lighting products, including commissions, trade shows and advertising, as we continue to expand our direct sales resources and channels and invest in building and promoting the Cree brand.

Amortization of Acquisition-Related Intangibles

As a result of our acquisitions, we have recognized various intangible assets, including customer relationships and developed technologies. During fiscal 2012, we acquired Ruud Lighting, resulting in $206.0 million of amortizable intangible assets, principally composed of developed technology, customer relationships and trade names. In fiscal 2008, we acquired LED Lighting Fixtures, Inc. (LLF), resulting in $41.2 million of amortizable intangible assets. These intangible assets are principally composed of developed technologies that specifically relate to technologies underlying the development of LED lighting products for the general illumination market. During fiscal 2007, we acquired INTRINSIC Semiconductor Corporation and COTCO Luminant Device Limited (now Cree Hong Kong Limited) (COTCO), resulting in $63.7 million of amortizable intangible assets principally composed of customer relationships and developed technology.

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Amortization of intangible assets related to our acquisitions is as follows (in thousands, except percentages):

	Three Months Ended									Nine Months Ended
	March 30, 2014		March 31, 2013		Change					March 30, 2014		March 31, 2013		Change
Ruud Lighting		$5,746		$5,743		$3		—	%		$17,238		$17,180		$58		—	%
COTCO	753		1,040		(287		)	(28	)%	2,259		3,121		(862		)	(28	)%
LLF	750		750		—			—	%	2,249		2,249		—			—	%
INTRINSIC	8		186		(178		)	(96	)%	54		558		(504		)	(90	)%
Total		$7,257		$7,719		($462	)	(6	)%		$21,800		$23,108		($1,308	)	(6	)%

Loss on Disposal or Impairment of Long-Lived Assets

The following table sets forth our loss on disposal or impairment of long-lived assets (in thousands, except percentages):

	Three Months Ended									Nine Months Ended
	March 30, 2014		March 31, 2013		Change					March 30, 2014		March 31, 2013		Change
Loss on disposal or impairment of long-lived assets		$364		$863		($499	)	(58	)%		$1,781		$2,385		($604	)	(25	)%

We operate a capital intensive business. As such, we dispose of a certain level of our equipment in the normal course of business as our production process changes due to production improvement initiatives or product mix changes. Due to the risk of technological obsolescence or changes in our production process, we regularly review our equipment and capitalized patent costs for possible impairment. We recognized a net loss of $0.4 million on the disposal of long-lived assets for the three months ended March 30, 2014 compared to a net loss of $0.9 million for the three months ended March 31, 2013. For the nine months ended March 30, 2014, we recognized a net loss of $1.8 million compared to $2.4 million for the nine months ended March 31, 2013.

Non-Operating Income, Net

The following table sets forth our non-operating income, net (in thousands, except percentages):

	Three Months Ended										Nine Months Ended
	March 30, 2014			March 31, 2013		Change					March 30, 2014		March 31, 2013		Change
Foreign currency (loss) gain, net		($368	)		$296		($664	)	(224	)%		$109		$424		($315	)	(74	)%
Gain on sale of investments, net	15			48		(33		)	(69	)%	25		84		(59		)	(70	)%
Interest income, net	3,415			2,018		1,397			69	%	8,562		5,756		2,806			49	%
Other, net	90			150		(60		)	(40	)%	677		2,114		(1,437		)	(68	)%
Total non-operating income, net		$3,152			$2,512		$640		25	%		$9,373		$8,378		$995		12	%

We have no debt or active lines of credit and therefore we are in a net interest income position. Our investments consist of municipal bonds, corporate bonds, U.S. agency securities, non-U.S. certificates of deposit and non-U.S. government securities. The primary objective of our investment policy is preservation of principal.

Foreign currency (loss) gain, net. Foreign currency (loss) gain, net consists primarily of remeasurement adjustments resulting from consolidating our international subsidiaries. The changes in foreign currency (loss) gain, net are primarily due to fluctuations in the exchange rate between the Chinese Yuan and the United States Dollar.

Gain on sale of investments, net.Gain on sale of investments, net was $15 thousand for the three months ended March 30, 2014 compared to $48 thousand for the three months ended March 31, 2013. For the nine months ended March 30, 2014, gain on sale of investments, net was $25 thousand compared to $84 thousand for the nine months ended March 31, 2013.

Interest income, net.Interest income, net was $3.4 million for the three months ended March 30, 2014 compared to $2.0 million for the three months ended March 31, 2013. For the nine months ended March 30, 2014, interest income, net was $8.6 million compared to $5.8 million for the nine months ended March 31, 2013. The increase in interest income for the three and nine months ended March 30, 2014 was primarily due to earning higher investment yields and higher invested balances as compared to the three and nine months ended March 31, 2013.

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Other, net.Other, net was $0.1 million for the three months ended March 30, 2014 compared to $0.2 million for the three months ended March 31, 2013. For the nine months ended March 30, 2014, other, net was $0.7 million compared to $2.1 million for the nine months ended March 31, 2013. The decrease for the nine months ended March 30, 2014 is due primarily to a one-time payment received in connection with the SemiLEDs patent litigation settlement which occurred in the first quarter of fiscal 2013.

Income Tax Expense

The following table sets forth our income tax expense in dollars and our effective tax rate (in thousands, except percentages):

	Three Months Ended										Nine Months Ended
	March 30, 2014			March 31, 2013			Change				March 30, 2014			March 31, 2013			Change
Income tax expense		$5,367			$3,607			$1,760	49	%		$17,585			$15,328			$2,257	15	%
Effective tax rate	16.0		%	14.0		%					15.7		%	20.7		%

The variation between our effective income tax rate and the U.S. statutory rate of 35 percent is due to a percentage of our projected income for the full year being derived from international locations with lower tax rates than the U.S. and the impact of tax credits available in the current year. A change in the mix of pretax income of our various tax jurisdictions can have a material impact on our periodic effective tax rate.

We recognized income tax expense of $5.4 million for an effective tax rate of 16.0% for the three months ended March 30, 2014 as compared to income tax expense of $3.6 million for an effective tax rate of 14.0% for the three months ended March 31, 2013. This increase in our effective tax rate was primarily due to the third quarter of fiscal 2013 tax benefit from the retroactive reinstatement and extension of the research and development credit being larger than the third quarter of fiscal 2014 tax benefits related to a statute expiration. The retroactive reinstatement and extension of the research and development credit provided a catch-up tax benefit for six quarters (fiscal 2012 and the first half of fiscal 2013) during the third quarter of fiscal 2013. The research and development credit expired in December 2013.

For the nine months ended March 30, 2014, we recognized income tax expense of $17.6 million for an effective tax rate of 15.7% compared to $15.3 million for an effective tax rate of 20.7% for the nine months ended March 31, 2013. This decrease in our effective tax rate was primarily due to an increased percentage of our income being earned in lower tax jurisdictions and the tax benefit related to the receipt of U.S. federal tax credits awarded on November 15, 2013 as part of Phase II of the American Recovery and Reinvestment Act of 2009 (Internal Revenue Code Section 48C).

Liquidity and Capital Resources

Overview

We require cash to fund our operating expenses and working capital requirements, including outlays for research and development, capital expenditures, strategic acquisitions and investments. Our principal sources of liquidity are cash and cash equivalents, marketable investments and cash generated from operations. Our ability to generate cash from operations has been one of our fundamental strengths and has provided us with substantial flexibility in meeting our operating, financing and investing needs. We have no debt or active lines of credit and have minimal lease commitments.

Based on past performance and current expectations, we believe our cash and cash equivalents, investments, cash generated from operations and our ability to access capital markets will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases, contractual obligations, commitments and other liquidity requirements associated with our operations through at least the next 12 months.

From time to time, we evaluate strategic opportunities, including potential acquisitions, divestitures or investments in complementary businesses and we anticipate continuing to make such evaluations. We may also access capital markets through the issuance of debt or additional shares of common stock in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities.

We may use a portion of our available cash and cash equivalents, or funds underlying our marketable securities, to repurchase shares of our common stock pursuant to repurchase programs authorized by our Board of Directors. With our strong working capital position, we believe that we have the ability to continue to invest in further development of our products and, when necessary

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or appropriate, make selective acquisitions or other strategic investments to strengthen our product portfolio, secure key intellectual properties or expand our production capacity.

Liquidity

Our liquidity and capital resources depend on our cash flows from operations and our working capital. The significant components of our working capital are liquid assets such as cash and cash equivalents, short-term investments, accounts receivable and inventories, reduced by trade accounts payable, accrued salaries and wages, and other accrued expenses. Our working capital increased to $1.5 billion as of March 30, 2014 from $1.3 billion as of June 30, 2013, primarily due to $228.2 million cash provided by operating activities and $89.5 million cash provided by the net issuances of common stock from employee option exercises. These cash inflows were partially offset by payments for patent and licensing rights and purchases of property and equipment of $134.4 million.

The following table presents the components of our cash conversion cycle for the three months ended March 30, 2014 and June 30, 2013:

	March 30, 2014	June 30, 2013	Change
Days of sales outstanding(a)	49	46	3		7	%
Days of supply in inventory(b)	89	76	13		17	%
Days in accounts payable(c)	(56)	(47)	(9	)	19	%
Cash conversion cycle	82	75	7		9	%

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 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 sold 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.

The increase in the cash conversion cycle was primarily driven by an increase in days of inventory partially offset by an increase in days in accounts payable.

As of March 30, 2014, we had unrealized losses on our investments of $0.9 million. All of our investments had investment grade ratings, and any such investments that were in an unrealized loss position at March 30, 2014 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes. As we intend and believe that we have the ability to hold such investments for a period of time that will be sufficient for anticipated recovery in market value, we currently expect to receive the full principal or recover our cost basis in these securities. The declines in value of the securities in our portfolio are considered to be temporary in nature and, accordingly, we do not believe these securities are impaired as of March 30, 2014.

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Cash Flows

In summary, our cash flows were as follows (in thousands, except percentages):

	Nine Months Ended
	March 30, 2014			March 31, 2013			Change
Net cash provided by operating activities		$228,170			$224,070			$4,100	2	%
Net cash used in investing activities	(257,261		)	(270,954		)	13,693		(5	)%
Net cash provided by financing activities	107,765			46,350			61,415		133	%
Effects of foreign exchange changes on cash and cash equivalents	95			87			8		9	%
Net increase (decrease) in cash and cash equivalents		$78,769			($447	)		$79,216

The following is a discussion of our primary sources and uses of cash in our operating, investing and financing activities.

Cash Flows from Operating Activities

Net cash provided by operating activities was $228.2 million for the nine months ended March 30, 2014 compared to $224.1 million for the nine months ended March 31, 2013. This increase was primarily due to an increase in net income partially offset by changes in our working capital.

Cash Flows from Investing Activities

Our investing activities primarily relate to transactions within our investments, purchases of property and equipment and payments for patent and licensing rights. Net cash used in investing activities was $257.3 million for the nine months ended March 30, 2014 compared to $271.0 million for the nine months ended March 31, 2013. For the nine months ended March 30, 2014, our purchases of property and equipment were $119.6 million as compared to $55.4 million for the nine months ended March 31, 2013. Our capital spending increased as we continued to make investments in capacity to support our future growth. This increase was more than offset by lower net purchases of investments for the nine months ended March 30, 2014 compared to the nine months ended March 31, 2013.

We continue to actively manage our capital spending. For fiscal 2014, we now target approximately $175.0 million of capital investment to support our strategic priorities.

Cash Flows from Financing Activities

Net cash provided by financing activities was $107.8 million for the nine months ended March 30, 2014 and $46.4 million for the nine months ended March 31, 2013. For the nine months ended March 30, 2014 and March 31, 2013, our financing activities primarily consisted of proceeds of $107.9 million and $47.0 million, respectively, from net issuances of common stock pursuant to the exercise of employee stock options, including the excess tax benefit on those exercises.

Off-Balance Sheet Arrangements

We do not use off-balance sheet arrangements with unconsolidated entities or related parties, nor do we use any other forms of off-balance sheet arrangements. Accordingly, our liquidity and capital resources are not subject to off-balance sheet risks from unconsolidated entities. As of March 30, 2014, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

We have entered into operating leases primarily for certain of our U.S. and international facilities in the normal course of business. Please refer to Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2013, in the section entitled “Contractual Obligations” for the future minimum lease payments due under our operating leases as of June 30, 2013. There have been no significant changes to the contractual obligations discussed therein.

Critical Accounting Policies and Estimates

For information about our critical accounting policies and estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

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New Accounting Standards

See Note 1, “Basis of Presentation and Changes in Significant Accounting Policies,” to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for a description of new accounting standards, including the effects, if any, on our consolidated financial statements.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about our market risks, see “Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2013. There have been

no material changes to the amounts presented therein.

Item 4.     Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures are effective in that they provide reasonable assurances that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We routinely review our internal control over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal control over financial reporting on an ongoing basis and will take action as appropriate. There have been no changes to our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the third quarter of fiscal 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.     Legal Proceedings

The information required by this item is set forth under Note 11, “Commitments and Contingencies,” to our unaudited financial statements in Part I, Item 1 of this Quarterly Report and is incorporated herein by reference.

Item 1A. Risk Factors

Described below are various risks and uncertainties that may affect our business. The descriptions below include any material changes to and supersede the description of the risk factors affecting our business previously disclosed in “Part I, Item IA. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2013 and any subsequent periodic reports. If any of the risks described below actually occurs, our business, financial condition or results of operations could be materially and adversely affected.

Our operating results are substantially dependent on the development and acceptance of new products.

Our future success may depend on our ability to develop new, higher performing and lower cost solutions for existing and new markets and for customers to accept those solutions. We must introduce new products in a timely and cost-effective manner, and we must secure production orders for those products from our customers. The development of new products is a highly complex process, and we have in some instances experienced delays in completing the development and introduction of new products. Our research and development efforts are aimed at solving increasingly complex problems, and we do not expect that all of our projects will be successful. The successful development, introduction and acceptance of new products depends on a number of factors, including the following:

• achievement of technology breakthroughs required to make commercially viable devices;

• the accuracy of our predictions for market requirements beyond near term visibility;

• our ability to predict, influence, and/or react to evolving standards;

• acceptance of our new product designs;

• acceptance of new technology in certain markets;

• the availability of qualified research and development personnel;

• our timely completion of product designs and development;

• our ability to develop repeatable processes to manufacture new products in sufficient quantities, with the desired specifications and at competitive costs;

• our ability to effectively transfer products and technology from development to manufacturing;

• our customers' ability to develop competitive products incorporating our products; and

• market acceptance of our customers' products.

If any of these or other similar factors becomes problematic, we may not be able to develop and introduce these new products in a timely or cost-effective manner.

If we are unable to effectively develop, manage and expand our sales channels for our products, our operating results may suffer.

We have expanded into business channels that are different from those in which we have historically operated as we grow our business and sell more LED and lighting products. Lighting sales agents have in the past and may in the future choose to drop our product lines from their portfolio to avoid losing access to our competitors' lighting products, resulting in a disruption in the project pipeline and lower than targeted sales for our lighting products. We sell an increasing portion of our products through retailers who may alter their promotional pricing or inventory strategies, which could impact our targeted sales of lighting products. If we are unable to effectively penetrate these channels or develop alternate channels to ensure our products are reaching the intended customer base, our financial results may be adversely impacted. In addition, if we successfully penetrate or develop

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these channels, we cannot guarantee that customers will accept our products or that we will be able to manufacture and deliver them in the timeline established by our customers.

We sell a substantial portion of our products to distributors. We rely on distributors to develop and expand their customer base as well as anticipate demand from their customers. If they are not successful, our growth and profitability may be adversely impacted. Distributors must balance the need to have enough products in stock in order to meet their customers' needs against their internal target inventory levels and the risk of potential inventory obsolescence. The risks of inventory obsolescence are especially true with technological products. The distributors' internal target inventory levels vary depending on market cycles and a number of factors within each distributor over which we have very little, if any, control.

We typically recognize revenue on products sold to distributors when the item is shipped and title passes to the distributor (sell-in method). Certain distributors have limited rights to return inventory under stock rotation programs and have limited price protection rights for which we make estimates. We evaluate inventory levels in the distribution channel, current economic trends and other related factors in order to account for these factors in our judgments and estimates. As inventory levels and product return trends change, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be adversely impacted.

We face significant challenges managing our growth as the market adopts LEDs for general lighting.

Our potential for growth depends significantly on the adoption of LEDs within the general lighting market and our ability to affect this rate of adoption. Although the market for LED lighting has grown rapidly in recent years, adoption of LEDs for general lighting is relatively new, still limited and faces significant challenges before widespread adoption. In order to manage our growth and business strategy effectively in light of uncertainty related to the pace of adoption, we must continue to:

• maintain, expand and purchase adequate manufacturing facilities and equipment to meet customer demand;

• manage an increasingly complex supply chain that has the ability to scale to maintain a sufficient supply of raw materials;

• expand research and development, sales and marketing, technical support, distribution capabilities and administrative functions;

• manage organizational complexity and communication;

• expand the skills and capabilities of our current management team;

• add experienced senior level managers; and

• attract and retain qualified employees.

While we intend to focus on managing our costs and expenses, over the long term we expect to invest substantially to support our growth and may have additional unexpected costs. For example, in 2013, we expanded our facilities in Wisconsin and North Carolina, and continue to do so in 2014. Such investments take time to become fully operational, and we may not be able to expand quickly enough to exploit targeted market opportunities. There are also inherent execution risks in starting up a new factory or expanding production capacity that could increase costs and reduce our operating results, including design and construction cost overruns, poor production process yields and reduced quality control during the start-up phase.

We are also increasingly dependent on information technology to enable us to improve the effectiveness of our operations and to maintain financial accuracy and efficiency. If we do not allocate and effectively manage the resources necessary to build, implement, upgrade, integrate and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions or loss of or damage to intellectual property through security breach.

In connection with our efforts to cost-effectively manage our growth, we have increasingly relied on contractors for production capacity, logistics support and certain administrative functions including hosting of certain information technology software applications. If these service providers do not perform effectively, we may not be able to achieve the expected cost savings and may incur additional costs to correct errors or fulfill customer demand. Depending on the function involved, such errors may also lead to business disruption, processing inefficiencies or the loss of or damage to intellectual property through security breach, or impact employee morale. Our operations may also be negatively impacted if any of these service providers do not have the financial capability to meet our growing needs.

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The markets in which we operate are highly competitive and have evolving technical requirements.

The markets for our products are highly competitive. In the LED market, we compete with companies that manufacture and sell LED chips and LED components. In the lighting market, we compete with companies that manufacture and sell traditional and LED lighting products, many of which have larger and more established sales channels. Competitors continue to offer new products with aggressive pricing and improved performance. Competitive pricing pressures may change and could accelerate the rate of decline of our average sales prices.

With the growth potential for LEDs, we will continue to face increased competition in the future. If the investment in new capacity exceeds the growth in demand, the LED market is likely to become more competitive with additional pricing pressures. Additionally, new technologies could emerge or improvements could be made in existing technologies that may also reduce the demand for LEDs in certain markets. There are also new technologies, such as organic LEDs (OLEDs), which could potentially have the same impact on LED demand for backlighting, which could impact the overall LED market.

As competition increases, in order to continue to grow our business, we need to continue to develop new products that meet or exceed the needs of our customers. Therefore, our ability to continually produce more efficient, higher brightness and lower cost LEDs and lighting products that meet the evolving needs of our customers will be critical to our success. Competitors may also try to align with some of our strategic customers. This could mean lower prices for our products, reduced demand for our products and a corresponding reduction in our ability to recover development, engineering and manufacturing costs. Any of these developments could have an adverse effect on our business, results of operations or financial condition.

We rely on a number of key sole source and limited source suppliers, and are subject to high price volatility on certain commodity inputs, variations in parts quality, and raw material consistency and availability.

We depend on a number of sole source and limited source suppliers for certain raw materials, components, services and equipment used in manufacturing our products, including key materials and equipment used in critical stages of our manufacturing processes. Although alternative sources generally exist for these items, qualification of many of these alternative sources could take up to six months or longer. Where possible, we attempt to identify and qualify alternative sources for our sole and limited source suppliers.

We generally purchase these sole or limited source items with purchase orders, and we have limited guaranteed supply arrangements with such suppliers. Some of our sources can have variations in attributes and availability which can affect our ability to produce products in sufficient volume or quality. We do not control the time and resources that these suppliers devote to our business, and we cannot be sure that these suppliers will perform their obligations to us. Additionally, general shortages in the marketplace of certain raw materials or key components may adversely impact our business. In the past, we have experienced decreases in our production yields when suppliers have varied from previously agreed upon specifications, which impacted our cost of revenue.

Additionally, the inability of our suppliers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours. This risk may increase if an economic downturn negatively affects key suppliers or a significant number of our other suppliers. Any delay in product delivery or other interruption or variation in supply from these suppliers could prevent us from meeting commercial demand for our products. If we were to lose key suppliers, if our key suppliers were unable to support our demand for any reason, or if we were unable to identify and qualify alternative suppliers, our manufacturing operations could be interrupted or hampered significantly.

We rely on arrangements with independent shipping companies for the delivery of our products from vendors and to customers in both the United States and abroad. The failure or inability of these shipping companies to deliver products, or the unavailability of their shipping services, even temporarily, could have a material adverse effect on our business. We may also be adversely affected by an increase in freight surcharges due to rising fuel costs and added security.

In our fabrication process we consume a number of precious metals and other commodities, which are subject to high price volatility. Our operating margins could be significantly affected if we are not able to pass along price increases to our customers. In addition, production could be disrupted by the unavailability of the resources used in production such as water, silicon, electricity and gases. Future environmental regulations could restrict supply or increase the cost of certain of those materials.

We operate in an industry that is subject to significant fluctuation in supply and demand that affects our revenue and profitability.

The LED lighting industry is in the early stages of adoption and is characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards, short product life-cycles and fluctuations in product supply and demand. The industry has experienced significant fluctuations, often in connection with, or in anticipation of, product cycles and changes in general economic conditions. As the markets for our products mature, additional fluctuations may result from variability

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and consolidations within the industry's customer base. These fluctuations have been characterized by lower product demand, production overcapacity, higher inventory levels and increased pricing pressure. We have experienced these conditions in our business in the past and may experience such conditions in the future, which could have a material negative impact on our business, results of operations or financial condition.

In addition, as we diversify our product offerings and as pricing differences in the average selling prices among our product lines widen, a change in the mix of sales among our product lines may increase volatility in our revenue and gross margin from period to period.

As a result of our continued expansion into new markets, we may compete with existing customers who may reduce their orders.

Through acquisitions and organic growth, we continue to expand into new markets and new market segments. Many of our existing customers who purchase our LED products develop and manufacture products using those chips and components that are offered into the same lighting markets. As a result, some of our current customers perceive us as a competitor in these market segments. In response, our customers may reduce or discontinue their orders for our LED products. This reduction in or discontinuation of orders could occur faster than our sales growth in these new markets, which could adversely affect our business, results of operations or financial condition.

We depend on a limited number of customers, including distributors and retailers, for a substantial portion of our revenues, and the loss of, or a significant reduction in purchases by, one or more of these customers could adversely affect our operating results.

We receive a significant amount of our revenues from a limited number of customers, including distributors, one of which represented greater than 10% of our consolidated revenues in fiscal 2013. Most of our customer orders are made on a purchase order basis, which does not generally require any long-term customer commitments. Therefore, these customers may alter their purchasing behavior with little or no notice to us for various reasons, including: developing, or, in the case of our distributors, their customers developing, their own product solutions; choosing to purchase product from our competitors; incorrectly forecasting end market demand for their products; or experiencing a reduction in their market share in the markets for which they purchase our products. In the case of retailers, these customers may alter their promotional pricing, increase promotion of competitor's products over our products or reduce their inventory levels all of which could negatively impact our financial condition and results of operations. If our customers alter their purchasing behavior, if our customers' purchasing behavior does not match our expectations, or if we encounter any problems collecting amounts due from them, our financial condition and results of operations could be negatively impacted.

Our results of operations, financial condition and business could be harmed if we are unable to balance customer demand and capacity.

As customer demand for our products changes, we must be able to ramp up or adjust our production capacity to meet demand. We are continually taking steps to address our manufacturing capacity needs for our products. If we are not able to increase our production capacity at our targeted rate, or if there are unforeseen costs associated with adjusting our capacity levels, we may not be able to achieve our financial targets.

Conversely, due to the proportionately high fixed cost nature of our business (such as facility costs), if demand does not increase at the rate forecasted, we may not be able to scale our manufacturing expenses or overhead costs to correspond to the demand.  This could result in lower margins and adversely impact our business and results of operations.  Additionally, if product demand decreases or we fail to forecast demand accurately, we may be required to recognize impairments on our long-lived assets or recognize excess inventory write off charges. We have in the past and may in the future be required to recognize excess capacity charges, which would have a negative impact on our results of operations.

In addition, our efforts to improve quoted delivery lead-time performance may result in corresponding reductions in order backlog. A decline in backlog levels could result in more variability and less predictability in our quarter-to-quarter net sales and operating results.

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If our products fail to perform or fail to meet customer requirements or expectations, we could incur significant additional costs, including costs associated with the recall of those items.

The manufacture of our products involves highly complex processes. Our customers specify quality, performance and reliability standards that we must meet. If our products do not meet these standards, we may be required to replace or rework the products. In some cases, our products may contain undetected defects or flaws that only become evident after shipment. Even if our products meet standard specifications, our customers may attempt to use our products in applications they were not designed for or in products that were not designed or manufactured properly, resulting in product failures and creating customer satisfaction issues.

We have experienced product quality, performance or reliability problems from time to time and defects or failures may occur in the future. If failures or defects occur, we may need to recall our products. These recalls could result in significant losses due to:

• costs associated with the removal, collection and destruction of the product recalled;

• payments made to replace recalled product;

• the write down or destruction of existing inventory subject to the recall;

• lost sales due to the unavailability of product for a period of time;

• delays, cancellations or rescheduling of orders for our products; or

• increased product returns.

A significant product recall could also result in adverse publicity, damage to our reputation, and a loss of customer or consumer confidence in our products. We also may be the target of product liability lawsuits or regulatory proceedings by the Consumer Product Safety Commission (CPSC), and could suffer losses from a significant product liability judgment or adverse CPSC finding against us if the use of our products at issue is determined to have caused injury or contained a substantial product hazard.

We provide warranty periods ranging from ninety days to ten years on our products. The standard warranty on nearly all of our new LED lighting products, which represent an increasing portion of our sales, is ten years. Although we believe our reserves are appropriate, we are making projections about the future reliability of new products and technologies. We may experience increased variability in warranty claims. Increased warranty claims could result in significant losses due to a rise in warranty expense and costs associated with customer support.

Variations in our production yields could impact our ability to reduce costs and could cause our margins to decline and our operating results to suffer.

All of our products are manufactured using technologies that are highly complex. The number of usable items, or yield, from our production processes may fluctuate as a result of many factors, including but not limited to the following:

• variability in our process repeatability and control;

• contamination of the manufacturing environment;

• equipment failure, power outages, information or other system failures or variations in the manufacturing process;

• lack of consistency and adequate quality and quantity of piece parts and other raw materials, and other bill of materials items;

• inventory shrinkage or human errors;

• defects in production processes (including system assembly) either within our facilities or at our suppliers; and

• any transitions or changes in our production process, planned or unplanned.

In the past, we have experienced difficulties in achieving acceptable yields on certain products, which has adversely affected our operating results. We may experience similar problems in the future, and we cannot predict when they may occur or their severity.

In addition, our ability to convert volume manufacturing to larger diameter substrates can be an important factor in providing a more cost effective manufacturing process. If we are unable to make this transition in a timely or cost effective manner, our results could be negatively impacted.

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In some instances, we may offer products for future delivery at prices based on planned yield improvements or increased cost efficiencies from other production advances. Failure to achieve these planned improvements or advances could have a significant impact on our margins and operating results.

Our results may be negatively impacted if customers do not maintain their favorable perception of our brand and products.

We have a developing brand with increasing value.  Maintaining and continually enhancing the value of this brand is critical to the success of our business.  Brand value is based in large part on customer perceptions.  Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products.  Brand value could diminish significantly due to a number of factors, including adverse publicity about our products (whether or not valid), a failure to maintain the quality of our products (whether alleged or real), the failure of our products to deliver consistently positive consumer experiences, the products becoming unavailable to consumers or consumer perception that we have acted in an irresponsible manner in some way.  Damage to our brand, reputation or loss of customer confidence in our brand or products could result in decreased demand for our products and have a negative impact on our business, results of operations or financial condition.

Global economic conditions could materially adversely impact demand for our products and services.

Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about global economic conditions could result in customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services and accordingly, on our business, results of operations or financial condition.

If we fail to evaluate and execute strategic opportunities successfully, our business may suffer.

From time to time, we evaluate strategic opportunities available to us for product, technology or business transactions, such as business acquisitions or divestitures. If we choose to enter into such transactions, we face certain risks, such as the failure of an acquired business to meet our performance expectations, diversion of management attention, identification of additional liabilities relating to the acquired business, 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, and difficulty integrating an acquired business's operations, personnel and financial and operating systems into our current business.

We may not be able to adequately address these risks or any other problems that arise from our recent or future acquisitions or divestitures. Any failure to successfully evaluate strategic opportunities and address risks or other problems that arise related to any such business transaction could adversely affect our business, results of operations or financial condition.

Our revenue is highly dependent on our customers' ability to produce, market and sell more integrated products.

Our revenue in our LED Products and Power and RF Products segments depends on getting our products designed into a larger number of our customers' products and in turn, our customers' ability to produce, market and sell their products. For example, we have current and prospective customers that create, or plan to create, lighting systems using our LED components. However, the traditional lighting industry is still developing technical expertise with LED-related designs, which may limit the success of our customers' products. Even if our customers are able to develop and produce LED lighting products and products that incorporate our Power and RF products, there can be no assurance that our customers will be successful in marketing and selling these products in the marketplace.

The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, use or other aspects of lighting could impact the demand for our products.

The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance or other aspects of LED lighting may impact the demand for our products. Demand for our products may also be impacted by changes in government and/or industry policies, standards or regulations that discourage the use of certain traditional lighting technologies. These constraints may be eliminated or delayed by legislative action, which could have a negative impact on demand for our products.

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If governments, their agencies or utilities reduce their demand for our products or discontinue or curtail their funding, our business may suffer.

Changes in governmental budget priorities could adversely affect our business and results of operations.  U.S. and foreign government agencies have purchased products directly from us and products from our customers, and U.S. government agencies have historically funded a portion of our research and development activities.  When the government changes budget priorities, such as in times of war or financial crisis, our research and development funding and our product sales to government entities and government-funded customers are at risk.  For example, demand and payment for our products and our customers' products may be affected by public sector budgetary cycles, funding authorizations, or utility rebates. Funding reductions or delays could negatively impact demand for our products. If government or utility funding is discontinued or significantly reduced, our business and results of operations could be adversely affected. 

Our operations in foreign countries expose us to certain risks inherent in doing business internationally, which may adversely affect our business, results of operations or financial condition.

As a result of acquisitions and organic growth, we have operations, manufacturing facilities and contract manufacturing arrangements in foreign countries that expose us to certain risks. For example, fluctuations in exchange rates may affect our revenues, expenses and results of operations as well as the value of our assets and liabilities as reflected in our financial statements. We are also subject to other types of risks, including the following:

• protection of intellectual property and trade secrets;

• tariffs, customs and other barriers to importing/exporting materials and products in a cost effective and timely manner;

• timing and availability of export licenses;

• rising labor costs;

• disruptions in or inadequate infrastructure of the countries where we operate;

• difficulties in accounts receivable collections;

• difficulties in staffing and managing international operations;

• the burden of complying with foreign and international laws and treaties; and

• the burden of complying with and changes in international taxation policies.

In some instances, we have been provided and may continue to receive incentives from foreign governments to encourage our investment in certain countries, regions, or areas outside of the United States. In particular, we have received and may continue to receive such incentives in connection with our operations in Asia, as Asian national and local governments seek to encourage the development of the technology industry. Government incentives may include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to us due to our foreign operations. Any of these incentives could be reduced or eliminated by governmental authorities at any time. Any reduction or elimination of incentives currently provided to our operations could adversely affect our business and results of operations. These same governments also may provide increased incentives to or require production processes that favor local companies, which could further negatively impact our business and results of operations.

Abrupt political change, terrorist activity and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse effect on our business and results of operations.

In order to compete, we must attract, motivate and retain key employees, and our failure to do so could harm our results of operations.

Hiring and retaining qualified executives, scientists, engineers, technical staff and sales personnel is critical to our business, and competition for experienced employees in our industry can be intense. As a global company, this issue is not limited to the United States, but includes our other locations such as Europe and China. For example, there is substantial competition in China for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult for us to recruit and retain qualified employees. Also, within Huizhou, China, there are other large companies building manufacturing plants that will likely compete for qualified employees. If we are unable to staff sufficient and adequate personnel at our China facilities, we may experience lower revenues or increased manufacturing costs, which would adversely affect our results of operations.

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To help attract, motivate and retain key employees, we use benefits such as stock-based compensation awards. If the value of such awards does not appreciate, as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate employees could be weakened, which could harm our business and results of operations.

Litigation could adversely affect our operating results and financial condition.

We are often involved in litigation, primarily patent litigation, as described in more detail in Note 12 "Commitments and Contingencies" to our consolidated financial statements included in "Item 8, Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for fiscal 2013 and in Note 11, "Commitments and Contingencies," to our unaudited financial statements in Part I, Item 1 of this Quarterly Report. Defending against existing and potential litigation will likely require significant attention and resources and, regardless of the outcome, result in significant legal expenses, which could adversely affect our results unless covered by insurance or recovered from third parties. If our defenses are ultimately unsuccessful, or if we are unable to achieve a favorable resolution, we could be liable for damage awards that could materially affect our results of operations and financial condition.

Where necessary, we may initiate litigation to enforce our patent or other intellectual property rights. Any such litigation may require us to spend a substantial amount of time and money and could distract management from our day-to-day operations. Moreover, there is no assurance that we will be successful in any such litigation.

Our business may be impaired by claims that we, or our customers, infringe the intellectual property rights of others.

Vigorous protection and pursuit of intellectual property rights characterize our industry. These traits have resulted in significant and often protracted and expensive litigation. Litigation to determine the validity of patents or claims by third parties of infringement of patents or other intellectual property rights could result in significant legal expense and divert the efforts of our technical personnel and management, even if the litigation results in a determination favorable to us. In the event of an adverse result in such litigation, we could be required to:

• pay substantial damages;

• indemnify our customers;

• stop the manufacture, use and sale of products found to be infringing;

• incur asset impairment charges;

• discontinue the use of processes found to be infringing;

• expend significant resources to develop non-infringing products or processes; or

• obtain a license to use third party technology.

There can be no assurance that third parties will not attempt to assert infringement claims against us, or our customers, with respect to our products. In addition, our customers may face infringement claims directed to the customer's products that incorporate our products, and an adverse result could impair the customer's demand for our products. We have also promised certain of our customers that we will indemnify them in the event they are sued by our competitors for infringement claims directed to the products we supply. Under these indemnification obligations, we may be responsible for future payments to resolve infringement claims against them.

From time to time, we receive correspondence asserting that our products or processes are or may be infringing patents or other intellectual property rights of others. If we believe the assertions may have merit or in other appropriate circumstances, we may take steps to seek to obtain a license or to avoid the infringement. We cannot predict, however, whether a license will be available; that we would find the terms of any license offered acceptable; or that we would be able to develop an alternative solution. Failure to obtain a necessary license or develop an alternative solution could cause us to incur substantial liabilities and costs and to suspend the manufacture of affected products.

There are limitations on our ability to protect our intellectual property.

Our intellectual property position is based in part on patents owned by us and patents licensed to us. We intend to continue to file patent applications in the future, where appropriate, and to pursue such applications with U.S. and certain foreign patent authorities.

40

Our existing patents are subject to expiration and re-examination and we cannot be sure that additional patents will be issued on any new applications around the covered technology or that our existing or future patents will not be successfully contested by third parties. Also, since issuance of a valid patent does not prevent other companies from using alternative, non-infringing technology, we cannot be sure that any of our patents, or patents issued to others and licensed to us, will provide significant commercial protection, especially as new competitors enter the market.

We periodically discover products that are counterfeit reproductions of our products or that otherwise infringe on our intellectual property rights. The actions we take to establish and protect trademarks, patents, and other intellectual property rights may not be adequate to prevent imitation of our products by others, and therefore, may adversely affect our sales and our brand and result in the shift of customer preference away from our products. Further, the actions we take to establish and protect trademarks, patents and other intellectual property rights could result in significant legal expense and divert the efforts of our technical personnel and management, even if the litigation or other action results in a determination favorable to us.

We also rely on trade secrets and other non-patented proprietary information relating to our product development and manufacturing activities. We try to protect this information through appropriate efforts to maintain its secrecy, including requiring employees and third parties to sign confidentiality agreements. We cannot be sure that these efforts will be successful or that the confidentiality agreements will not be breached. We also cannot be sure that we would have adequate remedies for any breach of such agreements or other misappropriation of our trade secrets, or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by others.

We may be required to recognize a significant charge to earnings if our goodwill or other intangible assets become impaired.

Goodwill and purchased intangible assets with indefinite lives are not amortized, but are reviewed for impairment annually and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the unamortized balance of our finite-lived intangible assets when indicators of potential impairment are present. Factors that may indicate that the carrying value of our goodwill or other intangible assets may not be recoverable include a decline in our stock price and market capitalization and slower growth rates in our industry. The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our goodwill or other intangible assets could adversely impact our results of operations.

We may be subject to confidential information theft or misuse, which could harm our business and results of operations.

We face attempts by others to gain unauthorized access to our information technology systems on which we maintain proprietary and other confidential information. Our security measures may be breached as the result of industrial or other espionage actions of outside parties, employee error, malfeasance, or otherwise, and, as a result, an unauthorized party may obtain access to our systems. Additionally, outside parties may attempt to access our confidential information through other means, for example by fraudulently inducing our employees to disclose confidential information. We actively seek to prevent, detect and investigate any unauthorized access, which sometimes occurs. We might be unaware of any such access or unable to determine its magnitude and effects. The theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position and the value of our investment in research and development could be reduced. Our business could be subject to significant disruption, and we could suffer monetary or other losses.

We are subject to risks related to international sales and purchases.

We expect that revenue from international sales will continue to represent a significant portion of our total revenue. As such, a significant slowdown or instability in relevant foreign economies, including economic instability in Europe, or lower investments in new infrastructure could have a negative impact on our sales. We also purchase a portion of the materials included in our products from overseas sources.

Our international sales and purchases are subject to numerous U.S. and foreign laws and regulations, including, without limitation, tariffs, trade barriers, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Act and the anti-boycott provisions of the U.S. Export Administration Act. If we fail to comply with these laws and regulations, we could be liable for administrative, civil or criminal liabilities, and in the extreme case, we could be suspended or debarred from government contracts or have our export privileges suspended, which could have a material adverse effect on our business.

International sales and purchases are also subject to a variety of other risks, including risks arising from currency fluctuations, collection issues and taxes. Our international sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S. Dollar and more competitive in countries with currencies

41

that are increasing in value against the U.S. Dollar. In addition, our international purchases can become more expensive if the U.S. Dollar weakens against the foreign currencies in which we are billed.

We have entered and may in the future enter into foreign currency derivative financial instruments in an effort to manage or hedge some of our foreign exchange rate risk. We may not be able to engage in hedging transactions in the future, and even if we do, foreign currency fluctuations may still have a material adverse effect on our results of operations.

Our business may be adversely affected by uncertainties in the global financial markets and our or our customers' or suppliers' ability to access the capital markets.

Global financial markets continue to reflect uncertainty about a sustained global economic recovery. Given these uncertainties, there could be future disruptions in the global economy, financial markets and consumer confidence. If economic conditions deteriorate unexpectedly, our business and results of operations could be materially and adversely affected. For example, our customers, including our distributors and their customers, may experience difficulty obtaining the working capital and other financing necessary to support historical or projected purchasing patterns, which could negatively affect our results of operations.

Although we believe we have adequate liquidity and capital resources to fund our operations internally, our inability to access the capital markets on favorable terms in the future, or at all, may adversely affect our financial performance. The inability to obtain adequate financing from debt or capital sources in the future could force us to self-fund strategic initiatives or even forego certain opportunities, which in turn could potentially harm our performance.

Changes in our effective tax rate may affect our results.

Our future effective tax rates may be affected by a number of factors including:

• the jurisdiction in which profits are determined to be earned and taxed;

• changes in government administrations, such as the Presidency and Congress of the U.S. as well as in the states and countries in which we operate;

• changes in tax laws or interpretation of such tax laws and changes in generally accepted accounting principles;

• the resolution of issues arising from tax audits with various authorities;

• changes in the valuation of our deferred tax assets and liabilities;

• adjustments to estimated taxes upon finalization of various tax returns;

• increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairment of goodwill in connection with acquisitions;

• changes in available tax credits;

• the recognition and measurement of uncertain tax positions;

• the lack of sufficient excess tax benefits (credits) in our additional paid in capital pool in situations where our realized tax deductions for certain stock-based compensation awards (such as non-qualified stock options and restricted stock) are less than those originally anticipated; and

• the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes, or any changes in legislation that may result in these earnings being taxed within the U.S., regardless of our decision regarding repatriation of funds.

Any significant increase or decrease in our future effective tax rates could impact net income for future periods. In addition, the determination of our income tax provision requires complex estimations, significant judgments and significant knowledge and experience concerning the applicable tax laws. To the extent our income tax liability materially differs from our income tax provisions due to factors, including the above, which were not anticipated at the time we estimated our tax provision, our net income or cash flows could be affected.

42

Failure to comply with applicable environmental laws and regulations worldwide could harm our business and results of operations.

The manufacturing, assembling and testing of our products require the use of hazardous materials that are subject to a broad array of environmental, health and safety laws and regulations. Our failure to comply with any of these applicable laws or regulations could result in:

• regulatory penalties, fines, legal liabilities, and the forfeiture of certain tax benefits;

• suspension of production;

• alteration of our fabrication, assembly and test processes; and

• curtailment of our operations or sales.

In addition, our failure to manage the use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials could subject us to increased costs or future liabilities. Existing and future environmental laws and regulations could also require us to acquire pollution abatement or remediation equipment, modify our product designs or incur other expenses, such as permit costs, associated with such laws and regulations. Many new materials that we are evaluating for use in our operations may be subject to regulation under existing or future environmental laws and regulations that may restrict our use of one or more of such materials in our manufacturing, assembly and test processes or products. Any of these restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our manufacturing processes.

Our results could vary as a result of the methods, estimates and judgments that we use in applying our accounting policies, including changes in the accounting standards to be applied.

The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results (see “Critical Accounting Policies and Estimates” in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for fiscal 2013). Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations or financial condition.

Likewise, our results may be impacted due to changes in the accounting standards to be applied, such as the increased use of fair value measurement standards and proposed changes in revenue recognition requirements.

Catastrophic events may disrupt our business.

A disruption or failure of our systems or operations in the event of a natural disaster, health pandemic, such as an influenza outbreak within our workforce, or man-made catastrophic event could cause delays in completing sales, continuing production or performing other critical functions of our business, particularly if a catastrophic event occurred at our primary manufacturing locations in the U.S. and China. This could severely affect our ability to conduct normal business operations and, as a result, our operating results could be adversely affected. There may also be secondary impacts that are unforeseeable as well, such as impacts to our customers, which could cause delays in new orders, delays in completing sales or even order cancellations.

New regulations related to conflict-free minerals may force us to incur additional expenses.

The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of minerals originating from the conflict zones of the Democratic Republic of Congo (DRC) and adjoining countries. As a result, in August 2012 the SEC established new annual disclosure and reporting requirements for those companies who may use “conflict” minerals mined from the DRC and adjoining countries in their products. These new requirements required us to undertake due diligence efforts beginning in the 2013 calendar year, with initial disclosure requirements beginning in May 2014. These new requirements could affect the sourcing and availability of certain minerals used in the manufacture of our products. As a result, we may not be able to obtain the relevant minerals at competitive prices and there will likely be additional costs associated with complying with the new due diligence procedures as required by the SEC. In addition, as our supply chain is complex, we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we implement, and we may incur additional costs as a result of changes to product, processes or sources of supply as a consequence of these new requirements.

43

We are exposed to fluctuations in the market value of our investment portfolio and in interest rates, and therefore, impairment of our investments or lower investment income could harm our earnings.

We are exposed to market value and inherent interest rate risk related to our investment portfolio. We have historically invested portions of our available cash in fixed interest rate securities such as high-grade corporate debt, commercial paper, government securities and other fixed interest rate investments. The primary objective of our investment policy is preservation of principal. However, our investments are generally not FDIC insured and may lose value and/or become illiquid regardless of their credit rating.

Our stock price may be volatile.

Historically, our common stock has experienced substantial price volatility, particularly as a result of significant fluctuations in our revenue, earnings and margins over the past few years, and variations between our actual financial results and the published expectations of analysts. For example, the closing price per share of our common stock on the NASDAQ Global Select Market ranged from a low of $31.44 to a high of $75.76 during calendar year 2013. If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.

Speculation and opinions in the press or investment community about our strategic position, financial condition, results of operations, or significant transactions can also cause changes in our stock price. In particular, speculation around our market opportunities for energy efficient lighting may have a dramatic effect on our stock price, especially as various government agencies announce their planned investments in energy efficient technology, including lighting.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of unregistered securities during the third quarter of fiscal 2014. The following table summarizes our stock repurchase activity for the third quarter of fiscal 2014 (in thousands, except price per share data):

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as a Part of Publicly Announced Program	Maximum Dollar Value of Shares that May Yet be Purchased Under the Program2
Shares repurchased outside our Stock Repurchase Program in connection with our indemnification rights1
December 30, 2013 to January 26, 2014	—		$—	—		$200,000
January 27, 2014 to February 23, 2014	—	—		—	200,000
February 24, 2014 to March 30, 2014	141	59.49		—	200,000
Total	141		$59.49	—		$200,000

(1) Represents shares of our common stock returned to us pursuant to a letter agreement which the Company entered into during September 2013 with the former Ruud Lighting shareholders to settle all remaining indemnification claims under the stock purchase agreement, which letter agreement was approved by the Audit Committee.  The average price per share represents the closing market price on September 26, 2013, the effective date of the letter agreement.

(2) On January 18, 2001, we announced the authorization by our Board of Directors of a program to repurchase shares of our outstanding common stock. Several times since then, the Board of Directors has renewed the program and increased the number of shares that can be repurchased under the program. As of March 30, 2014, pursuant to an extension of the stock repurchase program by the Board of Directors, we are authorized to repurchase shares of our common stock having an aggregate purchase price not exceeding $200 million for all purchases from June 20, 2013 through the June 29, 2014 expiration of the program. During the three months ended March 30, 2014, no common stock was repurchased under the repurchase program.

Item 3. Defaults Upon Senior Securities

Not applicable.

44

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

45

Item 6. Exhibits

The following exhibits are being filed herewith and are numbered in accordance with Item 601 of Regulation S-K:

Exhibit No.	Description
31.1	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
31.2	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
32.1	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
32.2	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
101	The following materials from Cree Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements

46

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 thereunto duly authorized.

	CREE, INC.
April 23, 2014
	/s/ MICHAEL E. MCDEVITT
	Michael E. McDevitt
	Executive Vice President and Chief Financial Officer
	(Authorized Officer and Principal Financial and Chief Accounting Officer)

47

EXHIBIT INDEX

Exhibit No.	Description
31.1	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
31.2	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
32.1	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
32.2	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
101	The following materials from Cree Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements

48

EX-31.1

Exhibit 31.1

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

I, Charles M. Swoboda, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 control 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.

April 23, 2014

/s/ CHARLES M. SWOBODA

Charles M. Swoboda

Chairman, Chief Executive Officer and President

EX-31.2

Exhibit 31.2

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

I, Michael E. McDevitt, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 control 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.

April 23, 2014

/s/ MICHAEL E. MCDEVITT

Michael E. McDevitt

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

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

In connection with the Quarterly Report of Cree, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles M. Swoboda, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

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/ CHARLES M. SWOBODA

Charles M. Swoboda

Chairman, Chief Executive Officer and President

April 23, 2014

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

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

In connection with the Quarterly Report of Cree, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael E. McDevitt, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

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

April 23, 2014

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Investments (Contractual Maturities of Marketable Investments by Type) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Within One Year	$ 499,799
After One, Within Five Years	411,905
After Five, Within Ten Years	42,869
After Ten Years	0
Total	954,573	833,846
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Within One Year	70,398
After One, Within Five Years	213,400
After Five, Within Ten Years	23,995
After Ten Years	0
Total	307,793
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Within One Year	33,506
After One, Within Five Years	176,288
After Five, Within Ten Years	18,874
After Ten Years	0
Total	228,668
U.S. Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Within One Year	8,083
After One, Within Five Years	19,201
After Five, Within Ten Years	0
After Ten Years	0
Total	27,284
Non-U.S. Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Within One Year	383,758
After One, Within Five Years	0
After Five, Within Ten Years	0
After Ten Years	0
Total	383,758
Non-U.S. Government Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Within One Year	4,054
After One, Within Five Years	3,016
After Five, Within Ten Years	0
After Ten Years	0
Total	$ 7,070

XML

Reportable Segments (Revenues, Gross Profit and Gross Margin, by Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Revenue, net	$ 405,259	$ 348,934	$ 1,211,351	$ 1,010,973
Gross profit	149,994	133,010	456,529	382,535
Gross Profit, Percent	37.00%	38.10%	37.70%	37.80%
LED Products [Member]
Segment Reporting Information [Line Items]
Revenue, net	201,119	195,561	634,164	584,070
Gross profit	91,634	85,728	290,931	245,381
Gross Profit, Percent	45.60%	43.80%	45.90%	42.00%
Lighting Products [Member]
Segment Reporting Information [Line Items]
Revenue, net	176,691	130,659	498,265	361,446
Gross profit	48,487	39,966	136,731	115,449
Gross Profit, Percent	27.40%	30.60%	27.40%	31.90%
Power and RF Products [Member]
Segment Reporting Information [Line Items]
Revenue, net	27,449	22,714	78,922	65,457
Gross profit	15,675	12,033	44,452	35,253
Gross Profit, Percent	57.10%	53.00%	56.30%	53.90%
Total Segment Gross Profit [Member]
Segment Reporting Information [Line Items]
Gross profit	155,796	137,727	472,114	396,083
Unallocated Costs [Member]
Segment Reporting Information [Line Items]
Gross profit	$ (5,802)	$ (4,717)	$ (15,585)	$ (13,548)

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Stock-Based Compensation (Summary of Outstanding Option Awards) (Details) (Stock Option [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Mar. 30, 2014
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding number of shares at beginning of period	8,657
Granted, number of shares	2,969
Exercised, number of shares	(2,260)
Forfeited or expired, number of shares	(300)
Outstanding number of shares at end of period	9,066
Outstanding weighted-average exercise price at beginning of period	$ 35.67
Granted, weighted-average exercise price	$ 55.21
Exercised, weighted-average exercise price	$ 36.28
Forfeited or expired, weighted-average exercise price	$ 40.20
Outstanding weighted-average exercised price at end of period	$ 41.77

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Reportable Segments Schedule of Inventory by Reportable Segment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Inventories	$ 251,234	$ 197,001
LED Products [Member]
Segment Reporting Information [Line Items]
Inventories	107,392	99,835
Product Lighting [Member]
Segment Reporting Information [Line Items]
Inventories	133,067	87,546
Power and RF Products [Member]
Segment Reporting Information [Line Items]
Inventories	6,997	6,593
Total segment inventories [Member]
Segment Reporting Information [Line Items]
Inventories	247,456	193,974
Unallocated inventories [Member]
Segment Reporting Information [Line Items]
Inventories	$ 3,778	$ 3,027

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Earnings Per Share (Diluted Earnings Per Share Computation) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Earnings Per Share, Diluted [Abstract]
Net income	$ 28,164	$ 22,157	$ 94,342	$ 58,683
Weighted average common shares - basic	121,535	116,682	120,677	116,059
Dilutive effect of stock options, nonvested shares and ESPP purchase rights	2,160	1,926	2,463	709
Weighted average common shares - diluted	123,695	118,608	123,140	116,768
Diluted earnings per share	$ 0.23	$ 0.19	$ 0.77	$ 0.50

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Financial Statement Details (Summary of the Components of Other Current Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Accrued Liabilities, Current [Abstract]
Accrued taxes	$ 17,812	$ 21,436
Accrued professional fees	7,390	4,493
Accrued warranty	5,602	5,259
Accrued other	13,596	12,060
Total other current liabilities	$ 44,400	$ 43,248

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Earnings Per Share (Tables)

9 Months Ended

Mar. 30, 2014

Earnings Per Share [Abstract]

Basic Earnings Per Share Computation

The following table presents the computation of basic earnings per share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net income		$28,164		$22,157		$94,342		$58,683
Weighted average common shares	121,535		116,682		120,677		116,059
Basic earnings per share	$0.23			$0.19	$0.78			$0.51

Diluted Earnings Per Share Computation

The following computation reconciles the differences between the basic and diluted earnings per share presentations (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net income		$28,164		$22,157		$94,342		$58,683
Weighted average common shares - basic	121,535		116,682		120,677		116,059
Dilutive effect of stock options, nonvested shares and ESPP purchase rights	2,160		1,926		2,463		709
Weighted average common shares - diluted	123,695		118,608		123,140		116,768
Diluted earnings per share	$0.23			$0.19	$0.77			$0.50

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Stock-Based Compensation (Total Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 16,011	$ 13,915	$ 46,261	$ 40,945
Cost of goods sold [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	3,129	2,334	8,357	6,875
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	3,912	3,441	11,453	10,445
Selling, general and administrative Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 8,970	$ 8,140	$ 26,451	$ 23,625

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Intangible Assets Intangible Assets (Future amortization expense of finite-lived intangible assets) (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013	Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 9,500,000	$ 9,400,000	$ 28,300,000	$ 28,200,000
June 29, 2014 (remainder of fiscal 2014)	9,035,000		9,035,000
June 28, 2015	33,973,000		33,973,000
June 26, 2016	33,686,000		33,686,000
June 25, 2017	31,702,000		31,702,000
June 24, 2018	30,534,000		30,534,000
Thereafter	121,837,000		121,837,000
Finite-lived intangible assets, net	$ 260,767,000		$ 260,767,000		$ 274,645,000

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Investments (Summary of Marketable Investments by Type) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 951,882	$ 834,249
Gross Unrealized Gains	3,554	2,695
Gross Unrealized Losses	(863)	(3,098)
Estimated Fair Value	954,573	833,846
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	306,484	250,206
Gross Unrealized Gains	1,598	817
Gross Unrealized Losses	(289)	(1,314)
Estimated Fair Value	307,793	249,709
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	227,500	192,147
Gross Unrealized Gains	1,742	1,678
Gross Unrealized Losses	(574)	(1,765)
Estimated Fair Value	228,668	192,060
U.S. Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	27,095	39,288
Gross Unrealized Gains	189	186
Gross Unrealized Losses	0	0
Estimated Fair Value	27,284	39,474
Non-U.S. Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	383,758	345,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	383,758	345,000
Non-U.S. Government Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,045	7,608
Gross Unrealized Gains	25	14
Gross Unrealized Losses	0	(19)
Estimated Fair Value	$ 7,070	$ 7,603

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Commitments and Contingencies (Warranties) (Details) (USD $)	9 Months Ended
	Mar. 30, 2014
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Warranty accrual, beginning balance	$ 6,171,000
Warranties accrued in current period	3,019,000
Changes in estimates for pre-existing warranties	907,000
Expenditures	(3,449,000)
Warranty accrual, ending balance	6,648,000
Product Warranty Accrual, Long-Term	$ 1,000,000
Minimum [Member]
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Product Warranty, Range Period	90 days
Maximum [Member]
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Product Warranty, Range Period	10 years

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Stock-Based Compensation (Narrative) (Details)	9 Months Ended
	Mar. 30, 2014 plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity-based compensation plans	1
Number of opportunities to purchase common stock at discount, per year	2
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum contribution of employee's compensation, percentage	15.00%
Employee stock plan purchase discount	15.00%

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Acquisitions

9 Months Ended

Mar. 30, 2014

Business Combinations [Abstract]

Acquisitions

Acquisitions

On August 17, 2011, the Company entered into a Stock Purchase Agreement with all of the shareholders of Ruud Lighting, Inc. (Ruud Lighting). Pursuant to the terms of the Stock Purchase Agreement and concurrently with the execution of the Stock Purchase Agreement, the Company acquired all of the outstanding share capital of Ruud Lighting in exchange for consideration consisting of 6.1 million shares of the Company's common stock valued at approximately $211.0 million and $372.2 million cash, subject to certain post-closing adjustments. Following the acquisition, the Company recorded certain post-closing purchase price adjustments resulting in a $2.3 million reduction to the purchase price and a total purchase price of approximately $666.0 million. See Note 11 “Commitments and Contingencies” for a discussion of the amounts received from the Stock Purchase Agreement escrow funds. The acquisition allowed the Company to expand its product portfolio into outdoor LED lighting.

Prior to the Company completing its acquisition of Ruud Lighting, Ruud Lighting completed the re-acquisition of its e-conolight business by purchasing all of the membership interests of E-conolight LLC (E-conolight). Ruud Lighting previously sold its e-conolight business in March 2010 and had been providing operational services to E-conolight since that date. In connection with the stock purchase transaction with Ruud Lighting, the Company funded Ruud Lighting's re-acquisition of E-conolight and repaid Ruud Lighting's outstanding debt in the aggregate amount of approximately $85.0 million.

The assets, liabilities and operating results of Ruud Lighting have been included in the Lighting Products segment of the Company’s consolidated financial statements from the date of acquisition and are reflected in all periods presented in the accompanying unaudited consolidated financial statements.

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Shareholders' Equity (Narrative) (Details) (June 29, 2014 Expiration [Member], Common Stock [Member], USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Mar. 30, 2014	Jun. 29, 2014
June 29, 2014 Expiration [Member] | Common Stock [Member]
Class of Stock [Line Items]
Stock Repurchase Program, Authorized Amount		$ 200
Repurchased shares	0

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Basis of Presentation and Changes in Significant Accounting Policies Narrative (Details)	3 Months Ended
	Mar. 30, 2014 reportable_segments
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of Reportable Segments	3

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Reportable Segments (Tables)

9 Months Ended

Mar. 30, 2014

Segment Reporting [Abstract]

Revenues, Gross Profit and Gross Margin, by Segment

Revenues, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):

	Three Months Ended						Nine Months Ended
	March 30, 2014			March 31, 2013			March 30, 2014			March 31, 2013
Revenues:
LED Products		$201,119			$195,561			$634,164			$584,070
Lighting Products	176,691			130,659			498,265			361,446
Power and RF Products	27,449			22,714			78,922			65,457
Total revenue		$405,259			$348,934			$1,211,351			$1,010,973
Gross Profit and Gross Margin:
LED Products gross profit		$91,634			$85,728			$290,931			$245,381
LED Products gross margin	45.6		%	43.8		%	45.9		%	42.0		%
Lighting Products gross profit	48,487			39,966			136,731			115,449
Lighting Products gross margin	27.4		%	30.6		%	27.4		%	31.9		%
Power and RF Products gross profit	15,675			12,033			44,452			35,253
Power and RF Products gross margin	57.1		%	53.0		%	56.3		%	53.9		%
Total segment gross profit	155,796			137,727			472,114			396,083
Unallocated costs	(5,802		)	(4,717		)	(15,585		)	(13,548		)
Consolidated gross profit		$149,994			$133,010			$456,529			$382,535
Consolidated gross margin	37.0		%	38.1		%	37.7		%	37.8		%

Schedule of inventory, net, by segment

Inventories for each of the Company's segments are as follows (in thousands):

	March 30, 2014		June 30, 2013
LED Products	$	107,392	$	99,835
Lighting Products	133,067		87,546
Power and RF Products	6,997		6,593
Total segment inventories	247,456		193,974
Unallocated inventories	3,778		3,027
Consolidated inventories	$	251,234	$	197,001

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Earnings Per Share (Narrative) (Details) (Common Stock [Member]) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive potential common shares excluded from diluted earnings per share calculation	3.1	2.2	2.4	8.7

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Acquisitions (Cost of Acquired Entity) (Details) (Ruud Lighting, Inc. [Member], USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended
	Aug. 17, 2011	Jun. 24, 2012
Business Acquisition [Line Items]
Cash consideration paid by the Company	$ 372.2
Post-closing purchase price adjustments		2.3
Total Purchase Price	666.0
Outstanding debt paid on behalf of acquired company's stockholders	85.0
Common Stock [Member]
Business Acquisition [Line Items]
Shares issued by the Company for acquisition	6.1
Fair value of common stock issued by the Company	$ 211.0

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Financial Statement Details (Summary of the Components of Accounts Receivable, Net) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Accounts Receivable, Net, Current [Abstract]
Accounts receivable, gross	$ 255,701	$ 221,478
Allowance for bad debts	(2,257)	(2,471)
Total accounts receivable, net	222,333	192,507
Billed trade receivables [Member]
Accounts Receivable, Net, Current [Abstract]
Accounts receivable, gross	254,274	220,307
Unbilled contract receivables [Member]
Accounts Receivable, Net, Current [Abstract]
Accounts receivable, gross	1,427	1,171
Sales Returns and Allowances [Member]
Accounts Receivable, Net, Current [Abstract]
Allowance for sales returns, discounts and other incentives	$ (31,111)	$ (26,500)

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Basis of Presentation and Changes in Significant Accounting Policies

9 Months Ended

Mar. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Changes in Significant Accounting Policies

Basis of Presentation and Changes in Significant Accounting Policies

Overview

Cree, Inc. (the Company) is a leading innovator of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. The Company's products are targeted for applications such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems.

The Company develops and manufactures semiconductor materials and devices primarily based on silicon carbide (SiC), gallium nitride (GaN) and related compounds. In many cases, the properties of SiC and GaN offer technical advantages over traditional silicon, gallium arsenide (GaAs) and other materials used for electronic applications.

The Company's LED products consist of LED components, LED chips and SiC materials. The Company's success in selling LED products depends upon its ability to offer innovative products and to enable its customers to develop and market LED-based products that successfully compete against other LED-based products and drive LED adoption against traditional lighting products.

The Company's lighting products primarily consist of LED lighting systems. The Company designs, manufactures and sells lighting fixtures and lamps for the commercial, industrial and consumer markets.

In addition, the Company develops, manufactures and sells power and RF devices. The Company's power products are made from SiC and provide increased efficiency, faster switching speeds and reduced system size and weight over comparable silicon-based power devices. The Company's RF devices are made from GaN and provide improved efficiency, bandwidth and frequency of operation as compared to silicon or GaAs.

The majority of the Company's products are manufactured at its production facilities located in North Carolina, Wisconsin and China. The Company also uses contract manufacturers for certain aspects of product fabrication, assembly and packaging. The Company operates research and development facilities in North Carolina, California, Wisconsin, India and China (including Hong Kong).

Cree, Inc. is a North Carolina corporation established in 1987 and is headquartered in Durham, North Carolina.

As of March 30, 2014, the Company has three reportable segments:

• LED Products

• Lighting Products

• Power and RF Products

For financial results by reportable segment, please refer to Note 12 "Reportable Segments."

Basis of Presentation

The consolidated balance sheet at March 30, 2014, the consolidated statements of income for the three and nine months ended March 30, 2014 and March 31, 2013, the consolidated statements of comprehensive income for the three and nine months ended March 30, 2014 and March 31, 2013, and the consolidated statements of cash flows for the nine months ended March 30, 2014 and March 31, 2013 (collectively, the consolidated financial statements) have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows at March 30, 2014, and for all periods presented, have been made. All intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 30, 2013 has been derived from the audited financial statements as of that date. The nine month period ended March 30, 2014 includes one less week as compared to the nine month period ended March 31, 2013.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 (fiscal 2013). The results of operations for the three and nine months ended March 30, 2014 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 29, 2014 (fiscal 2014).

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual amounts could differ materially from those estimates.

Certain fiscal 2013 amounts in the accompanying consolidated financial statements have been reclassified to conform to the fiscal 2014 presentation. These reclassifications had no effect on previously reported consolidated net income or shareholders’ equity.

New Accounting Standards

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists. The ASU provides guidance regarding the presentation in the statement of financial position of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryfoward exists. The ASU generally provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The ASU applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date, and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company early adopted this guidance beginning with the first quarter of fiscal 2014. The Company's adoption of this guidance did not have a significant impact on its consolidated financial statements.

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Financial Statement Details (Summary of the Components of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Inventory, Net [Abstract]
Raw material	$ 84,302	$ 62,253
Work-in-progress	81,846	68,146
Finished goods	85,086	66,602
Total inventories	$ 251,234	$ 197,001

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Fair Value of Financial Instruments (Financial Instruments Carried at Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value transfers level 1 to level 2	$ 0
Fair value transfers, level 2 to level 1	0
Assets, Fair Value Disclosure [Abstract]
Short-term investments	954,573	833,846
Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	79,716	14,598
Short-term investments	954,573	833,846
Total assets	1,034,289	848,444
Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	67,553	12,589
Short-term investments	0	0
Total assets	67,553	12,589
Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	12,163	2,009
Short-term investments	954,573	833,846
Total assets	966,736	835,855
Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	0
Short-term investments	0	0
Total assets	0	0
Municipal Bonds [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	307,793	249,709
Municipal Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	307,793	249,709
Municipal Bonds [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Municipal Bonds [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	307,793	249,709
Municipal Bonds [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Corporate Bonds [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	228,668	192,060
Corporate Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	228,668	192,060
Corporate Bonds [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Corporate Bonds [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	228,668	192,060
Corporate Bonds [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
U.S. Agency Securities [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	27,284	39,474
U.S. Agency Securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	27,284	39,474
U.S. Agency Securities [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
U.S. Agency Securities [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	27,284	39,474
U.S. Agency Securities [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Non-U.S. Certificates of Deposit [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	383,758	345,000
Non-U.S. Certificates of Deposit [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	383,758	345,000
Non-U.S. Certificates of Deposit [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Non-U.S. Certificates of Deposit [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	383,758	345,000
Non-U.S. Certificates of Deposit [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Non-U.S. Government Securities [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	7,070	7,603
Non-U.S. Government Securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	7,070	7,603
Non-U.S. Government Securities [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Non-U.S. Government Securities [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	7,070	7,603
Non-U.S. Government Securities [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Short-term investments	0	0
Non-U.S. Certificates of Deposit [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	12,163	0
Non-U.S. Certificates of Deposit [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	0
Non-U.S. Certificates of Deposit [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	12,163	0
Non-U.S. Certificates of Deposit [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	0
Municipal Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	2,009
Municipal Bonds [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	0
Municipal Bonds [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	2,009
Municipal Bonds [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	0
Money Market Funds [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	67,553	12,589
Money Market Funds [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	67,553	12,589
Money Market Funds [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	0	0
Money Market Funds [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents	$ 0	$ 0

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Commitments and Contingencies (Litigation) (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended	0 Months Ended				1 Months Ended
	Sep. 29, 2013	Sep. 29, 2013	Feb. 19, 2013 Cooper Lighting, LLC [Member] Patents	Sep. 07, 2012 Cooper Lighting, LLC [Member] Patents	Apr. 02, 2010 Cooper Lighting, LLC [Member] Patents	Jun. 07, 2010 Illumination Management Solutions, Inc. [Member] Patents	Jan. 31, 2013 Illumination Management Solutions, Inc. [Member] Employees	Jan. 31, 2013 Minimum [Member] Illumination Management Solutions, Inc. [Member] Patents
Loss Contingencies [Line Items]
Gain Contingency, Patents Allegedly Infringed upon, Number			2		2
Loss Contingency, Patents Allegedly Infringed, Number				1		2		1
Loss Contingency, Number of Defendants							2
Gain and Loss Contingency, Claims Settled, Number	6
Gain and Loss Contingency, Claims Settled, Royalty-Free Cross License Period	7 years
Gain and Loss Contingency, Claims Settled, Supply Agreement Term	7 years
Non-Cash Litigation Settlement Charge		$ 17.4
Indemnification Obligation Refund Related to Business Combination		$ 17.4

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Current assets:
Cash and cash equivalents	$ 268,838	$ 190,069
Short-term investments	954,573	833,846
Total cash, cash equivalents and short-term investments	1,223,411	1,023,915
Accounts receivable, net	222,333	192,507
Inventories	251,234	197,001
Deferred income taxes	25,740	26,125
Prepaid expenses and other current assets	59,352	76,218
Total current assets	1,782,070	1,515,766
Property and equipment, net	575,945	542,833
Intangible assets, net	343,647	357,525
Goodwill	616,345	616,345
Other assets	45,041	19,941
Total assets	3,363,048	3,052,410
Current liabilities:
Accounts payable, trade	159,230	121,441
Accrued salaries and wages	44,030	41,407
Income taxes payable	16,060	1,315
Other current liabilities	44,400	43,248
Total current liabilities	263,720	207,411
Long-term liabilities:
Deferred income taxes	27,249	25,504
Other long-term liabilities	40,691	12,843
Total long-term liabilities	67,940	38,347
Commitments and contingencies (Note 11)
Shareholders' equity:
Preferred stock, par value $0.01; 3,000 shares authorized at March 30, 2014 and June 30, 2013; none issued and outstanding	0	0
Common stock, par value $0.00125; 200,000 shares authorized at March 30, 2014 and June 30, 2013; 121,930 and 119,623 shares issued and outstanding at March 30, 2014 and June 30, 2013, respectively	151	148
Additional paid-in-capital	2,162,798	2,025,764
Accumulated other comprehensive income, net of taxes	10,117	8,244
Retained earnings	858,322	772,496
Total shareholders’ equity	3,031,388	2,806,652
Total liabilities and shareholders’ equity	$ 3,363,048	$ 3,052,410

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Earnings Per Share (Basic Earnings Per Share Computation) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Earnings Per Share, Basic [Abstract]
Net income	$ 28,164	$ 22,157	$ 94,342	$ 58,683
Weighted average common shares - basic	121,535	116,682	120,677	116,059
Basic earnings per share	$ 0.23	$ 0.19	$ 0.78	$ 0.51

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Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Statement of Comprehensive Income [Abstract]
Tax benefit (expense) on currency translation (loss) gain	$ 0	$ 90	$ 0	$ (1)
Tax (expense) on net unrealized gain (loss) on available-for-sale securities	$ (126)	$ (75)	$ (1,191)	$ (22)

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Financial Statement Details (Summary of the Components of Non-operating Income, Net) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Other Income and Expenses [Abstract]
Foreign currency (loss) gain, net	$ (368)	$ 296	$ 109	$ 424
Gain on sale of investments, net	15	48	25	84
Interest income, net	3,415	2,018	8,562	5,756
Other, net	90	150	677	2,114
Total non-operating income, net	$ 3,152	$ 2,512	$ 9,373	$ 8,378

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Investments (Tables)

9 Months Ended

Mar. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Summary of Marketable Investments by Type

The following tables summarize marketable investments (in thousands):

	March 30, 2014
	Amortized     Cost		Gross Unrealized     Gains		Gross Unrealized     Losses			Estimated Fair  Value
Municipal bonds		$306,484		$1,598		($289	)		$307,793
Corporate bonds	227,500		1,742		(574		)	228,668
U.S. agency securities	27,095		189		—			27,284
Non-U.S. certificates of deposit	383,758		—		—			383,758
Non-U.S. government securities	7,045		25		—			7,070
Total		$951,882		$3,554		($863	)		$954,573
	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Municipal bonds		$250,206		$817		($1,314	)		$249,709
Corporate bonds	192,147		1,678		(1,765		)	192,060
U.S. agency securities	39,288		186		—			39,474
Non-U.S. certificates of deposit	345,000		—		—			345,000
Non-U.S. government securities	7,608		14		(19		)	7,603
Total		$834,249		$2,695		($3,098	)		$833,846

Summary of Gross Unrealized Losses and Estimated Fair Value of Investment Securities, Aggregated by Investment Type and Length of Time

The following tables present the gross unrealized losses and estimated fair value of the Company's investment securities, aggregated by investment type and the length of time that individual investment securities have been in a continuous unrealized loss position (in thousands, except numbers of securities):

	March 30, 2014
	Less than 12 Months					Greater than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds		$61,656		($289	)		$—		$—			$61,656		($289	)
Corporate bonds	82,888		(536		)	1,979		(38		)	84,867		(574		)
Non-U.S. government securities	—		—			—		—			—		—
Total		$144,544		($825	)		$1,979		($38	)		$146,523		($863	)
Number of securities with an unrealized loss			71					1					72
	June 30, 2013
	Less than 12 Months					Greater than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds		$126,926		($1,314	)		$—		$—			$126,926		($1,314	)
Corporate bonds	102,010		(1,765		)	—		—			102,010		(1,765		)
Non-U.S. government securities	5,534		(19		)	—		—			5,534		(19		)
Total		$234,470		($3,098	)		$—		$—			$234,470		($3,098	)
Number of securities with an unrealized loss			123					—					123

Contractual Maturities of Marketable Investments by Type

The contractual maturities of marketable investments as of March 30, 2014 were as follows (in thousands):

	Within One     Year		After One, Within Five     Years		After Five, Within Ten     Years		After Ten     Years		Total
Municipal bonds		$70,398		$213,400		$23,995		$—		$307,793
Corporate bonds	33,506		176,288		18,874		—		228,668
U.S. agency securities	8,083		19,201		—		—		27,284
Non-U.S. certificates of deposit	383,758		—		—		—		383,758
Non-U.S. government securities	4,054		3,016		—		—		7,070
Total		$499,799		$411,905		$42,869		$—		$954,573

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Financial Statement Details (Summary of the Amounts Reclassified Out of Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Reclassification Out of Accumulated Other Comprehensive Income [Line Items]
Non-operating income, net	$ 3,152	$ 2,512	$ 9,373	$ 8,378
Income before income taxes	33,531	25,764	111,927	74,011
Income tax expense	5,367	3,607	17,585	15,328
Net income	28,164	22,157	94,342	58,683
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Unrealized Investment Gain (Loss) [Member]
Reclassification Out of Accumulated Other Comprehensive Income [Line Items]
Non-operating income, net	15	43	25	80
Income before income taxes	15	43	25	80
Income tax expense	2	6	4	17
Net income	$ 13	$ 37	$ 21	$ 63

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Intangible Assets (Tables)

9 Months Ended

Mar. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Components of intangible assets, net

The following table presents the components of intangible assets, net (in thousands):

	March 30, 2014							June 30, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Customer relationships		$137,440		($65,131	)		$72,309		$137,440		($59,611	)		$77,829
Developed technology	162,760		(68,260		)	94,500		162,760		(53,476		)	109,284
Non-compete agreements	10,244		(5,507		)	4,737		10,244		(4,037		)	6,207
Trade names, finite-lived	520		(510		)	10		520		(493		)	27
Patent and licensing rights	129,599		(40,388		)	89,211		116,147		(34,849		)	81,298
Total intangible assets with finite lives	440,563		(179,796		)	260,767		427,111		(152,466		)	274,645
Trade names, indefinite-lived	82,880					82,880		82,880					82,880
Total intangible assets		$523,443		($179,796	)		$343,647		$509,991		($152,466	)		$357,525

Future amortization expense of finite-lived intangible assets

Total future amortization expense of finite-lived intangible assets is estimated to be as follows (in thousands):

Fiscal Year Ending
June 29, 2014 (remainder of fiscal 2014)		$9,035
June 28, 2015	33,973
June 26, 2016	33,686
June 25, 2017	31,702
June 24, 2018	30,534
Thereafter	121,837
Total		$260,767

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 94,342	$ 58,683
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	120,219	114,370
Stock-based compensation	46,261	40,945
Excess tax benefit from share-based payment arrangements	(18,396)	(3,636)
Loss on disposal or impairment of long-lived assets	1,781	2,385
Amortization of premium/discount on investments	7,674	7,075
Changes in operating assets and liabilities:
Accounts receivable, net	(29,829)	(29,624)
Inventories	(53,511)	(6,866)
Prepaid expenses and other assets	13,008	(6,472)
Accounts payable, trade	29,016	33,495
Accrued salaries and wages and other liabilities	17,605	13,715
Net cash provided by operating activities	228,170	224,070
Cash flows from investing activities:
Purchases of property and equipment	(119,614)	(55,406)
Purchases of available-for-sale investments	(510,401)	(533,884)
Proceeds from maturities of available-for-sale investments	365,005	297,740
Proceeds from sale of property and equipment	117	301
Proceeds from sale of available-for-sale investments	22,387	36,089
Purchases of patent and licensing rights	(14,755)	(15,794)
Net cash used in investing activities	(257,261)	(270,954)
Cash flows from financing activities:
Net proceeds from issuance of common stock	89,476	43,352
Excess tax benefit from share-based payment arrangements	18,396	3,636
Repurchases of common stock	(107)	(638)
Net cash provided by financing activities	107,765	46,350
Effects of foreign exchange changes on cash and cash equivalents	95	87
Net increase (decrease) in cash and cash equivalents	78,769	(447)
Cash and cash equivalents:
Beginning of period	190,069	178,885
End of period	$ 268,838	$ 178,438

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Consolidated Balance Sheets Consolidation Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,000	3,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.00125	$ 0.00125
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	121,930	119,623
Common stock, shares outstanding	121,930	119,623

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Income Taxes

9 Months Ended

Mar. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The variation between the Company's effective income tax rate and the U.S. statutory rate of 35% is due to a percentage of the Company's projected income for the full year being derived from international locations with lower tax rates than the U.S. and the impact of tax credits available in the current year. A change in the mix of pretax income of the Company's various tax jurisdictions can have a material impact on the Company's periodic effective tax rate.

During the second quarter of fiscal 2014, the Company was notified by the Internal Revenue Service that it had been allocated up to $30 million of federal tax credits as part of the American Recovery and Reinvestment Act of 2009 - Phase II (Internal Revenue Code Section 48C). This $30 million allocation is in addition to the $39 million previously allocated to the Company in the third quarter of fiscal 2010. The $30 million allocation was based upon the Company's plan to place into service approximately $100 million of qualified equipment at its U.S. manufacturing locations from fiscal 2013 through fiscal 2017. Property placed into service during fiscal 2013 generated $15 million of the potential $30 million Internal Revenue Code Section 48C credit. The remaining $15 million of Internal Revenue Code Section 48C credit was generated during the first three quarters of fiscal 2014. The tax benefit (net of related basis adjustments) will be amortized into income over the useful life (five years) of the underlying equipment that was placed in service to generate these credits. In fiscal 2014, the Company anticipates it will recognize an income tax benefit of approximately $5.2 million related to this award; of this amount, $0.7 million and $4.4 million have been recorded as tax benefits in the three and nine months ended March 30, 2014, respectively.

U.S. GAAP requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement.

As of June 30, 2013, the Company's liability for unrecognized tax benefits was $2.7 million. The Company recognized an $18.0 million increase to the liability for unrecognized tax benefits due to uncertainty regarding a change in tax depreciation methodology adopted in the first quarter of fiscal 2014. In addition, there was a $2.3 million decrease to the amount of unrecognized tax benefits following the settlement of prior year tax audits and statute expirations. As a result, the total liability for unrecognized tax benefits as of March 30, 2014 was $18.4 million. If any portion of this $18.4 million is recognized, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution and/or closure of audits is highly uncertain, the Company believes it is reasonably possible that approximately $0.2 million of gross unrecognized tax benefits will change in the next 12 months as a result of pending audit settlements or statute requirements.

The Company files U.S. federal, U.S. state and foreign tax returns. For U.S. federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2011. For U.S. state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2010. For foreign purposes, the Company is generally no longer subject to examination for tax periods 2003 and prior. Certain carryforward tax attributes generated in prior years remain subject to examination and adjustment. During the third quarter of fiscal 2014, the Company settled its examination with the German Federal Central Tax Office for the fiscal year ended June 29, 2008 through the fiscal year ended June 27, 2010, resulting in an immaterial amount of additional tax expense.

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Document and Entity Information	9 Months Ended
	Mar. 30, 2014	Apr. 16, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	CREE INC
Entity Central Index Key	0000895419
Current Fiscal Year End Date	--06-29
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		121,938,248
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

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Commitments and Contingencies

9 Months Ended

Mar. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Warranties

The following table summarizes the changes in the Company's product warranty liabilities (in thousands):

	Nine Months Ended
	March 30, 2014
Balance at beginning of period		$6,171
Warranties accrued in current period	3,019
Changes in estimates for pre-existing warranties	907
Expenditures	(3,449		)
Balance at end of period		$6,648

Product warranties are estimated and recognized at the time the Company recognizes revenue. The warranty periods range from 90 days to 10 years. The Company accrues warranty liabilities at the time of sale, based on historical and projected incident rates and expected future warranty costs. The warranty reserves, which are primarily related to Lighting Products, are evaluated on a quarterly basis based on various factors including historical warranty claims, assumptions about the frequency of warranty claims, and assumptions about the frequency of product failures derived from quality testing, field monitoring and the Company's reliability estimates. As of March 30, 2014, $1.0 million of the Company's product warranty liabilities were classified as long-term.

Litigation

The Company is currently a party to various legal proceedings, including those described in the Company's Annual Report on Form 10-K for fiscal 2013. The following is provided as an update to the Company's legal proceedings as contained in that report. Unless otherwise indicated, the potential losses for claims against the Company in these matters are not reasonably estimable.

Cooper Lighting Litigation

Ruud Lighting, Inc. filed a complaint for patent infringement against Cooper Lighting, LLC in the U.S. District Court for the Eastern District of Wisconsin on April 2, 2010. The complaint as amended seeks injunctive relief and damages for infringement of two U.S. patents owned by Ruud Lighting: No. 7,686,469, entitled "LED Lighting Fixture"; and No. 7,891,835, entitled “Light-Directed Apparatus with Protected Reflector-Shield and Lighting Fixture Utilizing Same.” On May 23, 2012, Ruud Lighting filed a second complaint for patent infringement against Cooper Lighting, LLC in the U.S. District Court for the Eastern District of Wisconsin. The complaint seeks injunctive relief and damages for infringement of a third U.S. patent owned by Ruud Lighting, No. 7,952,262, entitled “Modular LED Unit Incorporating Interconnected Heat Sinks Configured To Mount and Hold Adjacent LED Modules." In each of these actions Cooper Lighting has filed an answer and counterclaims in which it denies any infringement and seeks a declaratory judgment that the asserted claims of the patents are invalid. On February 19, 2013, the Company, as successor-in-interest to Ruud Lighting, Inc., filed a third complaint for patent infringement against Cooper Lighting in the U.S. District Court for the Eastern District of Wisconsin. The complaint seeks injunctive relief and damages for infringement of two U.S. patents owned by the Company, No. 8,282,239, entitled “Light-Directing Apparatus with Protected Reflector-Shield and Lighting Fixture Utilizing Same” and No. 8,070,306, entitled “LED Lighting Fixture.”

Cooper Lighting, LLC filed a complaint for patent infringement against the Company and Ruud Lighting, Inc. in the U.S. District Court for the Northern District of Georgia on September 7, 2012. The complaint seeks injunctive relief and damages for infringement of one U.S. patent owned by Cooper Lighting, LLC: No. 8,210,722, entitled "LED Device for Wide Beam Generation." The Company has filed an answer in which it denies any infringement and asserts that the patent is invalid as well as other defenses.

Illumination Management Solutions, Inc., a subsidiary of Cooper Lighting, LLC, filed a complaint for patent infringement against Ruud Lighting in the U.S. District Court for the Eastern District of Texas on June 7, 2010. The action was later transferred to the U.S. District Court for the Eastern District of Wisconsin. As amended in January 2012, the complaint alleged that Ruud Lighting is infringing two U.S. patents owned by Illumination Management Solutions, No. 7,674,018 and No. 7,993,036, each entitled "LED Device for Wide Beam Generation." It also alleged that Ruud Lighting and its then president, Alan Ruud, who served on the plaintiff's board of directors in 2006 and 2007 when Ruud Lighting was a shareholder of the plaintiff, conspired to misuse confidential information obtained from the plaintiff to file patent applications and to obtain patents assigned to Ruud Lighting. The complaint sought injunctive relief, damages and ownership of the patent applications and patents alleged to have been wrongfully filed and obtained. The court in October 2012 granted partial summary judgment in favor of Ruud Lighting, finding that most of the accused products did not infringe either of the asserted patents. The court in February 2013 entered final judgment in which the court 1) dismissed the claims relating to most of the accused products, finding that they did not infringe either of the asserted patents; 2) dismissed with prejudice and with the consent of the parties the claims with respect to the remaining accused products; 3) severed the conspiracy claim, which was subsequently voluntarily dismissed; and 4) dismissed the remaining claims and counterclaims without prejudice. In March 2013, the plaintiffs filed a notice of appeal from this judgment to the U.S. Court of Appeals for the Federal Circuit.

Ruud Lighting is a defendant in an action commenced by Illumination Management Solutions in the U.S. District Court for the Central District of California on June 8, 2010 and later transferred to the U.S. District Court for the Eastern District of Wisconsin. As amended in January 2013, the complaint names as defendants Ruud Lighting and two of its employees, Alan Ruud and Christopher Ruud, and asserts that the defendants engaged in wrongful acts arising out of the relationship between the plaintiff and Ruud Lighting in 2006 and 2007 when Ruud Lighting was a shareholder of the plaintiff and Alan Ruud served on the plaintiff's board of directors. The complaint alleges that the defendants breached fiduciary duties and otherwise acted improperly by pursuing a plan to compete with the plaintiff and that the defendants misused information obtained from the plaintiff as fiduciaries and subject to a non-disclosure agreement. These allegedly wrongful acts included filing patent applications and obtaining patents assigned to Ruud Lighting on inventions claimed by the plaintiff. The complaint also alleges that Ruud Lighting: 1) marketed its LED products without reference to certain optical technology claimed by the plaintiff, thereby breaching a marketing agreement with the plaintiff and engaging in unfair competition and false advertising; and 2) breached the marketing agreement by failing to give the plaintiff a right of first refusal to integrate the plaintiff's optical technology into Ruud Lighting LED products. The complaint further alleges that the plaintiff is entitled to a correction of the inventors named in one or more patents to add a founder of the plaintiff as an inventor. The complaint seeks to recover damages, all profits and other gains realized by defendants as a result of the acts complained of, attorneys' fees, ownership of any interest in the patent applications and patents alleged to have been wrongfully filed and obtained, and correction of the named inventors on one or more patents.

In September 2013, the Company and the Cooper Lighting and Illumination Management Solutions parties reached a binding term sheet agreement to settle all six cases. This non-cash settlement agreement provided for a royalty-free cross license of all of the patents-in-suit in the six cases for the life of the patents; a royalty-free cross license of each of the Company’s and Cooper Lighting’s LED luminaire patent portfolios for seven years (with carve-outs of the Company’s LED chip, LED component and LED replacement lamp patents from the cross license, as well as carve-outs for certain LED luminaires of Cooper Lighting that are not for general illumination); and a supply agreement, with no minimum purchase commitment and with a seven year term, whereby the Company may sell Cooper Lighting LED components and modules. The Company recorded a $17.4 million non-cash litigation settlement charge and related obligation in the first quarter of fiscal 2014, representing the current estimated fair value of the patent licenses to be provided to the Cooper Lighting and Illumination Management Solutions parties in excess of the fair value patent license rights to be received by the Company under the terms of the cross license agreement. This $17.4 million obligation will be amortized into income over the remainder of the seven year license period. The parties executed the definitive agreements to effect this binding agreement in February 2014, and the six cases have been dismissed with prejudice by the parties.

In conjunction with the September 2013 settlement with the Cooper Lighting and Illumination Management Solutions parties, the Company also recorded a $17.4 million offset to the non-cash litigation charge to reflect the amount receivable by the Company from the Stock Purchase Agreement escrow funds, including cash and common stock consideration, pursuant to a letter agreement approved by the Audit Committee, which the Company entered into during September 2013 with Christopher Ruud, acting as the Seller Representative for the former Ruud Lighting shareholders. The escrow consideration was provided to the Company during the third quarter of fiscal 2014 upon the execution of the final settlement agreement with the Cooper Lighting and Illumination Management Solutions parties.

Lighting Science Group Litigation

Lighting Science Group Corporation (“LSG”) filed a complaint for patent infringement against the Company in the U.S. District Court for the Middle District of Florida on April 10, 2013.  The complaint sought injunctive relief and damages for alleged infringement of U.S. patent No. 8.201,968, entitled “Low Profile Light." In March 2014, the Company and LSG executed a settlement agreement, which settlement permitted LSG to return certain LED component parts that LSG had purchased from the Company for partial credit, and provided the Company with a worldwide, non-exclusive, non-transferable, fully paid-up license under the patent-in-suit, and any and all parents, continuations, continuations-in-part, divisions, substitutions, extensions, reissues, and reexaminations thereof, and any and all foreign counterparts of the patent-in-suit. This settlement agreement ended the litigation between the parties.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Income Statement [Abstract]
Revenue, net	$ 405,259	$ 348,934	$ 1,211,351	$ 1,010,973
Cost of revenue, net	255,265	215,924	754,822	628,438
Gross profit	149,994	133,010	456,529	382,535
Operating expenses:
Research and development	46,626	39,036	132,805	116,524
Sales, general and administrative	65,368	62,140	197,589	174,885
Amortization of acquisition-related intangibles	7,257	7,719	21,800	23,108
Loss on disposal or impairment of long-lived assets	364	863	1,781	2,385
Total operating expenses	119,615	109,758	353,975	316,902
Operating income	30,379	23,252	102,554	65,633
Non-operating income, net	3,152	2,512	9,373	8,378
Income before income taxes	33,531	25,764	111,927	74,011
Income tax expense	5,367	3,607	17,585	15,328
Net income	$ 28,164	$ 22,157	$ 94,342	$ 58,683
Earnings per share:
Basic	$ 0.23	$ 0.19	$ 0.78	$ 0.51
Diluted	$ 0.23	$ 0.19	$ 0.77	$ 0.50
Weighted average shares used in per share calculation:
Basic	121,535	116,682	120,677	116,059
Diluted	123,695	118,608	123,140	116,768

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Fair Value of Financial Instruments

9 Months Ended

Mar. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is categorized into three levels based on the reliability of inputs as follows:

• 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.

The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents and short-term investments. As of March 30, 2014, financial assets utilizing Level 1 inputs included money market funds. Financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, U.S. agency securities, non-U.S. certificates of deposit and non-U.S. government securities. Level 2 assets are valued using a third-party pricing services consensus price, which is a weighted average price based on multiple sources. These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility. The Company does not have any financial assets requiring the use of Level 3 inputs. There were no transfers between Level 1 and Level 2 during the nine months ended March 30, 2014.

The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy (in thousands):

	March 30, 2014								June 30, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Non-U.S. certificates of deposit	$	—	$	12,163	$	—	$	12,163	$	—	$	—	$	—	$	—
Municipal bonds	—		—		—		—		—		2,009		—		2,009
Money market funds	67,553		—		—		67,553		12,589		—		—		12,589
Total cash equivalents	67,553		12,163		—		79,716		12,589		2,009		—		14,598
Short-term investments:
Municipal bonds	—		307,793		—		307,793		—		249,709		—		249,709
Corporate bonds	—		228,668		—		228,668		—		192,060		—		192,060
U.S. agency securities	—		27,284		—		27,284		—		39,474		—		39,474
Non-U.S. certificates of deposit	—		383,758		—		383,758		—		345,000		—		345,000
Non-U.S. government securities	—		7,070		—		7,070		—		7,603		—		7,603
Total short-term investments	—		954,573		—		954,573		—		833,846		—		833,846
Total assets		$67,553		$966,736		$—		$1,034,289		$12,589		$835,855		$—		$848,444

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Investments

9 Months Ended

Mar. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

Short-term investments consist of municipal bonds, corporate bonds, U.S. agency securities, non-U.S. certificates of deposit and non-U.S. government securities. All marketable investments are classified as available-for-sale.

The following tables summarize marketable investments (in thousands):

	March 30, 2014
	Amortized     Cost		Gross Unrealized     Gains		Gross Unrealized     Losses			Estimated Fair  Value
Municipal bonds		$306,484		$1,598		($289	)		$307,793
Corporate bonds	227,500		1,742		(574		)	228,668
U.S. agency securities	27,095		189		—			27,284
Non-U.S. certificates of deposit	383,758		—		—			383,758
Non-U.S. government securities	7,045		25		—			7,070
Total		$951,882		$3,554		($863	)		$954,573
	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Municipal bonds		$250,206		$817		($1,314	)		$249,709
Corporate bonds	192,147		1,678		(1,765		)	192,060
U.S. agency securities	39,288		186		—			39,474
Non-U.S. certificates of deposit	345,000		—		—			345,000
Non-U.S. government securities	7,608		14		(19		)	7,603
Total		$834,249		$2,695		($3,098	)		$833,846

The following tables present the gross unrealized losses and estimated fair value of the Company's investment securities, aggregated by investment type and the length of time that individual investment securities have been in a continuous unrealized loss position (in thousands, except numbers of securities):

	March 30, 2014
	Less than 12 Months					Greater than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds		$61,656		($289	)		$—		$—			$61,656		($289	)
Corporate bonds	82,888		(536		)	1,979		(38		)	84,867		(574		)
Non-U.S. government securities	—		—			—		—			—		—
Total		$144,544		($825	)		$1,979		($38	)		$146,523		($863	)
Number of securities with an unrealized loss			71					1					72
	June 30, 2013
	Less than 12 Months					Greater than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds		$126,926		($1,314	)		$—		$—			$126,926		($1,314	)
Corporate bonds	102,010		(1,765		)	—		—			102,010		(1,765		)
Non-U.S. government securities	5,534		(19		)	—		—			5,534		(19		)
Total		$234,470		($3,098	)		$—		$—			$234,470		($3,098	)
Number of securities with an unrealized loss			123					—					123

The Company utilizes specific identification in computing realized gains and losses on the sale of investments. Realized gains from the sale of investments for the nine months ended March 30, 2014 of $25 thousand were included in "Non-operating income, net" and unrealized gains and losses are included as a separate component of equity, net of tax, unless the loss is determined to be other-than-temporary.

The Company evaluates its investments for possible impairment or a decline in fair value below cost basis that is deemed to be other-than-temporary on a periodic basis. It considers such factors as the length of time and extent to which the fair value has been below the cost basis, the financial condition of the investee, and its ability and intent to hold the investment for a period of time that may be sufficient for an anticipated full recovery in market value. Accordingly, the Company considers declines in its securities to be temporary in nature, and does not consider its securities to be impaired as of March 30, 2014 and June 30, 2013.

The contractual maturities of marketable investments as of March 30, 2014 were as follows (in thousands):

	Within One     Year		After One, Within Five     Years		After Five, Within Ten     Years		After Ten     Years		Total
Municipal bonds		$70,398		$213,400		$23,995		$—		$307,793
Corporate bonds	33,506		176,288		18,874		—		228,668
U.S. agency securities	8,083		19,201		—		—		27,284
Non-U.S. certificates of deposit	383,758		—		—		—		383,758
Non-U.S. government securities	4,054		3,016		—		—		7,070
Total		$499,799		$411,905		$42,869		$—		$954,573

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Mar. 30, 2014

Fair Value Disclosures [Abstract]

Financial Instruments Carried at Fair Value

The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy (in thousands):

	March 30, 2014								June 30, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Non-U.S. certificates of deposit	$	—	$	12,163	$	—	$	12,163	$	—	$	—	$	—	$	—
Municipal bonds	—		—		—		—		—		2,009		—		2,009
Money market funds	67,553		—		—		67,553		12,589		—		—		12,589
Total cash equivalents	67,553		12,163		—		79,716		12,589		2,009		—		14,598
Short-term investments:
Municipal bonds	—		307,793		—		307,793		—		249,709		—		249,709
Corporate bonds	—		228,668		—		228,668		—		192,060		—		192,060
U.S. agency securities	—		27,284		—		27,284		—		39,474		—		39,474
Non-U.S. certificates of deposit	—		383,758		—		383,758		—		345,000		—		345,000
Non-U.S. government securities	—		7,070		—		7,070		—		7,603		—		7,603
Total short-term investments	—		954,573		—		954,573		—		833,846		—		833,846
Total assets		$67,553		$966,736		$—		$1,034,289		$12,589		$835,855		$—		$848,444

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Reportable Segments

9 Months Ended

Mar. 30, 2014

Segment Reporting [Abstract]

Reportable Segments

Reportable Segments

The Company's operating and reportable segments are:

• LED Products

• Lighting Products

• Power and RF Products

Reportable Segments Description

The Company's LED Products segment includes LED chips, LED components and SiC materials. The Company's Lighting Products segment primarily consists of LED lighting systems. The Company's Power and RF Products segment includes power devices and RF devices.

Financial Results by Reportable Segment

The table below reflects the results of the Company's reportable segments as reviewed by the Chief Operating Decision Maker (CODM) for the three and nine months ended March 30, 2014 and March 31, 2013. The Company's CODM is the Chief Executive Officer. The Company uses substantially the same accounting policies to derive the segment results reported below as those used in the Company's consolidated financial statements.

The Company's CODM does not review inter-segment revenue when evaluating segment performance and allocating resources to each segment. Thus, inter-segment revenue is not included in the segment revenues presented in the table below. As such, total segment revenue in the table below is equal to the Company's consolidated revenue.

The Company's CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the consolidated statements of income must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated income before income taxes.

In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment's cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated.

Unallocated costs in the table below consist primarily of manufacturing employees' stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans, matching contributions under the Company's 401(k) plan and acquisition related costs. These costs are not allocated to the reportable segments’ gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources.

Revenues, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):

	Three Months Ended						Nine Months Ended
	March 30, 2014			March 31, 2013			March 30, 2014			March 31, 2013
Revenues:
LED Products		$201,119			$195,561			$634,164			$584,070
Lighting Products	176,691			130,659			498,265			361,446
Power and RF Products	27,449			22,714			78,922			65,457
Total revenue		$405,259			$348,934			$1,211,351			$1,010,973
Gross Profit and Gross Margin:
LED Products gross profit		$91,634			$85,728			$290,931			$245,381
LED Products gross margin	45.6		%	43.8		%	45.9		%	42.0		%
Lighting Products gross profit	48,487			39,966			136,731			115,449
Lighting Products gross margin	27.4		%	30.6		%	27.4		%	31.9		%
Power and RF Products gross profit	15,675			12,033			44,452			35,253
Power and RF Products gross margin	57.1		%	53.0		%	56.3		%	53.9		%
Total segment gross profit	155,796			137,727			472,114			396,083
Unallocated costs	(5,802		)	(4,717		)	(15,585		)	(13,548		)
Consolidated gross profit		$149,994			$133,010			$456,529			$382,535
Consolidated gross margin	37.0		%	38.1		%	37.7		%	37.8		%

Assets by Reportable Segment

Inventories are the only assets reviewed by the Company's CODM when evaluating segment performance and allocating resources to the segments. The following table sets forth the Company's inventories by reportable segment at March 30, 2014 and June 30, 2013.

Unallocated inventories in the table below consist primarily of manufacturing employees' stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under the Company's 401(k) plan. These costs are not allocated to the reportable segments’ inventories because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources.

The Company does not allocate assets other than inventories to the reportable segments because the Company's CODM does not review them when assessing segment performance and allocating resources. The CODM reviews all of the Company's assets other than inventories on a consolidated basis.

Inventories for each of the Company's segments are as follows (in thousands):

	March 30, 2014		June 30, 2013
LED Products	$	107,392	$	99,835
Lighting Products	133,067		87,546
Power and RF Products	6,997		6,593
Total segment inventories	247,456		193,974
Unallocated inventories	3,778		3,027
Consolidated inventories	$	251,234	$	197,001

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Earnings Per Share

9 Months Ended

Mar. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table presents the computation of basic earnings per share (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net income		$28,164		$22,157		$94,342		$58,683
Weighted average common shares	121,535		116,682		120,677		116,059
Basic earnings per share	$0.23			$0.19	$0.78			$0.51

The following computation reconciles the differences between the basic and diluted earnings per share presentations (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net income		$28,164		$22,157		$94,342		$58,683
Weighted average common shares - basic	121,535		116,682		120,677		116,059
Dilutive effect of stock options, nonvested shares and ESPP purchase rights	2,160		1,926		2,463		709
Weighted average common shares - diluted	123,695		118,608		123,140		116,768
Diluted earnings per share	$0.23			$0.19	$0.77			$0.50

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted earnings per share. For the three and nine months ended March 30, 2014, there were 3.1 million and 2.4 million, respectively, of potential common shares not included in the calculation of diluted earnings per share because their effect was anti-dilutive. For the three and nine months March 31, 2013, there were 2.2 million and 8.7 million, respectively, of potential common shares not included in the calculation of diluted earnings per share because their effect was anti-dilutive.

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Intangible Assets

9 Months Ended

Mar. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

The following table presents the components of intangible assets, net (in thousands):

	March 30, 2014							June 30, 2013
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets with finite lives:
Customer relationships		$137,440		($65,131	)		$72,309		$137,440		($59,611	)		$77,829
Developed technology	162,760		(68,260		)	94,500		162,760		(53,476		)	109,284
Non-compete agreements	10,244		(5,507		)	4,737		10,244		(4,037		)	6,207
Trade names, finite-lived	520		(510		)	10		520		(493		)	27
Patent and licensing rights	129,599		(40,388		)	89,211		116,147		(34,849		)	81,298
Total intangible assets with finite lives	440,563		(179,796		)	260,767		427,111		(152,466		)	274,645
Trade names, indefinite-lived	82,880					82,880		82,880					82,880
Total intangible assets		$523,443		($179,796	)		$343,647		$509,991		($152,466	)		$357,525

Total amortization of intangible assets recognized during the three and nine months ended March 30, 2014 was $9.5 million and $28.3 million, respectively. For the three and nine months ended March 31, 2013, total amortization of intangible assets recognized was $9.4 million and $28.2 million, respectively.

Total future amortization expense of finite-lived intangible assets is estimated to be as follows (in thousands):

Fiscal Year Ending
June 29, 2014 (remainder of fiscal 2014)		$9,035
June 28, 2015	33,973
June 26, 2016	33,686
June 25, 2017	31,702
June 24, 2018	30,534
Thereafter	121,837
Total		$260,767

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Shareholders' Equity

9 Months Ended

Mar. 30, 2014

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

As of March 30, 2014, pursuant to an extension of the stock repurchase program authorized by the Board of Directors, the Company is authorized to repurchase shares of its common stock having an aggregate purchase price not exceeding $200 million for all purchases from June 20, 2013 through the expiration of the program on June 29, 2014. During the nine months ended March 30, 2014, there were no repurchases of common stock by the Company under the share repurchase program.

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Stock-Based Compensation

9 Months Ended

Mar. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Prior to the second quarter of fiscal 2014, the Company had one equity-based compensation plan, the 2004 Long-Term Incentive Compensation Plan (2004 LTIP), from which stock-based compensation awards could be granted to employees and directors. The Company’s 2013 Long-Term Incentive Compensation Plan (2013 LTIP) became effective in the second quarter of fiscal 2014, and replaced the 2004 LTIP as the sole plan for providing stock-based compensation awards to employees and directors on January 1, 2014. The 2004 LTIP has been terminated as to future grants although outstanding awards under the 2004 LTIP will continue to be governed by that plan. In addition, the Company has other equity-based compensation plans that have been terminated so that no future grants can be made under those plans, but under which options are currently outstanding.

Prior to fiscal 2013, the Company’s stock-based awards had been service-based only.  Beginning in fiscal 2013, the Company issued grants of awards that also contain performance-based conditions.  Performance-based conditions are generally tied to future financial and/or operating performance of the Company. The compensation expense with respect to performance-based grants is recognized if the Company believes it is probable that the performance condition will be achieved. The Company reassesses the probability of the achievement of the performance condition at each reporting period, and adjusts the compensation expense for subsequent changes in the estimate or actual outcome.

The Company also has an Employee Stock Purchase Plan (ESPP) that provides employees with the opportunity to purchase common stock at a discount. The ESPP limits employee contributions to 15% of each employee’s compensation (as defined in the plan). The ESPP allows employees to purchase shares at a 15% discount to the fair market value of common stock on the purchase date during the twelve-month participation period, divided into two equal six-month purchase periods, and provides a look-back feature. At the end of each six-month period in April and October, employees participating in the plan purchase the Company's common stock through the ESPP at a 15% discount to the fair market value of the common stock on the first day of the twelve-month participation period or the purchase date, whichever is lower. The plan also provides for an automatic reset feature to start participants on a new twelve-month participation period if the stock price declines during the first six-month purchase period.

Stock Option Awards

The following table summarizes option activity during the nine months ended March 30, 2014 (in thousands, except per share data):

	Number of Shares		Weighted Average Exercise Price
Outstanding at June 30, 2013	8,657			$35.67
Granted	2,969		55.21
Exercised	(2,260	)	36.28
Forfeited or expired	(300	)	40.20
Outstanding at March 30, 2014	9,066			$41.77

Restricted Stock Awards and Units

A summary of nonvested restricted stock awards (RSAs) and restricted stock unit awards (RSUs) outstanding as of March 30, 2014, and changes during the nine months then ended, are as follows (in thousands, except per share data):

	Number of   RSAs/RSUs		Weighted Average  Grant-Date Fair Value
Nonvested at June 30, 2013	647			$33.80
Granted	527		54.76
Vested	(252	)	33.09
Forfeited	(22	)	40.37
Nonvested at March 30, 2014	900			$46.11

Stock-Based Compensation Valuation and Expense

The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term.

The Company currently uses the Black-Scholes option-pricing model to estimate the fair value of the Company's stock option and ESPP awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements.

For RSAs and RSUs, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term.

Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.

Total stock-based compensation expense was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Income Statement Classification:
Cost of goods sold		$3,129		$2,334		$8,357		$6,875
Research and development	3,912		3,441		11,453		10,445
Sales, general and administrative	8,970		8,140		26,451		23,625
Total		$16,011		$13,915		$46,261		$40,945

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Financial Statement Details (Summary of the Components of Accumulated Other Comprehensive Income, Net of Taxes) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Accumulated other comprehensive income, net of taxes [Abstract]
Currency translation gain	$ 8,464	$ 8,492
Net unrealized gain (loss) on available-for-sale securities	1,653	(248)
Total accumulated other comprehensive income, net of taxes	$ 10,117	$ 8,244

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Income Taxes (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended		3 Months Ended	9 Months Ended			12 Months Ended
	Mar. 30, 2014	Jun. 30, 2013	Mar. 30, 2014 Second Quarter Fiscal 2014 Investment Tax Credit Award [Member]	Mar. 30, 2014 Second Quarter Fiscal 2014 Investment Tax Credit Award [Member]	Nov. 15, 2013 Second Quarter Fiscal 2014 Investment Tax Credit Award [Member] Prior Fiscal Year [Member]	Nov. 15, 2013 Second Quarter Fiscal 2014 Investment Tax Credit Award [Member] Current Fiscal Year [Member]	Jun. 29, 2014 Second Quarter Fiscal 2014 Investment Tax Credit Award [Member] Scenario, Forecast [Member]	Jan. 06, 2010 Third Quarter Fiscal 2010 Investment Tax Credit Award [Member]	Nov. 15, 2013 Maximum [Member] Second Quarter Fiscal 2014 Investment Tax Credit Award [Member]
Income Tax Contingency [Line Items]
U.S. statutory tax rate	35.00%
48C Tax Credit Carryforward, Amount					$ 15	$ 15		$ 39	$ 30
Amount Of Qualified Equipment				100
Investment Credit Period Recognized				5 years
Income tax benefit related to award			0.7	4.4			5.2
Unrecognized tax benefits balance	18.4	2.7
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions	18.0
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities	2.3
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	18.4
Estimated change in unrecognized tax benefits in next 12 months	$ 0.2

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Financial Statement Details (Tables)

9 Months Ended

Mar. 30, 2014

Financial Statement Details [Abstract]

Summary of the Components of Accounts Receivable, Net

The following table summarizes the components of accounts receivable, net (in thousands):

	March 30, 2014			June 30, 2013
Billed trade receivables		$254,274			$220,307
Unbilled contract receivables	1,427			1,171
	255,701			221,478
Allowance for sales returns, discounts and other incentives	(31,111		)	(26,500		)
Allowance for bad debts	(2,257		)	(2,471		)
Total accounts receivable, net		$222,333			$192,507

Summary of the Components of Inventories

The following table summarizes the components of inventories (in thousands):

	March 30, 2014		June 30, 2013
Raw material		$84,302		$62,253
Work-in-progress	81,846		68,146
Finished goods	85,086		66,602
Total inventories		$251,234		$197,001

Summary of the Components of Other Current Liabilities

The following table summarizes the components of other current liabilities (in thousands):

	March 30, 2014		June 30, 2013
Accrued taxes		$17,812		$21,436
Accrued professional fees	7,390		4,493
Accrued warranty	5,602		5,259
Accrued other	13,596		12,060
Total other current liabilities		$44,400		$43,248

Summary of the Components of Accumulated Other Comprehensive Income, Net of Taxes

The following table summarizes the components of accumulated other comprehensive income, net of taxes (in thousands):

	March 30, 2014		June 30, 2013
Currency translation gain		$8,464		$8,492
Net unrealized gain (loss) on available-for-sale securities	1,653		(248		)
Total accumulated other comprehensive income, net of taxes		$10,117		$8,244

Summary of the Components of Non-operating Income, Net

The following table summarizes the components of non-operating income, net (in thousands):

	Three Months Ended					Nine Months Ended
	March 30, 2014			March 31, 2013		March 30, 2014		March 31, 2013
Foreign currency (loss) gain, net		($368	)		$296		$109		$424
Gain on sale of investments, net	15			48		25		84
Interest income, net	3,415			2,018		8,562		5,756
Other, net	90			150		677		2,114
Total non-operating income, net		$3,152			$2,512		$9,373		$8,378

Summary of the Amounts Reclassified Out of Accumulated Other Comprehensive Income

The following table summarizes the amounts reclassified out of accumulated other comprehensive income (in thousands):

Accumulated Other Comprehensive Income Component	Amount Reclassified from Accumulated Other Comprehensive Income								Affected Line Item in the Statement of Income
	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net unrealized gain on available-for-sale securities, net of tax expense		$15		$43		$25		$80	Non-operating income, net
	15		43		25		80		Income before income taxes
	2		6		4		17		Income tax expense
		$13		$37		$21		$63	Net income

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Stock-Based Compensation (Tables)

9 Months Ended

Mar. 30, 2014

Share-based Compensation [Abstract]

Summary of Outstanding Option Awards

The following table summarizes option activity during the nine months ended March 30, 2014 (in thousands, except per share data):

	Number of Shares		Weighted Average Exercise Price
Outstanding at June 30, 2013	8,657			$35.67
Granted	2,969		55.21
Exercised	(2,260	)	36.28
Forfeited or expired	(300	)	40.20
Outstanding at March 30, 2014	9,066			$41.77

Summary of Nonvested Shares of Restricted Stock and Stock Unit Awards Outstanding

A summary of nonvested restricted stock awards (RSAs) and restricted stock unit awards (RSUs) outstanding as of March 30, 2014, and changes during the nine months then ended, are as follows (in thousands, except per share data):

	Number of   RSAs/RSUs		Weighted Average  Grant-Date Fair Value
Nonvested at June 30, 2013	647			$33.80
Granted	527		54.76
Vested	(252	)	33.09
Forfeited	(22	)	40.37
Nonvested at March 30, 2014	900			$46.11

Total Stock-Based Compensation Expense

Total stock-based compensation expense was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Income Statement Classification:
Cost of goods sold		$3,129		$2,334		$8,357		$6,875
Research and development	3,912		3,441		11,453		10,445
Sales, general and administrative	8,970		8,140		26,451		23,625
Total		$16,011		$13,915		$46,261		$40,945

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Stock-Based Compensation (Summary of Nonvested Shares of Restricted Stock and Stock Unit Awards Outstanding) (Details) (Restricted Stock Awards And Restricted Stock Units [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Mar. 30, 2014
Restricted Stock Awards And Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested, Number of RSAs/RSUs at beginning of period	647
Granted, Number of RSAs/RSUs	527
Vested, number of RSAs/RSUs	(252)
Forfeited, number of RSAs/RSUs	(22)
Nonvested, Number of RSAs/RSUs at end of period	900
Nonvested, weighted-average grant-date fair value at beginning of period	$ 33.80
Granted, weighted-average grant-date fair value	$ 54.76
Vested, weighted-average grant-date fair value	$ 33.09
Forfeited, weighted-average grant-date fair value	$ 40.37
Nonvested, weighted-average grant-date fair value at end of period	$ 46.11

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Intangible Assets (Components of intangible assets, net) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Jun. 30, 2013
Intangible Assets [Line Items]
Finite-lived intangible assets, gross	$ 440,563	$ 427,111
Finite-lived intangible assets, accumulated amortization	(179,796)	(152,466)
Finite-lived intangible assets, net	260,767	274,645
Trade names, indefinite-lived	82,880	82,880
Finite and indefinite intangible assets, gross	523,443	509,991
Intangible assets, net	343,647	357,525
Customer Relationships [Member]
Intangible Assets [Line Items]
Finite-lived intangible assets, gross	137,440	137,440
Finite-lived intangible assets, accumulated amortization	(65,131)	(59,611)
Finite-lived intangible assets, net	72,309	77,829
Developed Technology [Member]
Intangible Assets [Line Items]
Finite-lived intangible assets, gross	162,760	162,760
Finite-lived intangible assets, accumulated amortization	(68,260)	(53,476)
Finite-lived intangible assets, net	94,500	109,284
Non-compete Agreements [Member]
Intangible Assets [Line Items]
Finite-lived intangible assets, gross	10,244	10,244
Finite-lived intangible assets, accumulated amortization	(5,507)	(4,037)
Finite-lived intangible assets, net	4,737	6,207
Trade Names, finite-lived [Member]
Intangible Assets [Line Items]
Finite-lived intangible assets, gross	520	520
Finite-lived intangible assets, accumulated amortization	(510)	(493)
Finite-lived intangible assets, net	10	27
Patent and Licensing Rights [Member]
Intangible Assets [Line Items]
Finite-lived intangible assets, gross	129,599	116,147
Finite-lived intangible assets, accumulated amortization	(40,388)	(34,849)
Finite-lived intangible assets, net	$ 89,211	$ 81,298

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 28,164	$ 22,157	$ 94,342	$ 58,683
Currency translation (loss) gain, net of tax benefit (expense) of $0, $90, $0 and ($1), respectively	(163)	(145)	(28)	5
Net unrealized gain (loss) on available-for-sale securities, net of tax (expense) of ($126), ($75), ($1,191) and ($22), respectively	191	67	1,901	(17)
Other comprehensive income (loss)	28	(78)	1,873	(12)
Comprehensive income	$ 28,192	$ 22,079	$ 96,215	$ 58,671

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Financial Statement Details

9 Months Ended

Mar. 30, 2014

Financial Statement Details [Abstract]

Financial Statement Details

 Financial Statement Details

Accounts receivable, net

The following table summarizes the components of accounts receivable, net (in thousands):

	March 30, 2014			June 30, 2013
Billed trade receivables		$254,274			$220,307
Unbilled contract receivables	1,427			1,171
	255,701			221,478
Allowance for sales returns, discounts and other incentives	(31,111		)	(26,500		)
Allowance for bad debts	(2,257		)	(2,471		)
Total accounts receivable, net		$222,333			$192,507

Inventories

The following table summarizes the components of inventories (in thousands):

	March 30, 2014		June 30, 2013
Raw material		$84,302		$62,253
Work-in-progress	81,846		68,146
Finished goods	85,086		66,602
Total inventories		$251,234		$197,001

Other current liabilities

The following table summarizes the components of other current liabilities (in thousands):

	March 30, 2014		June 30, 2013
Accrued taxes		$17,812		$21,436
Accrued professional fees	7,390		4,493
Accrued warranty	5,602		5,259
Accrued other	13,596		12,060
Total other current liabilities		$44,400		$43,248

Accumulated other comprehensive income, net of taxes

The following table summarizes the components of accumulated other comprehensive income, net of taxes (in thousands):

	March 30, 2014		June 30, 2013
Currency translation gain		$8,464		$8,492
Net unrealized gain (loss) on available-for-sale securities	1,653		(248		)
Total accumulated other comprehensive income, net of taxes		$10,117		$8,244

Non-operating income, net

The following table summarizes the components of non-operating income, net (in thousands):

	Three Months Ended					Nine Months Ended
	March 30, 2014			March 31, 2013		March 30, 2014		March 31, 2013
Foreign currency (loss) gain, net		($368	)		$296		$109		$424
Gain on sale of investments, net	15			48		25		84
Interest income, net	3,415			2,018		8,562		5,756
Other, net	90			150		677		2,114
Total non-operating income, net		$3,152			$2,512		$9,373		$8,378

Reclassifications out of accumulated other comprehensive income

The following table summarizes the amounts reclassified out of accumulated other comprehensive income (in thousands):

Accumulated Other Comprehensive Income Component	Amount Reclassified from Accumulated Other Comprehensive Income								Affected Line Item in the Statement of Income
	Three Months Ended				Nine Months Ended
	March 30, 2014		March 31, 2013		March 30, 2014		March 31, 2013
Net unrealized gain on available-for-sale securities, net of tax expense		$15		$43		$25		$80	Non-operating income, net
	15		43		25		80		Income before income taxes
	2		6		4		17		Income tax expense
		$13		$37		$21		$63	Net income

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Commitments and Contingencies (Tables)

9 Months Ended

Mar. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Summary of changes in product warranty liabilities

The following table summarizes the changes in the Company's product warranty liabilities (in thousands):

	Nine Months Ended
	March 30, 2014
Balance at beginning of period		$6,171
Warranties accrued in current period	3,019
Changes in estimates for pre-existing warranties	907
Expenditures	(3,449		)
Balance at end of period		$6,648

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Investments Investments (Summary of Investment Securities, Aggregated by Investment Type and Length of Time) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014	Mar. 31, 2013	Jun. 30, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 144,544		$ 144,544		$ 234,470
Unrealized Loss, Less than 12 Months	(825)		(825)		(3,098)
Fair Value, Greater than 12 Months	1,979		1,979		0
Unrealized Loss, Greater than 12 Months	(38)		(38)		0
Fair Value, Total	146,523		146,523		234,470
Unrealized Loss, Total	(863)		(863)		(3,098)
Number of Securities with an Unrealized Loss, Less than 12 Months	71		71		123
Number of Securities with an Unrealized Loss, Greater than 12 Months	1		1		0
Number of Securities with an Unrealized Loss, Total	72		72		123
Gain on sale of investments, net	15	48	25	84
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	61,656		61,656		126,926
Unrealized Loss, Less than 12 Months	(289)		(289)		(1,314)
Fair Value, Greater than 12 Months	0		0		0
Unrealized Loss, Greater than 12 Months	0		0		0
Fair Value, Total	61,656		61,656		126,926
Unrealized Loss, Total	(289)		(289)		(1,314)
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	82,888		82,888		102,010
Unrealized Loss, Less than 12 Months	(536)		(536)		(1,765)
Fair Value, Greater than 12 Months	1,979		1,979		0
Unrealized Loss, Greater than 12 Months	(38)		(38)		0
Fair Value, Total	84,867		84,867		102,010
Unrealized Loss, Total	(574)		(574)		(1,765)
Non-U.S. Government Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	0		0		5,534
Unrealized Loss, Less than 12 Months	0		0		(19)
Fair Value, Greater than 12 Months	0		0		0
Unrealized Loss, Greater than 12 Months	0		0		0
Fair Value, Total	0		0		5,534
Unrealized Loss, Total	$ 0		$ 0		$ (19)

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Basis of Presentation and Changes in Significant Accounting Policies (Policies)

9 Months Ended

Mar. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated balance sheet at March 30, 2014, the consolidated statements of income for the three and nine months ended March 30, 2014 and March 31, 2013, the consolidated statements of comprehensive income for the three and nine months ended March 30, 2014 and March 31, 2013, and the consolidated statements of cash flows for the nine months ended March 30, 2014 and March 31, 2013 (collectively, the consolidated financial statements) have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows at March 30, 2014, and for all periods presented, have been made. All intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 30, 2013 has been derived from the audited financial statements as of that date. The nine month period ended March 30, 2014 includes one less week as compared to the nine month period ended March 31, 2013.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 (fiscal 2013). The results of operations for the three and nine months ended March 30, 2014 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 29, 2014 (fiscal 2014).

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual amounts could differ materially from those estimates.

Certain fiscal 2013 amounts in the accompanying consolidated financial statements have been reclassified to conform to the fiscal 2014 presentation. These reclassifications had no effect on previously reported consolidated net income or shareholders’ equity.

New Accounting Standards

New Accounting Standards

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists. The ASU provides guidance regarding the presentation in the statement of financial position of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryfoward exists. The ASU generally provides that an entity's unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The ASU applies prospectively to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date, and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company early adopted this guidance beginning with the first quarter of fiscal 2014. The Company's adoption of this guidance did not have a significant impact on its consolidated financial statements.

Stock-Based Compensation Valuation and Expense

Stock-Based Compensation Valuation and Expense

The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term.

The Company currently uses the Black-Scholes option-pricing model to estimate the fair value of the Company's stock option and ESPP awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements.

For RSAs and RSUs, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term.

Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.