<SUBMISSION>
<ACCESSION-NUMBER>0000950144-01-507092
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20011023
<FILING-DATE>20010920
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CREE INC
<CIK>0000895419
<ASSIGNED-SIC>3674
<IRS-NUMBER>561572719
<STATE-OF-INCORPORATION>NC
<FISCAL-YEAR-END>0627
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-21154
<FILM-NUMBER>1741318
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4600 SILICON DR
<CITY>DURHAM
<STATE>NC
<ZIP>27703
<PHONE>9193135300
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>4600 SILICON DR
<CITY>DURHAM
<STATE>NC
<ZIP>27703-8475
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CREE RESEARCH INC /NC/
<DATE-CHANGED>19940224
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>g71723ddef14a.htm
<DESCRIPTION>CREE INC
<TEXT>
<HTML>
<HEAD>
<TITLE>CREE INC NOTICE & PROXY STATEMENT</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV align="center">
<B>SCHEDULE 14A</B><BR>
<B>(Rule 14a-101)</B>
</DIV>

<P align="center">
<B>INFORMATION REQUIRED IN PROXY STATEMENT</B>

<P align="center">
<B>SCHEDULE 14A INFORMATION</B>

<DIV align="center">
<B>Proxy Statement Pursuant to Section 14(a) of the Securities
</B>
</DIV>

<DIV align="center">
<B>Exchange Act of 1934 (Amendment No. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;)</B>
</DIV>

<P align="left">
Filed by the Registrant&nbsp; [X]

<P align="left">
Filed by a Party other than the Registrant&nbsp;
[&nbsp;&nbsp;&nbsp;]

<P align="left">Check the appropriate box:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
        <TD width="51%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="46%">&nbsp;</TD>
</TR>

<TR>
        <TD align="left" valign="top"><FONT size="2">
        [&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;Preliminary Proxy Statement</FONT></TD>
        <TD></TD>
        <TD align="left" valign="top"><FONT size="2">
        [&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;Confidential, for Use of the
        Commission Only (as permitted by Rule 14a-6(e)(2))</FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top"><FONT size="2">[X]&nbsp;&nbsp;Definitive Proxy Statement</FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top"><FONT size="2">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;Definitive Additional Materials</FONT></TD>
</TR>

<TR>
        <TD colspan="3" align="left" valign="top"><FONT size="2">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">

<DIV align="center">
<FONT size="2">CREE, INC.</FONT>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left">
</DIV>

<DIV align="center">
<FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT>
</DIV>

<P align="center">


<DIV align="center">
<FONT size="2">&nbsp;</FONT>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left">
</DIV>

<DIV align="center">
<FONT size="2">(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)</FONT>
</DIV>

<P align="left">
Payment of Filing Fee (Check the appropriate box):
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>

<TR valign="top">
        <TD>[X]&nbsp;&nbsp;</TD>
        <TD align="left">
        No fee required.</TD>
</TR>

</TABLE>

<P align="left">
[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</TD>
        <TD align="left">
        Title of each class of securities to which transaction applies:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</TD>
        <TD align="left">
        Aggregate number of securities to which transaction applies:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</TD>
        <TD align="left">
        Per unit price or other underlying value of transaction computed
        pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on
        which the filing fee is calculated and state how it was
        determined):</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</TD>
        <TD align="left">
        Proposed maximum aggregate value of transaction:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)</TD>
        <TD align="left">
        Total fee paid:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>

<TR valign="top">
        <TD>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
        <TD align="left">
        Fee paid previously with preliminary materials:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="96%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>

<TR valign="top">
        <TD>[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
        <TD align="left">
        Check box if any part of the fee is offset as provided by
        Exchange Act Rule 0-11(a)(2) and identify the filing for which
        the offsetting fee was paid previously. Identify the previous
        filing by registration statement number, or the Form or Schedule
        and the date of its filing.</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</TD>
        <TD align="left">
        Amount Previously Paid:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</TD>
        <TD align="left">
        Form, Schedule or Registration Statement No.:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</TD>
        <TD align="left">
        Filing Party:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="7%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</TD>
        <TD align="left">
        Date Filed:</TD>
</TR>

</TABLE>

<P>
<DIV align="left">
<HR size="1" width="93%" align="right">
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="center">
<B>CREE, INC.</B>

<P align="center">
<B>4600 Silicon Drive</B>

<DIV align="center">
<B>Durham, North Carolina 27703</B>
</DIV>

<DIV align="center">
<B>(919)&nbsp;313-5300</B>
</DIV>

<P align="center">
<HR size="1" width="82%" align="center" noshade>

<P align="center">
<B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B>

<P align="center">
<HR size="1" width="82%" align="center" noshade>

<P align="left">
To the Shareholders of Cree, Inc.:

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2001 Annual Meeting of Shareholders of Cree, Inc. (the
&#147;Company&#148;) will be held on Tuesday, October&nbsp;23,
2001, at 10:00&nbsp;a.m. local time, at the Company&#146;s
offices at 4425 Silicon Drive, Durham, North Carolina, for the
following purposes:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="3%"></TD>
        <TD width="4%"></TD>
        <TD width="93%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD>1.</TD>
        <TD align="left">
        To elect seven directors to serve until the next annual meeting
        of shareholders and until their successors are elected and
        qualified; and</TD>
</TR>

<TR>
        <TD>&nbsp;</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD>2.</TD>
        <TD align="left">
        To transact such other business as may properly come before the
        meeting and any adjournments thereof.</TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These items are more fully described in the accompanying proxy
statement, which is made a part of this notice. The Board of
Directors has fixed September&nbsp;4, 2001 as the record date
for the meeting. Accordingly, only shareholders of record at the
close of business on September&nbsp;4, 2001 are entitled to
notice of and to vote at the meeting.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="50%"></TD>
        <TD width="50%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        By order of the Board of Directors,</TD>
</TR>

<TR>
        <TD>&nbsp;</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        <IMG src="g71723dg7172301.jpg" alt="-s- Adam H. Broome"></TD>
</TR>

<TR>
        <TD>&nbsp;</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        Adam H. Broome</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        <I>Secretary</I></TD>
</TR>

</TABLE>

<P align="left">
Durham, North Carolina

<DIV align="left">
September&nbsp;20, 2001
</DIV>

<P align="left">
<B>IMPORTANT:</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>All shareholders are cordially invited to attend the meeting
in person. Whether or not you expect to attend, please complete
and return the enclosed proxy as promptly as possible to ensure
your shares are represented. You may still vote in person if you
attend the meeting. Please note, however, that if a broker or
other nominee holds your shares of record and you wish to vote
at the meeting, you must obtain from the record holder a proxy
issued in your name.</B>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="center">
<B>CREE, INC.</B>

<P align="center">
<B>4600 Silicon Drive</B>

<DIV align="center">
<B>Durham, North Carolina 27703</B>
</DIV>

<DIV align="center">
<B>(919)&nbsp;313-5300</B>
</DIV>

<P align="center">
<HR size="1" width="33%" align="center" noshade>

<P align="center">
<B>PROXY STATEMENT</B>

<P align="center">
<HR size="1" width="33%" align="center" noshade>

<P align="center">
<B>INFORMATION CONCERNING SOLICITATION AND VOTING</B>

<P align="left">
<B>General</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The enclosed proxy is solicited on behalf of Cree, Inc., a North
Carolina corporation (the &#147;Company&#148;), for use at the
2001 Annual Meeting of Shareholders of the Company and any
adjournments thereof. The Annual Meeting will held on Tuesday,
October&nbsp;23, 2001, beginning at 10:00&nbsp;a.m. local time,
at the Company&#146;s offices at 4425 Silicon Drive, Durham,
North Carolina. The mailing address of the Company&#146;s
principal executive offices is 4600 Silicon Drive, Durham, North
Carolina 27703-8475.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company will mail this proxy statement and the accompanying
form of proxy to shareholders entitled to vote at the Annual
Meeting beginning on or about September&nbsp;20, 2001. The
Company will bear the cost of this solicitation, including the
preparation, printing and mailing of the proxy statement, form
of proxy and any additional soliciting materials sent by the
Company to shareholders. In addition, the Company&#146;s
directors, officers and employees may solicit proxies personally
or by telephone without additional compensation. The Company
will also reimburse brokerage firms and other persons
representing beneficial owners of shares for reasonable expenses
incurred in forwarding proxy-soliciting materials to the
beneficial owners.

<P align="left">
<B>Voting Securities</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shareholders of record at the close of business on
September&nbsp;4, 2001 are entitled to vote at the Annual
Meeting. As of the record date, there were 73,041,479 shares of
Common Stock of the Company outstanding. Each share of Common
Stock outstanding on the record date is entitled to one vote on
each matter on which a vote is taken at the meeting. Shares of
Common Stock were the only voting securities of the Company
outstanding on the record date. A quorum will be present at the
Annual Meeting if a majority of the shares of Common Stock
outstanding on the record date is present at the meeting in
person or by proxy.

<P align="left">
<B>Revocability and Voting of Proxies</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A shareholder who has signed and returned the enclosed proxy may
revoke it at any time before it is voted. It may be revoked by
voting in person at the Annual Meeting or by delivering to the
Secretary of the Company, at the Company&#146;s principal
executive offices, a written revocation or properly executed
proxy bearing a later date.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The persons acting as proxies pursuant to the enclosed proxy
form will vote the shares represented as directed in the signed
proxy. Unless otherwise directed, the proxy holders will vote
the shares represented by the proxy for election of the seven
director nominees named in this proxy statement and in the proxy
holders&#146; discretion on such other business as may come
before the meeting and any adjournments thereof. If the proxy is
marked to abstain from voting or to withhold authority to vote
on a matter, or if a broker or other nominee returns a proxy
indicating a lack of authority to vote on a matter, the shares
represented by that proxy will not be counted in calculating the
vote on the matter but will be deemed present at the meeting for
purposes of establishing a quorum.

<P align="center">

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="center">
<B>ELECTION OF DIRECTORS</B>

<P align="left">
<B>Nominees for the Board of Directors</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All seven of the persons nominated for election to the Board of
Directors at the Annual Meeting are currently serving as
directors of the Company. Dr. Walter L. Robb, who has served on
the Board since 1993, is not standing for re-election. The
Company is not aware of any nominee who will be unable or will
decline to serve as a director. If a nominee becomes unable or
declines to serve, the enclosed proxy may be voted for a
substitute nominee, if any, designated by the Board of
Directors. The term of office of each person elected as a
director will continue until the later of the next annual
meeting of shareholders or until such time as his successor has
been duly elected and qualified. Directors are elected by a
plurality of votes cast. Assuming the presence of a quorum at
the Annual Meeting, abstentions and non-votes, including proxies
marked to withhold authority to vote, will have no effect on the
outcome of the election.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s nominees for director are as follows:

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Name</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Age</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="2">Position with the Company</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Director Since</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">F. Neal Hunter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director, Chairman of the Board and Executive
	Chairman
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1987</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Charles M. Swoboda
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">34</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director, Chief Executive Officer and President
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">John W. Palmour, Ph.D.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">40</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director and Director of Advanced Devices
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dolph W. von Arx
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">67</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">James E. Dykes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">63</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">William J. O&#146;Meara
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">64</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Robert J. Potter, Ph.D.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">68</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Hunter, one of the Company&#146;s founders, has served
as Chairman of the Board of Directors since 1995, as Executive
Chairman since June 2001 and as a member of the Board of
Directors since the Company&#146;s inception in 1987. He was the
Chief Executive Officer of the Company from 1994 to June 2001
and President from 1994 to 1999. Prior to 1994, Mr.&nbsp;Hunter
served as General Manager for the Company&#146;s optoelectronic
products business and as Secretary and Treasurer.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Swoboda has served as the Company&#146;s Chief
Executive Officer since June 2001, as a member of the Board of
Directors since October 2000 and as President since January
1999. He was Chief Operating Officer of the Company from 1997 to
June 2001 and Vice President for Operations from 1997 to 1999.
Prior to his appointment as Chief Operating Officer,
Mr.&nbsp;Swoboda served as Operations Manager from 1996 to 1997,
as General Manager of the Company&#146;s former subsidiary, Real
Color Displays, Incorporated, from 1994 to 1996 and as LED
Product Manager from 1993 to 1994. He was previously employed by
Hewlett-Packard Company<I>.</I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dr.&nbsp;Palmour, also one of the Company&#146;s founders, has
served as a member of the Company&#146;s Board of Directors
since October 1995. He has also served since 1995 as the
Company&#146;s Director of Advanced Devices and in that capacity
manages all of the research and development programs undertaken
by the Company directed to wide bandgap RF, microwave and power
devices. Dr.&nbsp;Palmour previously served on the Board of
Directors from 1992 to 1993.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr. von Arx has been a member of the Company&#146;s Board of
Directors since October 1991 and previously served as Chairman,
President and Chief Executive Officer of Planters Lifesavers
Company, an affiliate of RJR Nabisco, Inc., until his retirement
in 1991. Since his retirement in 1991, Mr. von Arx served as
non-executive Chairman of Morrison Restaurants Inc., a publicly
held family dining business, from 1996 to 1998 and is currently
a director of Ruby Tuesday, Inc., International Multifoods
Corporation, Northern Trust of Florida Corp. and BMC Fund, Inc.

<P align="center">2

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Dykes has served on the Company&#146;s Board of
Directors since January 1992. Mr.&nbsp;Dykes was President and
Chief Executive Officer of Signetics Company, a semiconductor
manufacturer and wholly-owned subsidiary of North American
Philips Corporation, from 1989 until his retirement in 1992, and
from 1987 to 1988 served as the first President and Chief
Executive Officer of Taiwan Semiconductor Manufacturing Company
Ltd., a semiconductor foundry. From 1994 to 1997 Mr.&nbsp;Dykes
was President and Chief Operating Officer of Intellon Corp., a
semiconductor company supplying products for home networking
applications, and from 1997 to 1998 served as Executive Vice
President for Corporate Development with the Thomas Group, Inc.,
a management services company. Mr.&nbsp;Dykes is currently a
director of EXAR Corporation and Thomas Group, Inc.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;O&#146;Meara was elected to the Company&#146;s Board of
Directors in October 2000. He previously served as President and
Chief Executive Officer of C-Cube Microsystems, Inc., a
semiconductor company supplying products for digital video
applications, until his retirement in 1995 and thereafter served
as its Vice Chairman until 1997. Before joining C-Cube
Microsystems Mr.&nbsp;O&#146;Meara was Chairman, Chief Executive
Officer and President of Headland Technology, Inc., an entity
affiliated with LSI Logic Corporation, a semiconductor company
he co-founded in 1981, and served as Vice President of Worldwide
Sales and Marketing for LSI Logic. Mr.&nbsp;O&#146;Meara also
served as a member of the Board of Directors of Cisco Systems,
Inc. from 1987 to 1994.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dr.&nbsp;Potter was elected as a member of the Company&#146;s
Board of Directors in April 2001. He is currently President and
Chief Executive Officer of R. J. Potter Company, a business
consulting firm based in Irving, Texas. Prior to establishing R.
J. Potter Company, Dr.&nbsp;Potter was President and Chief
Executive Officer of Datapoint Corporation, a producer of local
area networking and video conferencing products, from 1987 to
1990 and held senior management positions in other
technology-rich businesses, including Group Vice President of
Northern Telecom Inc. responsible for the customer premises
telecommunications and integrated office systems businesses,
Senior Vice President and Chief Technical Officer of
International Harvester Company, President of the Office Systems
Division of Xerox Corporation and Research Manager of IBM
Corporation. He is currently a director of Molex Corporation.

<P align="center">
<B>The Board of Directors recommends shareholders</B>

<DIV align="center">
<B>vote FOR election of the nominees named above.</B>
</DIV>

<P align="left">
<B>Other Directors and Executive Officers</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other directors not standing for re-election, and executive
officers not serving or nominated for election as directors,
include the following:

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Walter L. Robb, Ph.D. (age 73) became a member of the Board of
Directors of the Company in April 1993. Dr.&nbsp;Robb is
President of Vantage Management, Inc., a consulting and
investment firm based in Schenectady, New York. From 1986 to
1992, he served as Senior Vice President of Corporate Research
and Development for General Electric Company, a diversified
technology company, and previously held various other management
positions with General Electric Company. Dr.&nbsp;Robb is
currently a director of Celgene Corporation, Medical Technology
Incorporated and Plug Power Inc.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cynthia B. Merrell (age 40) has served as Chief Financial
Officer and Treasurer of the Company since 1998 and previously
served as the Company&#146;s Controller from 1996 to 1998 after
joining the Company in 1996. Prior to 1996 Ms.&nbsp;Merrell was
employed as the controller of Kaset International, a subsidiary
of The Times Mirror Company engaged in providing training,
consulting and project management services in the field of
customer relations. Her prior financial experience includes
service in various capacities with Tropicana Products, Inc. and
the accounting firm of Arthur Andersen &#38; Co. She is licensed
as a certified public accountant in the state of Florida.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
M.&nbsp; Todd Tucker (age 38) has served as the Company&#146;s
Executive Vice President for Operations since December 2000 and
as an executive officer of the Company since June 2001. Prior to
joining the Company Mr.&nbsp;Tucker was employed by JDS Uniphase
Corporation, an optical components and module provider to the
communications industry, where he was Senior Vice President,
Chief Improvement Officer and Vice President

<P align="center">3

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV align="left">
for Operations from 1998 to 2000, Director of Operations in 1998
and Plant Manager from 1997 to 1998. His previous positions
include Director, National Service of Brother International
Corporation, a consumer electronics business, where he was
employed from 1996 to 1997, and various positions in the
telecommunications equipment businesses of AT&#38;T Corporation
and Lucent Technologies Inc. from 1983 to 1996.
</DIV>

<P align="left">
<B>Compensation of Directors</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company does not pay cash compensation for service on the
Board of Directors. Directors not employed by the Company are
awarded stock options as compensation for such service.
Directors who are also employees of the Company are not
separately compensated for service on the Board. The Company
reimburses directors for expenses incurred in serving as a
director.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Non-employee directors standing for re-election at the Annual
Meeting were each granted, in July 2001, options to purchase
20,000 shares of Common Stock of the Company at a price of
$25.30 per share, which was the closing market price on the
grant date. Subject to continued service as a director, these
options vest in equal monthly increments on the last day of each
month during the one-year period ending October&nbsp;31, 2002
or, if earlier, on the date of the 2002 Annual Meeting of
Shareholders of the Company.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;O&#146;Meara and Dr.&nbsp;Potter were also granted
options to purchase shares of Common Stock in connection with
their initial election to the Board of Directors. The Company
granted Mr.&nbsp;O&#146;Meara, in October 2000, an option to
purchase 48,000 shares of Common Stock at a price of $43.00 per
share, which was the closing market price on the grant date
(after adjustment for the December 2000 stock split). The
Company granted Dr.&nbsp;Potter, in May 2001, an option to
purchase 36,000 shares of Common Stock at a price of $21.89 per
share, which was the closing market price on the grant date.
Each of these options vests in equal quarterly installments over
three years from the grant date, subject to continued service as
a director.

<P align="left">
<B>Board Meetings and Committees</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors of the Company held nine meetings during
the fiscal year ended June&nbsp;24, 2001. Each director attended
or participated in 75% or more of all meetings of the Board of
Directors during the fiscal year which were held during the
period he served as a director.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board has standing Audit, Compensation and Executive
Committees. During fiscal 2001, the Audit Committee held eight
meetings, the Compensation Committee held five meetings and the
Executive Committee held one meeting. Each director attended or
participated during the year in 75% or more of all meetings of
committees on which he served that were held during the period
of his service, with the exception of Dr.&nbsp;Robb who attended
67% of such meetings (six of nine meetings). The Board did not
have a standing nominating committee, or committee performing
similar functions, during the fiscal 2001 but subsequently voted
to expand the role of the Compensation Committee to include
responsibility for evaluating and nominating new candidates for
election as directors. Directors presently serving on Board
committees are as follows:

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Audit Committee</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="2">Compensation Committee</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="2">Executive Committee</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mr. von Arx (Chairman)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Mr. Dykes (Chairman)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Mr. Hunter (Chairman)
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mr.&nbsp;Dykes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Mr. von Arx
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Mr. Dykes
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dr.&nbsp;Robb
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Dr. Robb
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Mr. von Arx
	</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mr.&nbsp;O&#146;Meara
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Mr. O&#146;Meara
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dr.&nbsp;Potter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Dr. Potter
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee is authorized by the Board of Directors to
review with the Company&#146;s independent auditors the annual
financial statements of the Company prior to publication, to
review the work of and approve non-audit services performed by
the independent auditors, and to make annual recommendations to
the Board of Directors for the appointment of independent
auditors for the ensuing year. The Committee also reviews the
effectiveness of the financial and accounting functions,
organization, operations and management of the Company. The
Board of Directors has adopted a written charter for the
functioning of the Audit Committee. The charter is set forth in
Appendix&nbsp;A to this proxy statement. All directors serving
as members

<P align="center">4

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV align="left">
of the Audit Committee are independent within the meaning of
Rule&nbsp;4200(a)(15) of the National Association of Securities
Dealers&#146; listing standards.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee determines the compensation of the
Company&#146;s chief executive officer and reviews and approves
the compensation of all other officers of the Company. In
addition, the Committee is responsible for administration of the
Company&#146;s stock option plans and, in that capacity, reviews
and approves proposed grants of stock options. As noted above,
the Board of Directors recently delegated to the Compensation
Committee responsibility for evaluating and nominating new
candidates for election as directors. The Committee has not yet
determined what procedures, if any, it will adopt for use by
shareholders in submitting recommendations and in evaluating
candidates recommended by shareholders.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Executive Committee was established to render advice and
recommendations to the Board of Directors with regard to
policies of the Company and the conduct of its affairs, to
consider matters submitted to the Committee during intervals
between meetings of the Board of Directors and, subject to
ratification by the full Board, to approve contracts, agreements
and other material corporate matters. The Executive Committee
held one meeting during the 2001 fiscal year.

<P align="left">
<B>Section&nbsp;16(a) Beneficial Ownership Reporting
Compliance</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;16(a) of the Securities Exchange Act of 1934, as
amended, requires that the Company&#146;s directors and
executive officers, and persons who own more than ten percent of
a registered class of the Company&#146;s equity securities, file
with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Directors, officers
and greater-than-ten-percent (10%) beneficial owners are
required by Commission rules to furnish the Company with copies
of all reports they file under Section&nbsp;16(a).

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To the Company&#146;s knowledge, based solely on its review of
the copies of such reports furnished to the Company and written
representations that no other reports were required, all
Section&nbsp;16(a) filing requirements applicable to its
directors, officers and beneficial owners were complied with on
a timely basis during the fiscal year ended June&nbsp;24, 2001,
except that Mr.&nbsp;Hunter reported a gift of 500 shares
approximately nine weeks late and Dr.&nbsp;Robb reported a sale
of 1,000 shares by a limited liability company of which he was
the sole member and sole manager approximately eight weeks late.

<P align="left">
<B>Certain Transactions</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In April 2000, the Company purchased shares in a private
placement offering of common stock of World Theatre, Inc.
(&#147;WTI&#148;), a North Carolina corporation engaged, among
other things, in developing a network for the distribution and
sale of music and other content through cable, satellite and
similar systems. The shares purchased represent less than 10% of
WTI&#146;s outstanding capital stock. During the second quarter
of fiscal 2001, the Company entered into a Development Agreement
and Exclusive Supply Agreement with WTI in which WTI agreed to
fund a four-year development program to be undertaken by the
Company directed to development of certain components for
potential use in WTI products and WTI in return received certain
exclusive rights with respect to the components.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WTI retained an option to terminate the agreement, which it
exercised in March 2001. As a result of the termination,
WTI&#146;s exclusive rights ended and neither party had any
further financial or development obligation. WTI paid the
Company $1 million in development funding pursuant to the
agreement prior to termination. The Company also received, as
additional consideration, an option to purchase from another WTI
shareholder, Eric Hunter, shares of WTI common stock
representing 2% percent of its outstanding capital stock at a
price per share equal to the price paid by the Company in April
2000. The option remains unexercised. Mr.&nbsp;Hunter, who is a
substantial shareholder of WTI, was a co-founder of the Company
and served as its President and Chief Executive Officer from
1987 to 1994 and as Chairman from 1987 to 1995. He is presently
employed by the Company on a part-time basis as a Senior
Technology Advisor, holds stock options granted by the Company
and is a brother of the Company&#146;s Executive Chairman, F.
Neal Hunter.

<P align="center">5

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="center">
<B>COMPARATIVE PERFORMANCE</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The graph below compares, for the five-year period ended
June&nbsp;24, 2001, the cumulative total return of the
Company&#146;s Common Stock at each fiscal year end with a
market index based on The Nasdaq Stock Market and an industry
index based on Nasdaq-traded stocks of electronic components
businesses. The market index is the Nasdaq Stock
Market&#151;U.S. Companies and the industry index is the Nasdaq
Electronic Components. The graph assumes an investment of $100
on June 30, 1996 in the Company&#146;s Common Stock and in each
index and also assumes the reinvestment of all dividends during
the period shown.

<P align="center">
<B><I>Comparison of Five-Year Cumulative Total Return</I></B>

<DIV align="center">
<B><I>Cree, Inc. Common Stock, Nasdaq Stock Market Index
and</I></B>
</DIV>

<DIV align="center">
<B><I>Nasdaq Electronic Components Index</I></B>
</DIV>

<DIV align="center">
<IMG src="g71723dg7172302.gif">
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Performance Graph Data</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">June 1996</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">June 1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">June 1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">June 1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">June 2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">June 2001</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cree, Inc. Common Stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">82</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">445</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,127</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Nasdaq Stock Market Index
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">158</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">218</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">329</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Nasdaq Electronic Components Index
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">166</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">268</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">245</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">6
<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="center">
<B>PRINCIPAL SHAREHOLDERS AND</B>

<DIV align="center">
<B>SHARE OWNERSHIP BY MANAGEMENT</B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the beneficial ownership of the
Company&#146;s Common Stock as of September&nbsp;4, 2001 by
(i)&nbsp;each person known to the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock, (ii) each
executive officer named in the Summary Compensation Table on
page 8, (iii) each person serving as a director or nominated for
election as a director, and (iv)&nbsp;all executive officers and
directors as a group. Unless otherwise noted, each of the
persons listed below is believed to hold sole voting and sole
investment power with respect to the shares indicated.

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
        <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Common Stock</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Percentage of</FONT></B></TD>
</TR>

<TR>
        <TD align="center" nowrap><B><FONT size="2">Name and Address (1)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Beneficially Owned (2)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Outstanding Shares</FONT></B></TD>
</TR>

<TR>
        <TD align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Janus Capital Group (3)
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">10,162,820</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">13.9%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">100 Fillmore Street, Suite&nbsp;300
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Denver, CO 80206-4923
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>
<TR>
        <TD>&nbsp;<BR></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">John W. Palmour, Ph.D.
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1,204,020</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1.6%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>
<TR>
        <TD>&nbsp;<BR></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Dolph W. von Arx
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1,028,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1.4%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">F. Neal Hunter
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">836,200</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1.1%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Charles M. Swoboda
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">413,394</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0.6%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Walter L. Robb, Ph.D.
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">389,500</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0.5%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Cynthia B. Merrell
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">278,813</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0.4%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">James E. Dykes
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">278,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0.4%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">William J. O&#146;Meara
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">16,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Robert J. Potter, Ph.D.
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">13,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">All directors and executive officers as a group
        (10 persons)
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">4,458,527</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">6.1%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;</TD>
        <TD align="left">
        Represents less than one-tenth percent.</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD>(1)&nbsp;</TD>
        <TD align="left">
        Unless otherwise noted, the address is in care of the Company at
        4600 Silicon Drive, Durham, NC 27703.</TD>
</TR>

<TR valign="top">
        <TD>(2)&nbsp;</TD>
        <TD align="left">
        Includes the following share amounts with respect to which the
        named person or group had the right to acquire beneficial
        ownership within sixty days after September&nbsp;4, 2001:
        Dr.&nbsp; Palmour, 332,000; Mr. von Arx, 312,000;
        Mr.&nbsp;Hunter, 518,000; Mr.&nbsp;Swoboda, 390,000;
        Dr.&nbsp;Robb, 327,000; Ms.&nbsp;Merrell, 276,800;
        Mr.&nbsp;Dykes, 264,000; Mr.&nbsp; O&#146;Meara, 16,000;
        Dr.&nbsp;Potter, 6,000; and all directors and executive officers
        as a group, 2,441,800. The share amount reported for
        Dr.&nbsp;Palmour includes 40,000 shares owned by his spouse and
        with respect to which he may be deemed to possess shared voting
        and investment power; Dr.&nbsp;Palmour disclaims beneficial
        ownership of these shares. The share amount reported for Mr. von
        Arx includes 20,000 shares owned by a charitable foundation of
        which he is a director and with respect to which he may be
        deemed to possess shared voting and investment power; Mr. von
        Arx disclaims beneficial ownership of these shares.</TD>
</TR>

<TR valign="top">
        <TD>(3)&nbsp;</TD>
        <TD align="left">
        Based solely on Amendment No.&nbsp;1 to Schedule&nbsp;13G filed
        with the Commission on February&nbsp;15, 2001. According to such
        filing, (a)&nbsp; Janus Capital Corporation (&#147;Janus
        Capital&#148;), an investment adviser registered under the
        Investment Advisers Act of 1940, and Thomas H. Bailey, as
        President and Chairman of the Board of Janus Capital and owner
        of 12.2% of its stock, each report sole voting and dispositive
        power over 10,162,820 shares of Common Stock but disclaim
        beneficial ownership of the shares; and (b) Janus Enterprise
        Fund, an investment company registered under the Investment
        Company Act of 1940 to which Janus Capital provides investment
        advice, reports sole voting and dispositive power over 4,348,100
        shares of Common Stock.</TD>
</TR>

</TABLE>

<P align="center">7

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="center">
<B>EXECUTIVE COMPENSATION</B>

<P align="left">
<B>Overview</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes the compensation, for the fiscal
years indicated, of the Company&#146;s chief executive officer
and all other persons who served as executive officers at the
end of fiscal 2001.

<P align="center">
<B><I>Summary Compensation Table</I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD colspan="2"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Long Term</FONT></B></TD>
        <TD></TD>
        <TD colspan="3"></TD>
</TR>

<TR>
        <TD colspan="2"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="7"></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Compensation Awards</FONT></B></TD>
        <TD></TD>
        <TD colspan="3"></TD>
</TR>

<TR>
        <TD colspan="2"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><B><FONT size="2">Annual Compensation</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3"></TD>
</TR>

<TR>
        <TD colspan="2"></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Year</FONT></B></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Securities</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">All Other</FONT></B></TD>
</TR>

<TR>
        <TD colspan="2" align="center" nowrap><B><FONT size="2">Name and Principal Position</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Ended</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Salary ($)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Bonus ($)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Underlying Options (#)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Compensation ($)(2)</FONT></B></TD>
</TR>

<TR>
        <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
        <TD colspan="2" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">F. Neal Hunter
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">230,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">270,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">216</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD colspan="2" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Chairman of the Board and
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">230,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">138,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">240,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">216</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Chief Executive Officer (1)
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">180,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">12,952</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">268,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">409</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD colspan="2" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Charles M. Swoboda
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">210,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">400,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">192</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD colspan="2" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">President and Chief
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">210,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">100,800</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">240,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">192</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Operating Officer (1)
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">160,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">46,513</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">180,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">292</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR>
        <TD colspan="2" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Cynthia B. Merrell
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">135,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">70,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD colspan="2" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Chief Financial Officer
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">135,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">48,600</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">92,800</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">and Treasurer
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">27,915</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">180,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD>(1)&nbsp;</TD>
        <TD align="left">
        Effective June&nbsp;25, 2001, Mr.&nbsp;Swoboda became Chief
        Executive Officer and President and Mr.&nbsp;Hunter became
        Executive Chairman.</TD>
</TR>

<TR valign="top">
        <TD>(2)&nbsp;</TD>
        <TD align="left">
        Represents group term life insurance premiums paid by the
        Company.</TD>
</TR>

</TABLE>

<P align="left">
<B>Stock Option Awards</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table provides additional information about stock
options granted to the named executive officers during fiscal
2001.

<P align="center">
<B><I>Option Grants in Last Fiscal Year</I></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
        <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="15"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="3"></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="15" align="center" nowrap><B><FONT size="2">Individual Grants</FONT></B></TD>
        <TD></TD>
        <TD colspan="7"></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><B><FONT size="2">Potential Realizable Value at</FONT></B></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">No. of</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">% Total</FONT></B></TD>
        <TD></TD>
        <TD colspan="7"></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><B><FONT size="2">Assumed Annual Rates of</FONT></B></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Securities</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Options</FONT></B></TD>
        <TD></TD>
        <TD colspan="7"></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><B><FONT size="2">Stock Price Appreciation for</FONT></B></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Underlying</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Granted to</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Exercise</FONT></B></TD>
        <TD></TD>
        <TD colspan="3"></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><B><FONT size="2">Option Term</FONT></B></TD>
</TR>

<TR>
        <TD></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Options</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Employees in</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Price</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Expiration</FONT></B></TD>
        <TD></TD>
        <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
        <TD align="center" nowrap><B><FONT size="2">Name</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Granted</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Fiscal Year</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">($/sh)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">Date (1)</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">5%</FONT></B></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><B><FONT size="2">10%</FONT></B></TD>
</TR>

<TR>
        <TD align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
        <TD></TD>
        <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">F. Neal Hunter (2)
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">120,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
        <TD><FONT size="2">%</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">71.53</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">7/3/10</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">5,398,278</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">13,680,296</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">F. Neal Hunter (3)
        </FONT></DIV>
        </TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">34.63</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/11</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">3,266,321</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">8,277,500</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD colspan="3" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Charles M. Swoboda (2)
        </FONT></DIV>
        </TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">120,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">71.53</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">7/3/10</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">5,398,278</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">13,680,296</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD colspan="3" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Charles M. Swoboda (4)
        </FONT></DIV>
        </TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">280,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">34.63</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/11</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">6,097,133</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">15,451,333</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
        <TD colspan="3" align="left" valign="top">
        <DIV style="margin-left:10px; text-indent:-10px">
        <FONT size="2">Cynthia B. Merrell (5)
        </FONT></DIV>
        </TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">70,000</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">71.53</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">7/3/10</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">3,148,996</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="bottom" nowrap><FONT size="2">7,980,173</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="4%"></TD>
        <TD width="96%"></TD>
</TR>

<TR valign="top">
        <TD>(1)&nbsp;</TD>
        <TD align="left">
        The options listed were granted under the Company&#146;s Equity
        Compensation Plan. Each option expires on the earlier of the
        expiration date shown or 90&nbsp;days after termination of the
        recipient&#146;s employment, except in cases of death or
        disability. Under the terms of each grant, the option vests in
        installments over a number of years provided the recipient is
        employed by the Company on the applicable vesting date. The
        option may be exercised to purchase vested shares only. Upon
        termination of employment the option is forfeited with respect
        to any shares not then vested. In the event of a change in
        control, as defined in the Plan, the option becomes fully vested
        and exercisable, except that the options listed above with
        expiration dates in 2011 do not become exercisable upon a change
        of control if and to the extent the options are assumed by a
        surviving entity.</TD>
</TR>

<TR valign="top">
        <TD>(2)&nbsp;</TD>
        <TD align="left">
        The option vested as to 10,000 shares in July 2001. It will vest
        as to 30,000 additional shares in July 2002 and 80,000
        additional shares in July 2003, provided the recipient remains
        an employee of the Company.</TD>
</TR>

</TABLE>

<P align="center">8

<!-- PAGEBREAK -->
<P><HR noshade><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>(3)&nbsp;</TD>
	<TD align="left">
	The option will vest in three equal annual installments, with
	the first installment vesting in February 2002, provided the
	recipient remains an employee of the Company.</TD>
</TR>

<TR valign="top">
	<TD>(4)&nbsp;</TD>
	<TD align="left">
	The option vests as to 200,000 shares in February 2002 and
	80,000 additional shares in February 2003, provided the
	recipient remains an employee of the Company.</TD>
</TR>

<TR valign="top">
	<TD>(5)&nbsp;</TD>
	<TD align="left">
	The option vested as to 10,000 shares in July 2001. It will vest
	as to 20,000 additional shares in July 2002 and 40,000
	additional shares in July 2003, provided the recipient remains
	an employee of the Company.</TD>
</TR>

</TABLE>

<P align="left">
<B>Stock Option Exercises</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table provides information about stock options
exercised by the named executive officers during fiscal 2001.

<P align="center">
<B><I>Aggregated Option Exercises in Last Fiscal Year and</I></B>

<DIV align="center">
<B><I>Fiscal Year-End Option Values</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Number of Securities</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Shares</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Underlying Unexercised</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">In-the-Money Options</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Acquired</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Value</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Options at FY-End (#)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">at FY-End ($)</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="2">Name</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">on Exercise</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Realized (1)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Exercisable/Unexercisable</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="2">Exercisable/Unexercisable (2)</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">F.&nbsp;Neal&nbsp;Hunter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,713,166</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">328,000/570,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,982,418 / $2,200,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Charles&nbsp;M.&nbsp;Swoboda
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,869,023</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">280,000/650,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,044,179 / 1,598,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cynthia&nbsp;B.&nbsp;Merrell
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,875</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184,400/214,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,018,993 / 1,275,390</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="4%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>(1)&nbsp;</TD>
	<TD align="left">
	Represents the market value of shares acquired at the date of
	exercise less the exercise price paid to the Company, without
	adjustment for income and other taxes payable upon exercise.</TD>
</TR>

<TR valign="top">
	<TD>(2)&nbsp;</TD>
	<TD align="left">
	Represents the value of the shares issuable upon exercise,
	calculated using the value at the fiscal year end, less the
	exercise price. The fiscal year end value was $22.15 per share
	based on the last sale price on June&nbsp;22, 2001 as reported
	by The Nasdaq Stock Market.</TD>
</TR>

</TABLE>

<P align="left">
<B>Report of the Compensation Committee</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee determines the compensation of the
Company&#146;s chief executive officer. It also reviews and
approves compensation recommendations submitted by the chief
executive officer for all other executive and non-executive
officers. In addition, the Committee administers the
Company&#146;s Equity Compensation Plan and other employee stock
option plans and, in that capacity, is responsible for reviewing
and approving stock options awarded under the plans. This report
describes the policies followed by the Committee with respect to
compensation of executive officers during fiscal 2001, and the
bases for the compensation of Mr.&nbsp;Hunter, who served as the
Chief Executive Officer during the year. The report is submitted
by the present members of the Compensation Committee who
participated in deliberations concerning some or all of the
compensation reported for fiscal 2001.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Executive Compensation Policies. </I>The Committee believes
the Company&#146;s overall compensation program should relate to
creating shareholder value. Accordingly, the Committee seeks to
adhere to executive compensation practices that will enable the
Company to attract and retain talented executives, align the
interests of executives with shareholder interests through
equity-based plans and motivate executives to achieve targeted
Company objectives. In furtherance of these goals, cash
compensation is generally set annually at levels which take into
account both competitive and performance factors. The Company
also relies to a substantial degree on stock options to attract
and motivate its executives.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For fiscal 2001 executive officer compensation consisted of base
salary, participation in an annual management incentive
compensation program and stock option grants, in addition to
other benefits available to Company employees generally. The
Committee sought to establish each overall package at
competitive market levels based on executive compensation
surveys, executive compensation at other publicly held
semiconductor companies and other relevant information.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cash Compensation. </I>The Committee examined both
qualitative and quantitative factors relating to corporate and
individual performance in approving salary adjustments. The
qualitative factors in many

<P align="center">9
<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV align="left">
instances necessarily involved a subjective assessment by the
Committee. The Committee did not base its considerations on any
single factor nor specifically assign relative weights to
factors. It instead considered a variety of factors and
evaluated individual performance against those factors both in
absolute terms and in relation to the executive&#146;s peers at
similar companies. With respect to executive officers other than
Mr.&nbsp;Hunter, the Committee also relied substantially on
Mr.&nbsp;Hunter&#146;s evaluations and recommendations. Based on
its review, the Committee authorized that the base salaries of
Mr.&nbsp;Hunter and the other named executive officers for
fiscal 2001 be increased. Mr.&nbsp;Hunter exercised his
discretion not to implement the authorized increases for the
year. The Committee also approved a management incentive
compensation program for fiscal 2001. Under the program, which
was first utilized in fiscal 2000, each participant was assigned
a target award for the fiscal year, expressed as a percentage of
base salary, to be paid if the Company achieved a certain
pre-established earnings per share goals. No amounts were paid
under the plan for fiscal 2001 since a required goal was not
achieved.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Equity Compensation. </I>The Company utilizes stock options
granted to executive officers under the Company&#146;s Equity
Compensation Plan to align shareholder and management interests
by giving executive officers a substantial economic stake in
long-term appreciation of the Company&#146;s stock. Only
nonqualified stock options have been awarded under this Plan,
and all awards have been made at exercise prices not less than
the market value of the underlying stock at the time of the
grant.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In reviewing proposed grants to executive officers, the
Compensation Committee takes into account all factors it deems
appropriate, including the officer&#146;s position and level of
responsibility, the officer&#146;s existing unvested option
holdings, the potential reward to the officer if the stock price
appreciates and the competitiveness of the officer&#146;s
overall compensation arrangements. Outstanding performance by an
individual may also be taken into consideration. Option grants
are often made to new executives upon commencement of employment
and, on occasion, to executives in connection with a significant
change in job responsibility. The Committee also relies on the
chief executive officer&#146;s recommendations in approving
option grants to other executive officers. The Committee
approved stock option grants to executive officers during fiscal
2001 based on the policies described above and Mr. Hunter&#146;s
recommendations.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Bases for Chief Executive Officer Compensation. </I>The
Compensation Committee following the general policies described
above in approving Mr. Hunter&#146;s cash compensation for
fiscal 2001 and the stock options awarded him during the year,
taking into consideration a number of factors relating to
corporate and individual performance. Of chief importance were
the success of the Company, under Mr.&nbsp;Hunter&#146;s
direction, in achieving increased profitability in recent years.
The Committee also considered his plans to step down as Chief
Executive Officer at the end of the fiscal year and to continue
in the role of Executive Chairman.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on these factors the Committee approved an increase in
Mr.&nbsp;Hunter&#146;s fiscal 2001 salary from $230,000 to
$280,000, with a target incentive award equal to 50% of his base
salary. As noted above, Mr.&nbsp;Hunter chose not to implement
the salary increase, and no awards were paid for fiscal 2001
under the management incentive compensation program.
Mr.&nbsp;Hunter also received two option grants during the year,
one representing the right to purchase 120,000 shares of Common
Stock at $71.53 per share and the other representing the right
to purchase 150,000 shares of Common Stock at $34.63 per share,
with the exercise price in each case equal to the closing market
price on the grant date. The first option vested as to 10,000
shares in July 2001, and the remainder vests over the next two
years in annual increments of 30,000 and 80,000 shares,
respectively, subject to continued employment at the applicable
vesting date. The second option vests in equal annual increments
of 50,000 shares beginning in February 2002, subject to
continued employment at the applicable vesting date.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="50%"></TD>
        <TD width="50%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        James E. Dykes, Chairman</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        Dolph W. von Arx</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        Walter L. Robb, Ph.D.</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        William J. O&#146;Meara</TD>
</TR>

</TABLE>

<P align="center">10

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="left">
<B>Compensation Committee Interlocks and Insider
Participation</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None of the current members of the Compensation Committee or the
members who served during fiscal 2001 has ever served as an
officer or employee of the Company. No interlocking
relationships exist between the Company&#146;s Board of
Directors or Compensation Committee and the board of directors
or compensation committee of any other company.

<P align="center">
<B>INFORMATION REGARDING INDEPENDENT</B>

<DIV align="center">
<B>AUDITORS AND RELATED MATTERS</B>
</DIV>

<P align="left">
<B>Independent Auditors</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Ernst &#38; Young LLP served as independent auditors of the
Company for the fiscal year ended June&nbsp;24, 2001 and has
been selected to serve as independent auditors of the Company
for the current fiscal year. A representative of Ernst &#38;
Young LLP is expected to be present at the Annual Meeting, will
have the opportunity to make a statement if he or she desires to
do so, and is expected to be available to respond to appropriate
questions.

<P align="left">
<B>Audit Fees</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During fiscal year 2001, the Company paid its independent
auditors, Ernst &#38; Young LLP, the amounts shown below for
services in the indicated categories:

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Audit fees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Financial information systems design and
	implementation fees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD><TR><TD><TR><TD><TR><TD>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other fees
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">284,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">401,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B>Report of the Audit Committee</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The role of the Audit Committee is to assist the Board of
Directors in its oversight of the Company&#146;s financial
reporting process. Management of the Company is responsible for
the preparation, presentation and integrity of the
Company&#146;s financial statements, the Company&#146;s
accounting and financial reporting principles, and internal
controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. The
independent auditors are responsible for auditing the
Company&#146;s financial statements and expressing an opinion as
to their conformity with generally accepted accounting
principles.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the performance of its oversight function, the Audit
Committee has reviewed and discussed the audited financial
statements with management and the independent auditors. The
Audit Committee has also discussed with the independent auditors
the matters required to be discussed by Statement on Auditing
Standards No.&nbsp;61, <I>Communication with Audit
Committees,</I> as currently in effect. In addition, the Audit
Committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards
Board Standard No.&nbsp;1, <I>Independence Discussions with
Audit Committees,</I> as currently in effect, has considered
whether the provision of non-audit services by the independent
auditors to the Company is compatible with maintaining the
auditor&#146;s independence and has discussed with the auditors
the auditors&#146; independence.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The members of the Audit Committee are not professionally
engaged in the practice of auditing or accounting and are not
experts in the fields of accounting or auditing, including in
respect of auditor independence. Members of the Audit Committee
rely without independent verification on the information
provided to them and on the representations made by management
and the independent accountants. Accordingly, the Audit
Committee&#146;s oversight does not provide an independent basis
to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate
internal control and procedures designed to assure compliance
with accounting standards and applicable laws and regulations.
The Audit Committee&#146;s considerations and discussions
referred to above do not assure that the audit of the
Company&#146;s financial statements has been carried out in
accordance with generally accepted

<P align="center">11

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV align="left">
auditing standards, that the financial statements are presented
in accordance with generally accepted accounting principles or
that the Company&#146;s auditors are in fact independent.
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based upon the review and discussions described in this report,
and subject to the limitations on the role and responsibilities
of the Audit Committee referred to above and in the Audit
Committee Charter, the Audit Committee recommended to the Board
that the audited financial statements be included in the
Company&#146;s Annual Report on Form&nbsp;10-K for the year
ended June 24, 2001 to be filed with the Securities and Exchange
Commission.
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
        <TD width="50%"></TD>
        <TD width="50%"></TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        Dolph W. von Arx, Chairman</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        James E. Dykes</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        Walter L. Robb, Ph.D.</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        William J. O&#146;Meara</TD>
</TR>

<TR valign="top">
        <TD>&nbsp;</TD>
        <TD align="left">
        Robert J. Potter, Ph.D.</TD>
</TR>

</TABLE>

<P align="center">
<B>OTHER BUSINESS</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company currently knows of no matter to be submitted at the
Annual Meeting other than election of directors. Under the
Company&#146;s Bylaws, any shareholder desiring to present a
proposal for consideration at the meeting, including any
director nomination, was required to give the Company written
notice of the proposal by a certain date. No timely proposals
have been received. Should any other business properly come
before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the shares they represent as
the Board of Directors may recommend except as noted below.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the Company&#146;s Bylaws, the size of the Board of
Directors was fixed at nine members in 1988 but since then
generally no more than seven persons have served on the Board at
any one time. Consistent with prior practice only seven persons
have been nominated for election at the Annual Meeting, and
under the rules of the Securities and Exchange Commission the
enclosed proxy cannot be voted for more than seven nominees.

<P align="center">
<B>ADDITIONAL INFORMATION</B>

<P align="left">
<B>Annual Report</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s Annual Report to Shareholders for the fiscal
year ended June 24, 2001 accompanies this proxy statement but is
not part of the proxy solicitation materials.

<P align="left">
<B>Availability of Report On Form&nbsp;10-K</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A copy of the Company&#146;s report on Form&nbsp;10-K for the
fiscal year ended June 24, 2001 will be furnished without charge
to any person solicited hereby upon written request directed to:
Investor Relations Manager, Cree, Inc., 4600 Silicon Drive,
Durham, North Carolina 27703-8475 (telephone: 919-313-5300).

<P align="left">
<B>Shareholder Proposals for 2002 Annual Meeting</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the rules of the Securities and Exchange Commission,
shareholder proposals submitted for inclusion in the
Company&#146;s proxy statement and form of proxy for the annual
meeting to be held in 2002 must be received by the Company not
later than May&nbsp;23, 2002, and must comply with the
Commission&#146;s rules in other respects.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other shareholder proposals to be presented at the annual
meeting in 2002, including director nominations, must comply
with the notice requirements of the Company&#146;s Bylaws and be
delivered to the Company not later than August&nbsp;24, 2002,
nor earlier than July&nbsp;25, 2002. Any such proposals should
be sent via means that afford proof of delivery to the Secretary
at the Company&#146;s principal executive offices.

<P align="left">
Dated: September&nbsp;20, 2001

<P align="center">12

<!-- PAGEBREAK -->
<P><HR noshade><P>

<P align="right">
<B>APPENDIX A</B>

<P align="center">
<B>AUDIT COMMITTEE CHARTER</B>

<P align="left">
<B>Organization</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee of the Board of Directors shall have at
least three directors, all of whom are financially literate,
with at least one member who has accounting or financial
management expertise. All members of this committee must be
independent of management and the Company.

<P align="left">
<B>Statement of Policy</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee shall provide assistance to the Board of
Directors in fulfilling its responsibilities to the
shareholders, potential shareholders, and the investment
community relating to corporate accounting, reporting practices
of the Company, and the quality and integrity of financial
reports of the Company. In doing so, it is the responsibility of
the Audit Committee to maintain free and open communication
between the directors, the independent auditors and the
financial management of the Company.

<P align="left">
<B>Responsibilities</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In carrying out its responsibilities, the Audit Committee
believes its policies and procedures should remain flexible in
order to best react to changing conditions and to ensure to the
directors and shareholders that the corporate accounting and
reporting practices of the Company are in accordance with
generally accepted accounting principles, the Securities and
Exchange Commission and all other requirements and are of the
highest quality.

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In carrying out these responsibilities, the Audit Committee will:
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Obtain the full Board of Directors&#146; approval of this
	Charter and review and reassess this Charter as conditions
	dictate, but at least annually.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Review and recommend to the directors the independent auditors
	to be selected to audit the consolidated financial statements of
	the Company.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Have a clear understanding with the independent auditors that
	they are ultimately accountable to the Audit Committee and to
	the Board of Directors, as the shareholders&#146;
	representatives, who have the ultimate authority in deciding to
	engage, evaluate, and if appropriate, terminate their services.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Meet at least annually with the independent auditors and
	financial management of Cree to review the scope of the proposed
	audit, the timing of quarterly reviews for the current fiscal
	year and the procedures to be utilized. At the conclusion of
	each audit and quarterly review, discuss the results, including
	any comments or recommendations by the independent auditors.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Periodically review with the independent auditors, and with the
	Company&#146;s financial and accounting personnel, the adequacy
	and effectiveness of the Company&#146;s accounting and financial
	internal controls. Also elicit any recommendations for the
	improvement of such internal controls or of particular areas
	where new or more detailed controls or procedures are desirable.
	Emphasis should be given to the adequacy of internal controls to
	expose any payments, transactions, or procedures that might be
	deemed illegal or improper.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Review communications received by the Company from the
	Securities and Exchange Commission, U.S. Government auditors or
	other regulators together with any other legal matters that may
	have a material effect on the financial statements of the
	Company.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Inquire of management and the independent auditors about
	significant risks or exposures and assess the steps management
	has taken to minimize such risks to the Company.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Review the quarterly financial statements with the Chief
	Financial Officer and the independent auditors prior to the
	filing of the Form 10-Q and prior to the press release of
	results, if possible.</TD>
</TR>

</TABLE>

<P align="center">Appendix A-1

<!-- PAGEBREAK -->
<P><HR noshade><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD></TD>
	<TD align="left">
	Determine that the independent auditors do not take exception to
	the disclosure and the content of the financial statements.
	Discuss other matters as appropriate including significant
	adjustments, management&#146;s judgments and accounting
	estimates, new accounting policies and any disagreements with
	management. The Chair of the Committee may represent the entire
	committee for purposes of this review.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Before filing the Form&nbsp;10-K, review the financial
	statements contained in the Form&nbsp;10-K with management and
	the independent auditors to determine that the independent
	auditors are satisfied with the disclosure and content of the
	financial statements to be presented to the shareholders. Review
	with financial management and the independent auditors the
	results of their timely analysis of significant financial
	reporting issues and practices, including changes in, or
	adoptions of, accounting principles and disclosure practices,
	and discuss any other matters communicated to the committee by
	the auditors. Also review with financial management and the
	independent auditors their judgments about the quality, not just
	acceptability, of the Company&#146;s accounting principles and
	the clarity of the financial disclosure practices used. Also
	assess the degree of aggressiveness or conservatism of
	Cree&#146;s accounting principles and underlying estimates, and
	other significant decisions made in preparing the financial
	statements. This should be an open and frank discussion.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Provide sufficient opportunity for the independent auditors to
	meet with the members of the Audit Committee without members of
	management present. Among the items to be discussed in these
	meetings are the independent auditors&#146; evaluation of
	Cree&#146;s financial and accounting personnel and that the
	independent auditors receive cooperation from Company personnel
	during the course of their audit and reviews. Also inquire about
	the quality of accounting principles applied and significant
	judgments made affecting the financial statements and that the
	Company&#146;s financial statements are prepared in accordance
	to generally accepted accounting principles in all material
	respects.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Review at least annually with the Chief Financial Officer the
	accounting and financial personnel and succession planning.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Review the results of the annual audit with the Board of
	Directors. If requested by the Board, invite the independent
	auditors to attend the Board of Directors meeting to assist in
	reporting results of the annual audit or answer other
	directors&#146; questions.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	On an annual basis, obtain from the independent auditors a
	written communication delineating their relationship with the
	Company as required by Independence Standards Board Standard
	No.&nbsp;1, &#147;Independence Discussions with Audit
	Committees&#148;. In addition, actively engage in dialog to
	review with the independent auditors any disclosed relationships
	or professional services that impact the objectivity or
	independence of the auditor, or recommend that the Board of
	Directors take appropriate action to ensure the continuing
	independence of the auditors.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Submit the minutes of all meetings of the Audit Committee to the
	Board of Directors.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Investigate any matter brought to its attention within the scope
	of its duties, with the power to retain outside counsel for this
	purpose if, in its judgment, that is appropriate.</TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD>&#149;&nbsp;</TD>
	<TD align="left">
	Establish, review and update periodically a Code of Ethical
	Conduct and ensure that management has established a system to
	enforce this Code. Also review management&#146;s monitoring of
	the Company&#146;s compliance with the Code.</TD>
</TR>

</TABLE>

<P align="center">Appendix A-2
<!-- PAGEBREAK -->
<P><HR noshade><P>
<P align="center"><FONT size="2"><B>CREE, INC.</B></FONT>

<P align="center"><FONT size="2"><B>PROXY SOLICITED BY THE BOARD OF DIRECTORS<BR>
FOR THE 2001 ANNUAL MEETING OF SHAREHOLDERS</B></FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby appoints F. Neal Hunter and Charles M. Swoboda, and
each of them individually, as proxies and attorneys-in-fact of the undersigned,
with full power of substitution, to represent the undersigned and to vote, in
accordance with the directions in this proxy, all of the shares of stock of
Cree, Inc. which the undersigned is entitled to vote at the 2001 Annual Meeting
of Shareholders of Cree, Inc. to be held at the offices of the corporation at
4425 Silicon Drive, Durham, North Carolina, on Tuesday, October&nbsp;23, 2001, at
10:00&nbsp;a.m. local time, and at any and all adjournments thereof.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE. UNLESS A CONTRARY
DIRECTION IS MARKED, THE PROXY HOLDERS WILL VOTE FOR ELECTION OF THE DIRECTOR
NOMINEES AND APPROVAL OF THE OTHER MATTERS LISTED ON THE REVERSE, AND IN THE
PROXY HOLDERS&#146; DISCRETION WITH RESPECT TO ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING, ALL AS MORE SPECIFICALLY SET FORTH IN THE NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT DATED SEPTEMBER 20, 2001, RECEIPT OF WHICH
IS HEREBY ACKNOWLEDGED.
</FONT>
<P align="center"><FONT size="2"><B><I>(Please sign and date on the reverse side and promptly return in the enclosed envelope.)</I></B></FONT>


<!-- PAGEBREAK -->
<P><HR noshade><P>



<P align="left"><FONT size="2">&#091;X&#093; Please mark your votes as in this example.</FONT>

<P><FONT size="2">PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. If you receive more than
one proxy, please date and sign each one and return all proxies in the same
envelope.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="10%">&nbsp;</TD>
        <TD width="20%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="14%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="20%">&nbsp;</TD>
        <TD width="9%">&nbsp;</TD>
        <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
FOR
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">WITHHOLD</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
all nominees
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">AUTHORITY</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">listed at right</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top" nowrap><FONT size="2">to vote for all nominees</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
(except as marked
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">listed at right</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
below)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
      <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD colspan="2" valign="top"><FONT size="2">Election of Directors</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
&#091;&nbsp;&nbsp;&nbsp;&#093;
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">&#091;&nbsp;&nbsp;&nbsp;&#093;
</FONT></TD>
        <TD align="left" valign="top" colspan="2"><FONT size="2">Nominees:</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top" nowrap><FONT size="2">F. Neal Hunter</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top" nowrap><FONT size="2">Charles M. Swoboda</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="5"><FONT size="2">To withhold authority to vote for fewer than all</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top" nowrap><FONT size="2">John W. Palmour, Ph.D.</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="5"><FONT size="2">nominees, write the name(s) here:</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Dolph W. von Arx</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="5"><FONT size="2"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">James E. Dykes</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">William J. O&#146;Meara</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Robert J. Potter, Ph.D.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<P><FONT size="2">Any proxy heretofore given by the undersigned is hereby revoked.
</FONT>
<P><FONT size="2">Please check box if you intend to attend the Annual Meeting in person. Please
complete, sign and return this proxy whether or not you intend to attend the meeting.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#091;&nbsp;&nbsp;&nbsp;&#093;
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="2%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="43%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="2%">&nbsp;</TD>
        <TD width="33%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top" nowrap><FONT size="2">Signature:</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD nowrap align="left" valign="top"><FONT size="2">Date</FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="2"><FONT size="2"><hr size="1" nowrap></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2"><hr size="1" nowrap></FONT></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">IMPORTANT:</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left"  colspan="4" valign="top"><FONT size="2">
Please sign exactly as printed name appears above. Executors, administrators,
trustees and other fiduciaries should give full titles when signing. If shares
are registered in two or more names, each person should sign. If the
shareholder is a corporation, please have an authorized officer sign, stating
title. If a partnership, please have signed in the partnership name by an
authorized representative, stating title.</FONT></TD>
</TR>
</TABLE>
</CENTER>



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