PR Newswire: news distribution, targeting and monitoring
2014

Spansion Inc. Reports Fourth Quarter 2013 Results

Share with Twitter Share with LinkedIn

SUNNYVALE, Calif., Feb. 4, 2014 /PRNewswire/ -- Spansion Inc. (NYSE: CODE), a global leader in embedded systems solutions, today announced operating results for its fourth quarter ended December 29, 2013.

(Logo: http://photos.prnewswire.com/prnh/20060118/SFW077LOGO)

On a U.S. GAAP basis, Spansion reported fourth quarter net sales of $313.7 million, gross margin of 29.7%, operating loss of $9.4 million and net loss of $23.7 million. The GAAP operating loss includes $5.8 million of acquisition related costs and purchase accounting inventory markup. 

On a non‑GAAP basis, gross margin was 34.1%, operating income was $25.5 million and net income was $12.6 million.

For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

Fourth Quarter 2013 Financial Highlights:

  • Revenue of $313.7 million, a 40% year-over-year increase
  • Non-GAAP gross margin of 34.1%
  • Non-GAAP operating income of $25.5 million or 8.1% of revenue
  • Adjusted EBITDA of $38.8 million
  • Non-GAAP Diluted EPS $0.20
  • Cash, cash equivalents and short term investments of $311.5 million

Note: Percentages may not calculate precisely due to rounding.

Fourth Quarter 2013 Business Highlights:

  • Continued embedded market leadership and focused execution
  • Strong design win momentum
  • Introduced family of microcontroller products for the Industrial Internet of Things
  • Expanded portfolio of high-performance serial flash memory devices

"Our fourth quarter results reflect our leadership in embedded systems and focused execution on product innovation, quality and customer service," said John Kispert, CEO of Spansion. "Our fourth quarter revenue increased 14% sequentially and 40% over the fourth quarter a year ago.  We also expanded our product portfolio and market opportunities with the addition of our Microcontroller and Analog/Mixed Signal businesses." 

Kispert continued, "For the full fiscal year, we delivered profitable growth and made significant progress in new product introductions, technology development and design wins. We are confident about our future growth.  Spansion is well positioned to deliver innovative embedded systems to address our customer requirements in the automotive, industrial, communications and consumer markets."

Quarterly Conference Call and Accompanying Slide Presentations

Spansion will host a conference call Tuesday, February 4, 2014, at 1:30 PM PT/ 4:30 PM ET to discuss its fourth quarter 2013 results. A live webcast of the conference call, with accompanying slide presentations, may be accessed through the investor relations section of Spansion's website at http://investor.spansion.com/.

Dial-in: 1-877-280-4956 (toll free), 1-857-244-7313 (International), Passcode: 97365860

An audio replay will be available within two hours of the call through February 11, 2014 and may be accessed via dial-in at 1-888-286-8010 (US), 1-617-801-6888 (International), with the Passcode 46037557 or by webcast on the investor relations section of Spansion's website at http://investor.spansion.com/.


Fourth Quarter 2013 Results


U.S. GAAP Results, in $millions except per share data and percentages


Q4 2013

Q3 2013

Q4 2012

Net Sales

$313.7

$273.4

$224.0

Gross Margin

29.7%

20.5%

32.1%

Operating Income (Loss)

($9.4)

($43.0)

$15.0

Operating Margin

(3.0%)

(15.7%)

6.7%

Net Income (Loss)

($23.7)

($36.9)

$6.9

Diluted Net Income (Loss) Per Share

($0.40)

($0.63)

$0.11

 

Non-GAAP Results, in $millions except  per share data and percentages


Q4 2013

Q3 2013

Q4 2012

 Net Sales

$313.7

$274.9

$224.0

Gross Margin

34.1%

35.4%

36.1%

Operating Income

$25.5

$25.2

$32.0

Operating Margin

8.1%

9.2%

14.3%

Net Income

$12.6

$16.6

$21.8

Diluted Net Income Per Share

$0.20

$0.27

$0.34

Note: Percentages may not calculate precisely due to rounding.

Business Outlook

For the first quarter of 2014, Spansion estimates net sales in the range of $295 million to $320 million and GAAP diluted net loss per share of ($0.46) to ($0.42). Non-GAAP gross margin is expected to be in the range of 32.5% to 34.5%, and non-GAAP diluted EPS is expected to be in the range of $0.14 to $0.22. These estimates exclude amortization of intangibles of approximately $10 million, and stock compensation expense of approximately $1 million in COGS and $9 million in Net Income. These estimates also exclude charges related to litigation of $4 million to $6 million, $5 million to $6 million related to financing, one time items of $1 million to $2 million related to business alignment, and the recently acquired Fujitsu Microcontroller and Analog business including (i) $3 million to $4 million in inventory markup related to fair value accounting, and (ii) $2 million to $3 million in integration related costs.

About Spansion

Spansion (NYSE: CODE) is a global leader in embedded systems solutions. Spansion's flash memory, microcontrollers, analog and mixed-signal products drive the development of faster, intelligent, secure and energy efficient electronics. Spansion is at the heart of electronics systems, connecting, controlling, storing and powering everything from automotive electronics and industrial systems to the highly interactive and immersive consumer devices that are enriching people's daily lives. For more information, visit http://www.spansion.com.

Spansion®, the Spansion logo, MirrorBit®, MirrorBit® Eclipse™ and combinations thereof, are trademarks and registered trademarks of Spansion LLC in the United States and other countries. Other names used are for informational purposes only and may be trademarks of their respective owners.

Cautionary Statement

This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements. The risks and uncertainties include statements related to the acquisition of the Fujitsu Microcontroller and Analog business and our ability to: improve our gross margins; grow revenue; maintain a competitive cost and expense structure; maintain a strong product portfolio; control operating expenses, particularly our sales, general and administrative costs; retain and expand our customer base in focus markets, and retain and grow our share of business within our customer base; penetrate further the embedded solutions market with our high density products and expand the number of customers in emerging markets; and successfully develop and transition to the latest technologies. In addition, the instability of the global economy and tight credit markets could continue to adversely impact our business in several respects, including adversely impacting credit quality and insolvency risk of the Company and its customers and business partners, including suppliers and distributors; bookings; and reductions and deferrals of demand for our products. We urge investors to review in detail the risks and uncertainties discussed in the company's Securities and Exchange Commission filings, including but not limited to our Annual Report on Form 10-K for the fiscal year ended December 30, 2012 and our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 29, 2013. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 


Spansion Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share amounts)



Three Months
Ended
December 29,
2013

Three Months
Ended
September 29,

2013

Three Months
Ended
December 30,
2012

Net sales

$313,670

$273,378

$223,987

Cost of sales

220,422

217,210

152,047

Gross Profit

93,248

56,168

71,940

Research and development

42,102

38,341

24,771

Sales, general and administrative

60,824

54,544

32,121

Restructuring charges (credits)

(247)

6,264

-

Operating income (loss)

(9,431)

(42,981)

15,048

Interest and other income (expense)

(3,252)

3,579

2,472

Interest expense

(7,459)

(7,351)

(7,224)

Gain (loss) on acquisition of the Microcontroller and Analog business

(255)

8,205

-

Income (loss) before income taxes

(20,397)

(38,548)

10,296

Benefit (provision) for income taxes

(3,301)

1,644

(3,428)

Net income (loss)

(23,698)

(36,904)

6,868

Net income (loss) per common share




                Basic

$(0.40)

$(0.63)

$0.11

                Diluted

$(0.40)

$(0.63)

$0.11

Shares used in per share calculation




                Basic

58,878

58,785

60,144

                Diluted

58,878

58,785

61,487

 

 

Spansion Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands except par value and shares)


Assets

December 29, 2013

September 29, 2013

December 30, 2012

Current assets:





Cash and cash equivalents

$286,069

$193,025

$262,177


Short-term investments

25,428

35,367

51,720


Accounts receivable, net

177,838

155,206

106,864


Inventories

254,154

257,600

182,192


Deferred income taxes

4,592

3,811

8,699


Prepaid expenses and other current assets

52,756

64,914

28,531



                Total current assets


800,837

709,923

640,183








Property, plant and equipment, net

185,505

186,211

176,728

Intangible assets

167,949

177,207

149,153

Goodwill

166,422

166,584

166,931

Other assets


60,208

66,961

39,171

                    Total assets

$1,380,921

$1,306,886

$1,172,166








Liabilities and  Equity




Current liabilities:





Accounts payable

126,680

99,454

85,542


Accrued compensation and benefits

57,876

65,606

26,080


Other accrued liabilities

86,352

97,896

29,913


Income taxes payable

4,651

1,673

2,618


Deferred income

30,247

27,099

9,135


Current portion of long-term debt

97,320

5,380

5,382



               Total current liabilities


403,126

297,108

158,670








Deferred income taxes

3,675

4,408

9,393

Long-term debt, less current portion

404,612

413,789

410,913

Other long-term liabilities

32,048

34,688

31,416




Total liabilities


843,461

749,993

610,392

Stockholders' equity




Class A Common stock, $0.001 par value, 150,000,000 shares authorized, shares issued and outstanding (58,882,913 shares as of December 29, 2013, 58,828,662 shares as of September 29, 2013; and 57,267,409 shares as of December 30, 2012)

59

59

58

Class B common stock, $0.001 par value, 1 share authorized, 1 share issued and outstanding

-

-

-

Preferred Stock, $0.001 par value, 50,000,000 shares authorized, 0 shares issued and outstanding

-

-

-

Additional paid-in capital

747,393

739,646

690,891

Accumulated deficit

(205,959)

(182,261)

(127,691)

Accumulated other comprehensive loss

(4,033)

(551)

(1,484)


            Total stockholders' equity

537,460

556,893

561,774

                   Total liabilities and stockholders' equity

$1,380,921

$1,306,886

$1,172,166









 

 


Spansion Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)




Three Months
Ended
December 29, 2013

Three Months
Ended
September 29, 2013

Three Months
Ended
December 30, 2012

Cash Flows from Operating Activities:




Net Income (Loss)

$(23,698)

$(36,904)

$6,868

Adjustments to reconcile net income (loss) to net cash
provided by operating activities:





Depreciation and amortization

26,162

24,847

21,041


Provision (benefit) for deferred income taxes

(1,257)

(3,738)

4,063


Net loss (gain) on sale and disposal of property,
plant and equipment

2

(2,126)

(760)


Loss (gain)  on acquisition of Microcontroller and Analog business

255

(8,205)

-


Partial repurchase of 7.875% Senior Notes related costs

-

2,280

-


Gain on recovery from impaired investment

(444)

(9,592)

-


Compensation recognized under employee stock plans

7,363

7,028

10,187


Changes in operating assets and liabilities 

12,477

80,934

(16,197)

Net cash provided by operating activities

20,860

54,524

25,202

Cash Flows from Investing Activities:





Proceeds from sale of property, plant and equipment

-

2,272

1,278


Purchase of property, plant and equipment

(13,242)

(18,047)

(11,533)


Purchase of marketable securities

(20,014)

(9,431)

(16,199)


Proceeds from maturities of marketable securities

29,952

73,815

13,086


Proceeds from recovery of impaired investment

444

9,592

-


Acquisition, net of cash acquired

(1,808)

(148,144)

-

Net cash used for investing activities

(4,668)

(89,943)

(13,368)

 

Cash Flows from Financing Activities:




Proceeds from issuance of common stock due to options exercised

390

844

230

Proceeds from issuance of Senior Exchangeable Notes

-

150,000

-

Costs on issuance of Senior Exchangeable Notes

-

(4,506)

-

Payments on financing arrangements

(5,053)

(1,191)

-

Refinancing costs on Term loan and Revolver

(134)

(84)

(2,597)

Purchase of capped call for the Senior Exchangeable notes

-

(15,375)

-

Partial repurchase of 7.875% Senior Notes including costs

-

(106,779)

-

Additional borrowings on term loan,  net of discount

82,117

-

-

Cash settlement on hedging activities

-

-

(274)

Purchase of bankruptcy claims

-

-

(24,450)

 Net cash provided by (used for) financing activities

77,320

22,909

(27,091)

Effect of exchange rate on cash and cash equivalents

(468)

-

(2,026)

Net increase (decrease) in cash and cash equivalents

93,044

(12,510)

(17,283)

Cash and cash equivalents at the beginning of period

193,025

205,535

279,460

Cash and cash equivalents at end of period

$286,069

$193,025

$262,177

Use of Non-GAAP Financial Information

To provide investors and others with additional information regarding Spansion's operating results, we have disclosed in this press release certain non-GAAP financial measures, including gross profit, operating income, net income, and adjusted EBITDA. These non-GAAP financial measures are a supplement to, and not a substitute for or superior to, the company's results presented in accordance with U.S. GAAP.

The non-GAAP financial measures are provided to enhance the user's overall understanding of the company's operating performance. Specifically, the company believes the non-GAAP information provides useful measures to investors regarding the company's financial performance by excluding certain expenses that the company believes are not indicative of its core operating results. For more information on non-GAAP financial measures, please see the reconciliations of such measures in the tables of this release.

Management believes these non-GAAP financial measures reflect Spansion's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in Spansion's business, as they exclude expenses that are not reflective of ongoing operating results and provide useful information to investors and others in understanding and evaluating Spansion's operating results and future prospects in the same manner as management. During the quarter ended December 29, 2013, the presentation of non-GAAP financial information included the addition of litigation reserve, interest expense, intangible amortization and stock compensation expense to the net income. Further adjustments due to acquisition related expense, gain on recovery from impaired investment, loss on acquisition, inventory mark-up amortization, financing costs, restructuring charges and others attempt to exclude items that are either non-cash or non-recurring in nature.

 

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures


Net Sales to Non-GAAP Net Sales

($ in millions)

Q4 2013

Q3 2013

Q4 2012

GAAP Net Sales

$313.7

$273.4

$224.0

Add: Revenue lost on Microcontroller and Analog business due to purchase accounting

-

1.5

-

Non-GAAP Net Sales

$313.7

$274.9

$224.0









Gross Profit to Non-GAAP Gross Profit




($ in millions)

Q4 2013

Q3 2013

Q4 2012

GAAP gross profit

$93.2

$56.2

$71.9

Add: Intangibles amortization

8.9

9.5

6.8

Add: Inventory mark-up amortization

3.1

27.1

-

Add: Stock compensation expense

1.7

1.4

2.1

Add: Revenue lost on Microcontroller and Analog business due to purchase accounting

-

1.5

-

Add: Acquisition related costs

0.1

0.2

-

Add: Restructuring and others

-

1.4

-

Non-GAAP Gross Profit

$107.0

$97.3

$80.8



Operating Income (Loss) to Non-GAAP Operating Income

($ in millions)

Q4 2013

Q3 2013

Q4 2012

GAAP operating income (loss)

$(9.4)

$(43.0)

$15.0

Add: Intangibles amortization

8.9

9.5

6.8

Add: Inventory mark-up amortization relating to acquisition

3.1

27.1

-

Add: Stock compensation expense

7.4

7.0

10.2

Add: Revenue lost on Microcontroller and Analog business due to purchase accounting

-

1.5

-

Add: Acquisition costs

2.7

7.4

-

Add: Litigation reserve

13.1

8.0

-

Add: Restructuring and others

(0.2)

7.7

-

Non-GAAP Operating Income

$25.5

$25.2

$32.0



Net Income (Loss) to Non-GAAP Net Income and Adjusted EBITDA

($ in millions)

Q4 2013

Q3 2013

Q4 2012

GAAP net income (loss)

$(23.7)

$(36.9)

$6.9

Add: Intangibles amortization

8.9

9.5

6.8

Add: Inventory mark-up amortization

3.1

27.1

-

Add: Stock compensation expense

7.4

7.0

10.2

Add: Restructuring and others

(0.1)

7.7

-

Add: Financing arrangements related costs

0.3

7.6

1.9

Add: Accretion of interest on the senior exchangeable notes

1.1

0.4

-

Add: Litigation reserve

13.1

8.0

-

Add: Revenue lost on Microcontroller and Analog business due to purchase accounting

-

1.5

-

Add: Acquisition costs, net of gain on acquisition

3.0

(5.8)

-

Less: Tessera claim reserve reversal

-

-

(4.0)

Less: Gain on recovery from impaired investment

(0.4)

(9.6)

-

Non-GAAP Net Income

$12.6

$16.6

$21.8

Add: Interest and other expense (income)

9.6

6.5

6.9

Add: Taxes

3.3

2.1

3.4

Add: Depreciation

13.3

12.8

13.8

Adjusted EBITDA

$38.8

$38.0

$46.0






Note: Totals may not add precisely due to rounding.

SOURCE Spansion Inc.



RELATED LINKS
http://www.spansion.com

Featured Video

Journalists and Bloggers

Visit PR Newswire for Journalists for releases, photos, ProfNet experts, and customized feeds just for Media.

View and download archived video content distributed by MultiVu on The Digital Center.

Share with Twitter Share with LinkedIn
 

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

 
 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

 
 

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.

 
Area to test

Online Member Center

Not a Member?
Click Here to Join
Login
Search News Releases
Advanced Search
Search
  1. PR Newswire Services
  2. Knowledge Center
  3. Browse News Releases
  4. Contact PR Newswire
  5. Send a News Release