PHILADELPHIA, June 27, 2003 (PRIMEZONE) -- Law Offices Bernard M. Gross, P.C. announces that a class action has been commenced in the United States District Court for the Middle District of North Carolina on behalf of purchasers of the securities of Cree, Inc. ("Cree") (Nasdaq:CREE) during the period between January 14, 2000 through and including June 13, 2003 (the "Class Period"). A copy of the Complaint is available from the Court or from our website at www.bernardmgross.com or you may contact us by phone at 866-561-3600 (toll free) or by email at susang@bernardmgross.com.
The action is pending in the United States District Court, Middle District of North Carolina, located at 324 W. Market St., Greensboro, NC against Cree, Inc.; Fred N. Hunter -- Chairman of the Board and founder, Cynthia B. Merrell -- Chief Financial Officer and Treasurer; Dolph W. Von Arx -- Director, Member of the Audit, Compensation & Audit Committees; Charles Swoboda -- President, Chief Executive Officer, former Chief Operating Officer, and Director; Walter L. Robb -- Director; and John W. Palmour -- Director and Executive Vice President. The Complaint charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Cree securities.
The Complaint alleges, among other things, that on January 14, 2000, the start of the Class Period, Cree filed a prospectus and registration statement in connection with the offering of 2,860,000 shares of common stock. The "Use Of Proceeds" Section of the prospectus failed to disclose that Cree would invest $5 million of the offering proceeds in World Theatre, Inc., a speculative start-up company in which Eric Hunter, a brother of the Company's Chairman and Chief Executive Officer, was a substantial shareholder.
In addition, in December 2000, Cree bought the UltraRF division from Spectrian Corporation ("Spectrian") for approximately 908,000 shares of Cree common stock and $30 million in cash. Cree had entered into a two-year supply contract with Spectrian that would generate $58 million in revenue for Cree but Cree failed to disclose that the Spectrian supply contract only obligated Spectrian to purchase product from Cree if Cree were able to sell at the best available commercial price for particular products; otherwise, Spectrian was free to purchase from other vendors. Despite continued losses that the UltraRF division sustained, Cree failed to timely write down the division's goodwill, which the Company persisted in valuing at $81.7 million. The full extent of the Company's financial statement fraud was not revealed until June 13, 2003. On that date, the Company revealed that it had been sued by Eric Hunter, a substantial Cree shareholder, and a brother of Cree Chairman, Fred Neal Hunter.
The lawsuit revealed, among other things, that the Company had a) altered corporate books and records to mislead auditors and investors as to material facts to boost executive compensation; b) filed public documents that omitted significant material facts in connection with the Company's secondary stock offerings; c) entered into an undisclosed long-term requirements contract with C3 Corporation that required that company to accept more shipments than demand would warrant, of silicon carbide crystals for the manufacture of moissanite gems solely to artificially inflate Cree's revenues and share price. As a result of this news, the Company's share price dropped 18.5%.
Plaintiff seeks to recover damages on behalf of the class purchasers of Cree common stock between January 14, 2000 and June 13, 2003). If you are a member of the class described above, you may, not later than August 18, 2003, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements.
Plaintiff is represented by the law firm of Law Offices Bernard M. Gross, P.C. having significant experience and expertise in prosecuting class actions.
We also recently filed a securities fraud class action lawsuit on behalf of shareholders of Tyco International, Inc.(NYSE:TYC) between September 9, 1999 and May 28, 2003. The lead plaintiff petition is due by August 4, 2003 in that case.
If you wish to discuss this action or have any questions concerning this Notice or rights or interests with respect to these matters,
PLEASE CONTACT: Law Offices Bernard M. Gross, P.C.
Susan R. Gross, Esq.
Deborah R. Gross, Esq.
1515 Locust Street, 2nd Floor
Philadelphia, PA 19102
Telephone: 866-561-3600 (toll-free)
215-561-3600
E-mail: susang@bernardmgross.com or
debbie@bernardmgross.com.
Website: http://www.bernardmgross.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca