Cypress Reports Fourth Quarter and Year-End 2015 Results

Jan 28, 2016, 08:00 ET from Cypress Semiconductor Corp.

SAN JOSE, Calif., Jan. 28, 2016 /PRNewswire/ -- Cypress Semiconductor Corp. (NASDAQ: CY) today announced its fourth-quarter and fiscal-year 2015 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included (all financial comments are based on non-GAAP results, unless otherwise noted):

  • Revenue of $456.4 million and earnings per share of $0.13, in line with guidance
  • $137.7 million in realized annualized synergies, remaining ahead of plan
  • $56.5 million common stock repurchase, part of a $450 million repurchase program
  • Dividend payment of $36.9 million ($0.11 per share, equal to a 4.5% annualized yield as of December 31, 2015)

Fellow shareholders: 

Our revenue and earnings for the quarter are given below, compared with those of the prior quarter:

(In thousands, except per-share data)

NON-GAAP

GAAP

Q4 2015

Q3 2015

Q4 2015

Q3 2015

Revenue

$456,378

$470,060

$450,128

$463,810

Gross margin

39.8%

41.2%

32.1%

34.6%

Pretax margin

10.6%

13.2%

(13.8%)

6.9%

Net income (loss)

$45,528

$60,040

$(77,259)

$30,312

Diluted EPS (loss)

$0.13

$0.17

$(0.23)

$0.08

Our revenue and earnings for the fiscal year are given below, compared with those of the prior year:

(In thousands, except per-share data)

NON-GAAP

GAAP

FY 20151

FY 2014

FY 20151

FY 2014

Revenue

$1,626,603

$725,497

$1,607,853

$725,497

Gross margin

35.3%

52.6%

24.9%

50.1%

Pretax margin

4.8%

12.6%

(23.0%)

2.1%

Net income (loss)

$70,532

$87,291

$(383,796)

$17,936

Diluted EPS (loss)

$0.21

$0.52

$(1.27)

$0.11

1.

2015 includes results of the merger with Spansion as of March 12, 2015.

Fourth-quarter revenue declined 2.9% sequentially in a seasonally soft semiconductor market. This performance was in line with the high end of our guidance. We remained ahead of our three-year merger synergy plan of $160 million in cost synergies, achieving $137.7 million in annualized synergies as of the end of the first year. Gross margin dropped to 39.8% due primarily to our lean inventory initiative, under which we are running our wafer fabs at a rate lower than actual demand capacity to burn off excess inventory.

Cypress remains committed to the task of building on our position as a leading provider of high-performance embedded solutions for the automotive and industrial markets and other promising markets such as Home Appliances and the Internet of Things (IoT). Our revenue in automotive and industrial continues to grow: Revenue from these segments increased to 55% of our total revenues in the fourth quarter, up from 52% in the fourth quarter of 2014. We continue to be a source of technology leadership in these markets. For example, our IoT wireless beacon solution, which is discussed in the new-product section below, was named one of the 10 best technologies at the CES tradeshow earlier this month.

We remain committed to the return of capital to our shareholders through quarterly dividends and stock repurchases. The return of capital this quarter was $93.4 million, with a dividend payout of $36.9 million and a $56.5 million buyback.

BUSINESS REVIEW

  • Our non-GAAP consolidated gross margin for the fourth quarter was 39.8%, consistent with the lower fab utilization inherent in our lean inventory initiative, which will run through the third quarter of 2016. In addition, excluding our Emerging Technologies Division (ETD), our core semiconductor gross margin was 40.3%. Fab utilization was roughly 60% in the fourth quarter. It will drop to approximately 50% in the first quarter of 2016, reducing gross margin.
  • Net inventory at the end of the fourth quarter was $243.6 million, down 12.7% from the third quarter and down 37.4% from the first quarter. This steep inventory reduction is the intended benefit of our lean inventory initiative.
  • Cypress announced that its Board of Directors approved a quarterly cash dividend of $0.11 per share, payable to holders of record of the company's common stock as of the close of business on December 31, 2015. This dividend was paid on January 21, 2016.

FIRST QUARTER 2016 FINANCIAL OUTLOOK

For the first quarter of 2016, Cypress estimates non-GAAP financial results as follows: net sales in the range of $410 million to $440 million, gross margin of 36%, and diluted EPS in the range of $0.04 to $0.08. 1

1.

These estimates exclude amortization of intangibles of approximately $36 million, equity compensation expense of approximately $27 million, and restructuring charges, depreciation or amortization related to accounting for the Spansion merger of approximately $28 million.

 

NET SALES SUMMARY

(In thousands, except percentages)

(Unaudited)

THREE MONTHS ENDED

Jan. 3,

Sept. 27,

Sequential

Business Unit

2016

2015

Change

PSD1

$157,763

$178,503

(12%)

MPD1,3

$259,402

$260,897

(1%)

DCD1

$17,522

$17,617

(1%)

ETD2

$21,691

$13,043

66%

Total

$456,378

$470,060

(3%)

Geographic

China and ROW

41%

39%

5%

Americas

16%

14%

14%

Europe

14%

14%

0%

Japan

29%

33%

(12%)

Total

100%

100%

Channel

Distribution

67%

71%

(6%)

Direct

33%

29%

14%

Total

100%

100%

1.

PSD, Programmable Systems Division; DCD, Data Communications Division; MPD, Memory Products Division.

2.

ETD, Emerging Technologies Division includes businesses outside our core semiconductor businesses named in Footnote 1. ETD includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.

3.

Our net sales for the third and fourth quarters of 2015 and our estimates for the first quarter of 2016 include $6.25 million of legacy Spansion non-GAAP licensing revenue in MPD, APAC region and direct channel.

 

TWELVE MONTHS ENDED

Jan. 3,

 Dec. 28,

Sequential

Business Unit

20161

2014

Change

PSD2

$613,884

$283,206

117%

MPD2, 4

$890,390

$347,903

156%

DCD2

$72,791

$70,378

3%

ETD 3

$49,538

$24,010

106%

Total

$1,626,603

$725,497

124%

Geographic

China and ROW

41%

61%

(33%)

Americas

15%

16%

(6%)

Europe

14%

14%

0%

Japan

30%

9%

233%

Total

100%

100%

Channel

Distribution

70%

69%

1%

Direct

30%

31%

(3%)

Total

100%

100%

1.

2015 includes results of the merger with Spansion as of March 12, 2015

2.

PSD, Programmable Systems Division; DCD, Data Communications Division; MPD, Memory Products Division.

3.

ETD, Emerging Technologies Division includes businesses outside our core semiconductor businesses named in Footnote 1. ETD includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.

4.

Our net sales for twelve months ended 2015 and our estimates for the first quarter of 2016 include $18.75 million and $6.25 million of legacy Spansion non-GAAP licensing revenue in MPD, APAC region and direct channel, respectively.

FOURTH-QUARTER 2015 HIGHLIGHTS

Cypress introduced 12 new products during the quarter, mostly in its targeted automotive and industrial markets:

  • The first Traveo™ automotive microcontrollers in an advanced 40-nm process, expanding Cypress's market-share-leading portfolio of MCUs for automotive instrument cluster systems.
  • The industry's most compact, highly integrated automotive power management ICs (PMICs), which regulate the power supply from a car battery, safely managing extreme voltage fluctuations in Advanced Driver Assistance Systems (ADAS), body-control modules and instrument cluster systems.
  • An automotive LED driver that is unique in its ability to drive a single LED at a high 2.1-MHz switching frequency in headlights and other front-lighting systems. High switching frequency reduces component size, enabling the industry's smallest LED headlight driving solutions.
  • A transceiver for the Clock Extension Peripheral Interface (CXPI), a new standard backed by Toyota that is designed to succeed the ubiquitous Local Interconnect Network (LIN) protocol for internal automotive communications. Cypress is the only supplier to provide a complete CXPI solution, offering a transceiver and automotive CXPI-enabled MCUs.
  • Two new NOR Flash memories with Quad Serial Peripheral Interfaces. Cypress's Quad SPI memories are used wherever a lot of data is required to boot up embedded automotive systems such as ADAS, instrument cluster and infotainment systems. The new 1.8-V, 64Mb FS-S NOR Flash device features the industry's highest read bandwidth and fastest program time.
  • A high-performance FM4 (Flexible Microcontroller) based on the 200-MHz ARM® Cortex®-M4 core, targeting motor control, home appliance applications and solutions for Industry 4.0 smart factories.
  • Two new FM0+ energy-efficient MCUs based on the ARM Cortex-M0+ core. The MCUs provide the market's best combination of power consumption, performance and peripheral integration for wearables and other Internet of Things (IoT) applications.
  • The PSoC® 4 L-Series programmable system-on-chip, the industry's most flexible single-chip 32-bit ARM-Cortex-M0-based solution. This new PSoC adds a USB controller to the PSoC 4 architecture for robust digital audio, and it features Cypress's industry-leading CapSense® capacitive sensing technology. The solution addresses a range of industrial and consumer applications.
  • The newest PSoC-based Bluetooth® Low Energy devices, the industry's first to be qualified for the latest Bluetooth 4.2 security, privacy and data throughput standards.
  • The PSoC-based USB EZ-PD™ CCG4 controller to support the new Type-C USB standard in desktops and notebooks.
  • VentureBeat, a technology publication, named Cypress's PSoC-based BLE solution for IoT beacons one of the 10 best technologies at the Consumer Electronics Show (CES). The solution is based on Cypress's EZ-BLE™ PRoC™ Bluetooth Smart module and its Energy-Harvesting PMIC, which eliminate the need for batteries—instead using heat, vibration or light for power. Wireless beacons can be used to send information to smartphones over short ranges, for example, communicating product markdowns to shoppers in a department store every second.  
  • Cypress also showcased three new BLE modules with a Bluetooth Smart Mesh demo at CES. Mesh networking, which is critical to many emerging IoT applications, extends Bluetooth's limited transmission range, enabling transmissions to hop to their destinations on intermediate nodes. For example, a BLE-based on-off switch signal might hop over several BLE-enabled lights before turning on a burglar alarm.
  • Canadian-based Hexoskin selected Cypress's EZ-BLE PRoC module for use in its "smart shirts," which collect and transmit vital statistics such as heart and respiratory rates to a user's smart device, where they can be analyzed and tracked over time. The low-power PRoC module enabled Hexoskin to more than double the battery life of its first-generation shirts.

FOLLOW CYPRESS ONLINE

ABOUT CYPRESS

Cypress (NASDAQ: CY) delivers high-performance, high-quality solutions at the heart of today's most advanced embedded systems, from automotive, industrial and networking platforms to highly interactive consumer and mobile devices. With a broad, differentiated product portfolio that includes NOR flash memories, F-RAM™ and SRAM, Traveo™ microcontrollers, the industry's only PSoC® programmable system-on-chip solutions, analog and PMIC Power Management ICs, CapSense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth Low-Energy and USB connectivity solutions, Cypress is committed to providing its customers worldwide with consistent innovation, best-in-class support and exceptional system value. To learn more, go to www.cypress.com.

FORWARD-LOOKING STATEMENTS

Statements herein that are not historical facts and that refer to Cypress or its subsidiaries' plans and expectations for the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," "future," "continue" or other wording indicating future results or expectations to identify such forward-looking statements that include, but are not limited to, statements related to our estimated non-GAAP revenue, non-GAAP gross margin and non-GAAP EPS in our financial outlook; the expected synergies related to our integration with Spansion Inc. ("Spansion"); our ability to execute on planned synergies related to our integration with Spansion; the semiconductor market; the expected benefits of our lean inventory initiative; the continued growth of our products in the automotive and industrial markets; our ability to penetrate the Home Appliance and Internet of Things markets; our expectations regarding our revenue growth and earnings leverage;  and our expectations regarding the demand for our products and how our products are expected to perform. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including, but not limited to, the risk that that future revenues, margins and earnings may not be achieved as expected; the state of and future of the global economy, business conditions and growth trends in the semiconductor market; our ability to continue to realize synergies from our integration with Spansion; our ability to attract and retain key personnel; whether our products perform as expected; whether the demand for our products in the automotive and industrial markets is fully realized; our ability to manage our business to have strong earnings and significant revenue growth and reduce operating expenses; our cash flows from operations; our ability to effectively implement third party wafer processes; the strength or softness of the markets we serve; our ability to maintain and improve our gross margins and realize our bookings; the seasonality of the markets we serve; the financial performance of our subsidiaries and Emerging Technologies Division; and other risks described in "Risk Factors" in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

Cypress, the Cypress logo, Spansion, the Spansion logo, and combinations thereof, PSoC and CapSense are registered trademarks and EZ-PD, EZ-BLE, PRoC, F-RAM and Traveo are trademarks of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners. 

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

January 3,

December 28,

2016

2014

ASSETS

Cash, cash equivalents and short-term investments

$                  227,561

$                  118,812

Accounts receivable, net

292,736

75,984

Inventories, net (a)

243,595

88,227

Property, plant and equipment, net

425,003

237,763

Goodwill and other intangible assets, net

2,528,077

99,615

Other assets

281,597

122,880

Total assets

$               3,998,569

$                  743,281

LIABILITIES AND EQUITY

Accounts payable

$                  137,690

$                    42,678

Deferred margin and allowances on sales to distributors

73,370

95,187

Income tax liabilities

59,932

21,494

Other liabilities

336,232

144,950

Revolving credit facility and long-term debt

678,659

237,107

Total liabilities

1,285,883

541,416

Total Cypress stockholders' equity

2,720,849

207,757

Noncontrolling interest

(8,163)

(5,892)

Total equity

2,712,686

201,865

Total liabilities and equity

$               3,998,569

$                  743,281

(a) Inventories include $4.3 million and $2.0 million of capitalized inventories related to stock-based compensation expense, 'as of January 3, 2016 'and December 28, 2014, respectively.

 

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

ON A GAAP BASIS

(In thousands, except per-share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

January 3,

September 27,

December 28,

January 3,

December 28,

2016

2015

2014

2016

2014

Revenues

$        450,128

$            463,810

$        184,097

$    1,607,853

$          725,497

Cost of revenues

305,819

303,434

90,395

1,206,789

361,820

Gross margin 

144,309

160,376

93,702

401,064

363,677

Operating expenses:

Research and development

$          75,195

$              75,960

$          39,677

$       282,904

$          164,560

Selling, general and administrative

86,112

74,627

37,746

297,721

163,488

Acquisition costs and amortization of acquisition-related intangibles

37,710

32,359

8,558

138,661

13,936

Gain on divestiture of TrueTouch business

-

(66,472)

-

(66,472)

-

Restructuring charges (benefit)

1,406

2,924

72

90,084

(1,180)

Total operating expenses, net

200,423

119,398

86,053

742,898

340,804

Operating income (loss)

$        (56,114)

$              40,978

$            7,649

$     (341,834)

$            22,873

Interest and other income (loss), net

(5,886)

(8,884)

(2,759)

(27,273)

(7,528)

Income (loss) before income taxes

(62,000)

32,094

4,890

(369,107)

15,345

Income tax provision (benefit)

15,726

2,303

1,814

16,960

(1,173)

Income (loss), net of taxes

(77,726)

29,791

3,076

(386,067)

16,518

Adjust for net loss attributable to noncontrolling interest

467

521

426

2,271

1,418

Net Income (loss) attributable to Cypress

$        (77,259)

$              30,312

$            3,502

$     (383,796)

$            17,936

Net Income (loss) per share attributable to Cypress:

Basic

$            (0.23)

$                  0.09

$              0.02

$           (1.27)

$                0.11

Diluted

$            (0.23)

$                  0.08

$              0.02

$           (1.27)

$                0.11

Cash dividend declared per share

$              0.11

$                  0.11

$              0.11

$             0.44

$                0.44

Shares used in net income (loss) per share calculation:

Basic

334,447

335,299

161,864

302,036

159,031

Diluted

334,447

357,657

169,148

302,036

169,122

 

CYPRESS SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES  (a)

(In thousands, except per-share data)

(Unaudited)

Three Months Ended

January 3,

% of

September 27,

% of

December 28,

% of

2016

Revenue

2015

Revenue

2014

Revenue

GAAP Revenues

$        450,128

$          463,810

$         184,097

Revenue from intellectual property license (b)

6,250

6,250

Non-GAAP Revenues

$        456,378

$          470,060

$         184,097

GAAP gross margin

$        144,309

32.1%

$          160,376

34.6%

$           93,702

50.9%

Stock-based compensation expense

4,460

1.0%

4,357

0.9%

2,759

1.5%

Changes in value of deferred compensation plan

53

0.0%

(326)

-0.1%

(44)

—%

Ramtron acquisition related expense

(—)%

0.0%

22

—%

Impairment of assets, restructuring and other charges

(—)%

(372)

-0.1%

0.0%

Effect of Non-GAAP revenue from intellectual property license

6,250

0.9%

6,250

0.8%

0.0%

Spansion merger costs and related amortization

26,361

5.9%

23,164

5.0%

0.0%

Non-GAAP gross margin

$        181,433

39.8%

$          193,449

41.2%

$           96,439

52.4%

GAAP research and development expenses

$          75,195

$            75,960

$           39,677

Stock-based compensation expense

(7,782)

(7,346)

(2,553)

Changes in value of deferred compensation plan

(103)

1,105

128

Impairment of assets, restructuring and other charges

(87)

(81)

(252)

Spansion merger costs and related amortization

(893)

(831)

Non-GAAP research and development expenses

$          66,330

$            68,807

$           37,000

GAAP selling, general and administrative expenses

$          86,112

$            74,627

$           46,376

Stock-based compensation expense

(14,796)

(13,253)

(1,436)

Changes in value of deferred compensation plan

(313)

1,959

229

Ramtron acquisition related expense

(8,602)

Impairment of assets, restructuring and other charges

(72)

Legal and other

(102)

(443)

(1,330)

Spansion merger costs and related amortization

(7,701)

(2,376)

Non-GAAP selling, general and administrative expenses

$          63,200

$            60,514

$           35,165

GAAP operating income (loss)

$         (56,114)

$            40,978

$             7,649

Stock-based compensation expense

27,038

24,956

6,748

Gain from divestiture transaction

(66,472)

Ramtron acquisition-related expense

1,305

1,305

8,622

Changes in value of deferred compensation plan

468

(3,389)

(402)

Impairment of assets, restructuring and other charges

328

Legal and other

188

150

Effect of Non-GAAP revenue from intellectual property license

6,250

6,250

Spansion merger costs and related amortization

72,766

60,350

Non-GAAP operating income (loss)

$          51,901

$            64,128

$           22,945

GAAP pretax profit (loss)

$         (62,000)

-13.8%

$            32,094

6.9%

$             4,890

2.7%

Stock-based compensation expense

27,038

6.0%

24,956

5.4%

6,748

3.7%

Gain from divestiture transaction

(—)%

(66,472)

-14.3%

(—)%

Ramtron acquisition-related expense

1,305

0.3%

1,305

0.3%

8,622

4.7%

Changes in value of deferred compensation plan

(317)

-0.1%

(50)

0.0%

(1,048)

(0.6)%

Impairment of assets, restructuring and other charges

0.0%

0.0%

327

0.2%

Legal and other

188

0.0%

151

0.0%

1,330

0.7%

Effect of Non-GAAP revenue from intellectual property license

5,791

1.2%

6,250

1.2%

(—)%

Investment related losses (gains)

291

0.1%

2,709

0.6%

1,495

0.8%

Tax-related, interest income, interest expense and other expenses

741

0.2%

(1,157)

-0.2%

(618)

(0.3)%

Losses from equity method investment

2,330

0.5%

1,800

0.4%

1,403

0.8%

Spansion merger costs and related amortization

72,766

16.2%

60,350

13.0%

(—)%

Non-GAAP pretax profit (loss)

$          48,133

10.6%

$            61,936

13.2%

$           23,149

12.6%

GAAP net income (loss) attributable to Cypress

$         (77,259)

$            30,312

$             3,502

Stock-based compensation expense

27,038

24,956

6,748

Gain from divestiture transaction

(66,472)

Ramtron acquisition-related expense

1,305

1,305

8,622

Changes in value of deferred compensation plan

(317)

(50)

(1,048)

Impairment of assets, restructuring and other charges

327

Legal and other

188

151

1,330

Effect of Non-GAAP revenue from intellectual property license

5,791

6,250

Investment related losses (gains)

291

2,709

1,495

Tax-related, interest income, interest expense and other expenses

13,395

(1,271)

(324)

Losses from equity method investment

2,330

1,800

1,403

Spansion merger costs and related amortization

72,766

60,350

Non-GAAP net income attributable to Cypress

$          45,528

$            60,040

$           22,055

GAAP net income (loss) per share attributable to    Cypress - diluted

$             (0.23)

$                0.08

$               0.02

Stock-based compensation expense

0.08

0.07

0.04

Gain from divestiture transaction

(0.18)

Ramtron acquisition-related expense

0.05

Changes in value of deferred compensation plan

(0.01)

Impairment of assets, restructuring and other charges

Effect of Non-GAAP revenue from intellectual property license

0.02

0.02

Investment related losses (gains)

0.01

0.01

Tax-related, interest income, interest expense and other expenses

0.04

Losses from equity method investment

0.01

0.01

0.01

Legal and other

0.01

Spansion merger costs and related amortization

0.21

0.17

Non-GAAP net income per share attributable to Cypress - diluted

$              0.13

$                0.17

$               0.13

(a) Refer to the accompanying "Notes to Non-GAAP Financial Measures" for a detailed discussion of management's use of non-GAAP financial measures.

(b) Non-GAAP revenue includes $6.25 million of Samsung intellectual property licensing revenue, not included in GAAP revenue as a result of the effects of purchase accounting for the Spansion merger.

 

CYPRESS SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES  (a)

(In thousands, except per-share data)

(Unaudited)

Twelve Months Ended

January 3,

% of

December 28,

% of

2016

Revenue

2014

Revenue

GAAP Revenues

$                     1,607,853

$              725,497

Revenue from intellectual property license (b)

18,750

Non-GAAP Revenues

$                     1,626,603

$              725,497

GAAP gross margin

$                        401,064

24.9%

$              363,677

50.1%

Stock-based compensation expense

16,838

1.0%

13,209

1.8%

Changes in value of deferred compensation plan

(37)

0.0%

427

0.1%

Ramtron acquisition related expense

0.0%

(86)

0.0%

Impairment of assets, restructuring and other charges

73

0.0%

4,489

0.6%

Effect of Non-GAAP revenue from intellectual property license

18,750

0.8%

0.0%

Spansion merger costs and related amortization

136,830

8.5%

0.0%

Non-GAAP gross margin

$                        573,518

35.3%

$              381,716

52.6%

GAAP research and development expenses

$                        282,904

$              164,560

Stock-based compensation expense

(27,885)

(16,187)

Changes in value of deferred compensation plan

232

(793)

Impairment of assets, restructuring and other charges

(326)

(482)

Spansion merger costs and related amortization

(2,681)

Non-GAAP research and development expenses

$                        252,244

$              147,098

GAAP selling, general and administrative expenses

$                        297,721

$              176,244

Stock-based compensation expense

(53,735)

(20,774)

Changes in value of deferred compensation plan

260

(1,855)

Ramtron acquisition related expense

(14,330)

Impairment of assets, restructuring and other charges

(36)

(97)

Legal and other

(1,198)

(1,330)

Spansion merger costs and related amortization

(11,814)

Non-GAAP selling, general and administrative expenses

$                        231,198

$              137,858

GAAP operating income (loss)

$                      (341,834)

$                22,873

Stock-based compensation expense

98,458

50,170

Gain from divestiture transaction

(66,472)

Ramtron acquisition-related expense

5,220

14,244

Changes in value of deferred compensation plan

(531)

3,075

Impairment of assets, restructuring and other charges

182

5,067

Legal and other

1,450

1,330

Effect of Non-GAAP revenue from intellectual property license

18,750

Spansion merger costs and related amortization

374,852

Non-GAAP operating income (loss)

$                          90,075

$                96,759

GAAP pretax profit (loss)

$                      (369,107)

(23.0)%

$                15,345

2.1%

Stock-based compensation expense

98,458

6.1%

50,170

6.9%

Gain from divestiture transaction

(66,472)

(4.1)%

0.0%

Ramtron acquisition-related expense

5,220

0.3%

14,244

2.0%

Changes in value of deferred compensation plan

820

0.1%

61

0.0%

Impairment of assets, restructuring and other charges

455

0.0%

3,737

0.5%

Legal and other

1,452

0.1%

1,330

0.2%

Effect of Non-GAAP revenue from intellectual property license

18,291

1.1%

0.0%

Investment related losses (gains)

4,058

0.3%

1,495

0.2%

Tax-related, interest income, interest expense and other expenses

3,039

0.2%

(263)

0.0%

Losses from equity method investment

7,148

0.3%

5,068

0.7%

Spansion merger costs and related amortization

374,852

23.3%

0.0%

Non-GAAP pretax profit (loss)

$                          78,214

4.8%

$                91,187

12.6%

GAAP net income (loss) attributable to Cypress

$                      (383,796)

$                17,936

Stock-based compensation expense

98,458

50,170

Gain from divestiture transaction

(66,472)

-

Ramtron acquisition-related expense

5,220

14,244

Changes in value of deferred compensation plan

821

61

Impairment of assets, restructuring and other charges

455

3,737

Legal and other

1,451

1,330

Effect of Non-GAAP revenue from intellectual property license

18,291

-

Investment related losses (gains)

4,058

1,495

Tax-related, interest income, interest expense and other expenses

10,046

(6,750)

Losses from equity method investment

7,148

5,068

Spansion merger costs and related amortization

374,852

Non-GAAP net income attributable to Cypress

$                          70,532

$                87,291

GAAP net income (loss) per share attributable to    Cypress - diluted

$                            (1.27)

$                    0.11

Stock-based compensation expense

0.33

0.30

Gain from divestiture transaction

(0.22)

Ramtron acquisition-related expense

0.02

0.08

Changes in value of deferred compensation plan

Impairment of assets, restructuring and other charges

0.02

Effect of Non-GAAP revenue from intellectual property license

0.06

Investment related losses (gains)

0.01

0.01

Tax-related, interest income, interest expense and other expenses

0.02

(0.04)

Losses from equity method investment

0.02

0.03

Legal and other

0.01

Spansion merger costs and related amortization

1.24

Non-GAAP net income per share attributable to Cypress - diluted

$                              0.21

$                    0.52

(a) Refer to the accompanying "Notes to Non-GAAP Financial Measures" for a detailed discussion of management's use of non-GAAP financial measures.

(b) Non-GAAP revenue includes $6.25 million of Samsung intellectual property licensing revenue, not included in GAAP revenue as a result of the effects of purchase accounting for the Spansion merger.

 

CYPRESS SEMICONDUCTOR CORPORATION

SUPPLEMENTAL FINANCIAL DATA

(In thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

January 3,

September 27,

December 28,

January 3,

December 28,

2016

2015

2014

2016

2014

Selected Cash Flow Data (Preliminary):

Net cash provided by (used in) operating activities

$       42,094

$             19,724

$          25,514

$        8,801

$          103,336

Net cash provided by (used in) investing activities

$      (24,351)

$             80,574

$         (13,736)

$     (79,088)

$          (42,156)

Net cash provided by (used in) financing activities

$       15,188

$           (30,679)

$         (13,126)

$    193,240

$          (43,453)

Other Supplemental Data (Preliminary):

Capital expenditures

$         9,227

$             12,748

$            3,769

$      47,206

$            20,947

Depreciation

$       39,443

$             36,665

$          10,013

$    126,496

$            39,724

Payment of dividend

$       36,914

$             36,748

$          17,728

$    127,995

$            69,248

Dividend paid per share

$           0.11

$                 0.11

$              0.11

$          0.11

$                0.11

Dividend yield per share (a)

4.5%

5.1%

3.0%

4.5%

3.0%

 

CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED DILUTED EPS CALCULATION

(In thousands, except per-share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

January 3,

September 27,

December 28,

January 3,

December 28,

2016

2015

2014

2016

2014

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Non-GAAP

Net income (loss) attributable to Cypress

$          (77,259)

$              45,528

$            30,312

$           60,040

$                 3,502

$           22,055

$     (383,796)

$        70,532

$         17,936

$        87,291

Weighted-average common shares outstanding basic

334,447

334,447

335,299

335,299

161,864

161,864

302,036

302,036

159,031

159,031

Effect of dilutive securities:

Stock options, unvested restricted stock and other

15,363

9,161

14,549

7,284

8,892

21,223

10,091

9,331

Impact of convertible bond

12,419

13,197

13,197

12,419

Weighted-average common shares  outstanding for diluted computation

334,447

362,229

357,657

363,045

169,148

170,756

302,036

335,678

169,122

168,362

Net income (loss) per share attributable to Cypress - basic

$              (0.23)

$                  0.14

$                0.09

$               0.18

$                   0.02

$               0.14

$           (1.27)

$            0.23

$             0.11

$            0.55

Net income (loss) per share attributable to Cypress - diluted

$              (0.23)

$                  0.13

$                0.08

$               0.17

$                   0.02

$               0.13

$           (1.27)

$            0.21

$             0.11

$            0.52

Three Months Ended

Twelve Months Ended

January 3,

September 27,

December 28,

January 3,

December 28,

2016

2015

2014

2016

2014

Average stock price for the period ended

$                9.87

$                10.64

$              10.77

$             12.10

$                 10.18

Common stock outstanding at period end (in thousands)

332,276

335,590

163,103

332,276

163,013

NOTES TO NON-GAAP FINANCIAL MEASURES

To supplement its consolidated financial results presented in accordance with GAAP, Cypress uses the following non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures:

  • Revenue
  • Gross margin
  • Research and development expenses
  • Selling, general and administrative expenses
  • Operating income (loss)
  • Net income (loss)
  • Diluted net income (loss) per share

The non-GAAP measures set forth above exclude charges related to our merger with Spansion, stock-based compensation, and other adjustments.  Non-GAAP revenue includes the effect of revenue from an intellectual property license agreement.  Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of Cypress's operations that, when viewed in conjunction with Cypress's GAAP results, provide a more comprehensive understanding of the various factors and trends affecting Cypress's business and operations.  Management uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting and resource allocation processes. In addition, these non-GAAP financial measures facilitate management's internal comparisons to Cypress's historical operating results and comparisons to competitors' operating results.  Pursuant to the requirements of Regulation G and to make clear to our investors the adjustments we make to GAAP measures, we have provided a reconciliation of the non-GAAP measures to the most directly comparable GAAP financial measures.

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SOURCE Cypress Semiconductor Corp.



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http://www.cypress.com