FORWARD-LOOKING STATEMENTS
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for the remainder of fiscal year 2013 and beyond are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as “believe,” “expect,” “future,” “plan,” “intend” and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to the markets we serve, including expected volatility in the mobile handset market; the strength and growth of our proprietary and programmable products; our expectations regarding our fourth quarter 2013 and first quarter 2014 revenue levels, earnings leverage, margins, profit and cash flow; the effectiveness of our cost-saving measures; our expectations regarding the demand for our products and how we expect our products to perform, the strength of our design win pipeline, expected market share gains and the expected tax treatment of our dividends. 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 state of and future of the global economy, business conditions and growth trends in the semiconductor market, whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, whether our product and design wins and kit sales result in increased sales, our ability to manage our business to have strong earnings, reduce operating expenses, factory utilization, 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 Technology Division, and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.
Cypress, the Cypress logo, TrueTouch, PSoC, CapSense, EZ-USB, and AGIGARAM are registered trademarks, and PSoC Creator, CapSense Express, EZ-Click, CX3, FX3S, FX3 and PRoC 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) | ||||||||
| September 29, | December 30, | |||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Cash, cash equivalents and short-term investments | $ | 101,389 | $ | 117,210 | ||||
| Accounts receivable, net | 108,200 | 82,920 | ||||||
| Inventories, net (a) | 101,031 | 127,596 | ||||||
| Property, plant and equipment, net | 259,897 | 274,427 | ||||||
| Goodwill and other intangible assets, net | 108,548 | 113,410 | ||||||
| Other assets | 116,926 | 116,066 | ||||||
| Total assets | $ | 795,991 | $ | 831,629 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Accounts payable | $ | 52,809 | $ | 58,704 | ||||
| Deferred margin on sales to distributors | 137,959 | 131,192 | ||||||
| Income tax liabilities | 29,013 | 47,454 | ||||||
| Other liabilities | 171,668 | 185,418 | ||||||
| Long-term revolving credit facility | 227,000 | 232,000 | ||||||
| Total liabilities | 618,449 | 654,768 | ||||||
| Total Cypress stockholders' equity | 181,679 | 180,900 | ||||||
| Noncontrolling interest | (4,137 | ) | (4,039 | ) | ||||
| Total equity | 177,542 | 176,861 | ||||||
| Total liabilities and equity | $ | 795,991 | $ | 831,629 | ||||
|
(a) Net inventories include $4.4 million and $2.8 million of capitalized inventories related to stock compensation expense, as of September 29, 2013 and December 30, 2012, respectively. |
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| CYPRESS SEMICONDUCTOR CORPORATION | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| ON A GAAP BASIS | ||||||||||||
| (In thousands, except per-share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| September 29, | June 30, | September 30, | ||||||||||
| 2013 | 2013 | 2012 | ||||||||||
| Revenues | $ | 188,723 | $ | 193,466 | $ | 203,015 | ||||||
| Cost of revenues | 97,070 | 102,041 | 92,959 | |||||||||
| Gross margin | 91,653 | 91,425 | 110,056 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 50,429 | 48,804 | 46,908 | |||||||||
| Selling, general and administrative | 45,533 | 48,073 | 47,328 | |||||||||
| Amortization of acquisition-related intangibles | 1,987 | 1,987 | 707 | |||||||||
| Restructuring charges | 3,693 | 693 | 66 | |||||||||
| Total operating expenses, net | 101,642 | 99,557 | 95,009 | |||||||||
| Operating income (loss) | (9,989 | ) | (8,132 | ) | 15,047 | |||||||
| Interest and other income, net | 428 | 2,119 | (1,330 | ) | ||||||||
| Income (loss) before income taxes | (9,561 | ) | (6,013 | ) | 13,717 | |||||||
| Income tax provision (benefit) | (774 | ) | (9,343 | ) | (241 | ) | ||||||
| Income (loss), net of taxes | (8,787 | ) | 3,330 | 13,958 | ||||||||
| Adjust for net loss attributable to noncontrolling interest | 429 | 436 | 374 | |||||||||
| Net Income (loss) attributable to Cypress | $ | (8,358 | ) | $ | 3,766 | $ | 14,322 | |||||
| Net Income (loss) per share attributable to Cypress: | ||||||||||||
| Basic | $ | (0.06 | ) | $ | 0.03 | $ | 0.10 | |||||
| Diluted | $ | (0.06 | ) | $ | 0.02 | $ | 0.09 | |||||
| Shares used in net income (loss) per share calculation: | ||||||||||||
| Basic | 149,679 | 147,287 | 147,673 | |||||||||
| Diluted | 149,679 | 156,262 | 160,300 | |||||||||
| CYPRESS SEMICONDUCTOR CORPORATION | ||||||||||||
| RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (a) | ||||||||||||
| (In thousands, except per-share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| September 29, | June 30, | September 30, | ||||||||||
| 2013 | 2013 | 2012 | ||||||||||
| GAAP gross margin | $ | 91,653 | $ | 91,425 | $ | 110,056 | ||||||
| Stock-based compensation expense | 2,804 | 3,279 | 4,526 | |||||||||
| Acquisition-related expense | 6,849 | 1,321 | - | |||||||||
| Changes in value of deferred compensation plan | 265 | 31 | 217 | |||||||||
| Impairment of assets and other | (64 | ) | 6,681 | 1,129 | ||||||||
| Non-GAAP gross margin | $ | 101,507 | $ | 102,737 | $ | 115,928 | ||||||
| GAAP research and development expenses | $ | 50,429 | $ | 48,804 | $ | 46,908 | ||||||
| Stock-based compensation expense | (6,806 | ) | (6,913 | ) | (5,062 | ) | ||||||
| Acquisition-related expense | (19 | ) | (26 | ) | - | |||||||
| Changes in value of deferred compensation plan | (548 | ) | (99 | ) | (389 | ) | ||||||
| Impairment of assets and other | (1,078 | ) | - | - | ||||||||
| Non-GAAP research and development expenses | $ | 41,978 | $ | 41,766 | $ | 41,457 | ||||||
| GAAP selling, general and administrative expenses | $ | 45,533 | $ | 48,073 | $ | 47,328 | ||||||
| Stock-based compensation expense | (9,701 | ) | (10,203 | ) | (6,513 | ) | ||||||
| Acquisition-related expense | (366 | ) | (98 | ) | (547 | ) | ||||||
| Changes in value of deferred compensation plan | (1,181 | ) | (145 | ) | (945 | ) | ||||||
| Impairment of assets and other | 131 | (160 | ) | - | ||||||||
| Non-GAAP selling, general and administrative expenses | $ | 34,416 | $ | 37,467 | $ | 39,323 | ||||||
| GAAP operating income (loss) | $ | (9,989 | ) | $ | (8,132 | ) | $ | 15,047 | ||||
| Stock-based compensation expense | 19,311 | 20,395 | 16,101 | |||||||||
| Acquisition-related expense | 9,221 | 3,432 | 1,254 | |||||||||
| Changes in value of deferred compensation plan | 1,994 | 275 | 1,551 | |||||||||
| Impairment of assets and other | 883 | 6,841 | 1,129 | |||||||||
| Restructuring charges | 3,693 | 693 | 66 | |||||||||
| Non-GAAP operating income | $ | 25,113 | $ | 23,504 | $ | 35,148 | ||||||
| GAAP net income (loss) attributable to Cypress | $ | (8,358 | ) | $ | 3,766 | $ | 14,332 | |||||
| Stock-based compensation expense | 19,311 | 20,395 | 16,101 | |||||||||
| Acquisition-related expense | 9,221 | 3,432 | 1,254 | |||||||||
| Changes in value of deferred compensation plan | (97 | ) | (21 | ) | 48 | |||||||
| Impairment of assets and other | 883 | 5,763 | 1,129 | |||||||||
| Restructuring charges | 3,693 | 693 | 66 | |||||||||
| Tax and tax-related items | (2,638 | ) | (12,393 | ) | (2,246 | ) | ||||||
| Investment-related gains/losses | - | - | 1,638 | |||||||||
| Non-GAAP net income attributable to Cypress | $ | 22,015 | $ | 21,635 | $ | 32,322 | ||||||
| GAAP net income (loss) per share attributable to Cypress - diluted | $ | (0.06 | ) | $ | 0.02 | $ | 0.09 | |||||
| Stock-based compensation expense | 0.12 | 0.13 | 0.10 | |||||||||
| Acquisition-related expense | 0.02 | 0.02 | 0.01 | |||||||||
| Impairment of assets and other | 0.05 | 0.04 | 0.01 | |||||||||
| Restructuring charges | 0.02 | 0.01 | - | |||||||||
| Tax and tax-related items | (0.02 | ) | (0.08 | ) | (0.02 | ) | ||||||
| Investment-related gains/losses | - | - | 0.01 | |||||||||
| Non-GAAP share count adjustment | 0.01 | - | - | |||||||||
| Non-GAAP net income per share attributable to Cypress - diluted | $ | 0.14 | $ | 0.14 | $ | 0.20 | ||||||
|
(a) Refer to the accompanying "Notes to Non-GAAP Financial Measures" for a detailed discussion of management's use of non-GAAP financial measures. |
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| CYPRESS SEMICONDUCTOR CORPORATION | ||||||||||||||||||||||
| SUPPLEMENTAL FINANCIAL DATA | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 29, | June 30, | September 30, | September 29, | September 30, | ||||||||||||||||||
| 2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
|
Selected Cash Flow Data (Preliminary): |
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| Net cash provided by operating activities | $ | 7,905 | $ | 30,355 | $ | 58,065 | $ | 46,525 | $ | 117,695 | ||||||||||||
| Net cash provided by (used in) investing activities | $ | (2,080 | ) | $ | 3,545 | $ | 30,510 | $ | 570 | $ | (17,474 | ) | ||||||||||
| Net cash provided by (used in) financing activities | $ | 108 | $ | (20,502 | ) | $ | (44,508 | ) | $ | (33,748 | ) | $ | (37,609 | ) | ||||||||
|
Other Supplemental Data (Preliminary): |
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| Capital expenditures | $ | 10,808 | $ | 7,771 | $ | 5,488 | $ | (27,877 | ) | $ | 25,204 | |||||||||||
| Depreciation | $ | 9,745 | $ | 10,036 | $ | 11,790 | $ | (30,136 | ) | $ | 34,140 | |||||||||||
| Payment of dividend | $ | 16,258 | $ | 16,138 | $ | 16,660 | $ | (48,241 | ) | $ | 47,170 | |||||||||||
| Dividend paid per share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.33 | $ | 0.33 | ||||||||||||
| Dividend yield per share (a) | 4.9 | % | 4.1 | % | 4.1 | % | 4.9 | % | 4.1 | % | ||||||||||||
| (a) Dividend yield per share is calculated based on annualized dividend paid per share divided by the common stock share price at the end of the period. | ||||||||||||||||||||||
| CYPRESS SEMICONDUCTOR CORPORATION | |||||||||||||||||||
| CONSOLIDATED DILUTED EPS CALCULATION | |||||||||||||||||||
| (In thousands, except per-share data) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| September 29, | June 30, | September 30, | |||||||||||||||||
| 2013 | 2013 | 2012 | |||||||||||||||||
| GAAP | Non-GAAP | GAAP | Non-GAAP | GAAP | Non-GAAP | ||||||||||||||
| Net income (loss) attributable to Cypress | $ | (8,358 | ) | $ | 22,015 | $ | 3,766 | $ | 21,635 | $ | 14,332 | $ | 32,322 | ||||||
| Weighted-average common shares outstanding (basic) | 149,679 | 149,679 | 147,287 | 147,287 | 147,673 | 147,673 | |||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||
| Stock options, unvested restricted stock and other | - | 12,525 | 8,975 | 12,500 | 12,627 | 13,902 | |||||||||||||
| Weighted-average common shares outstanding for diluted computation | 149,679 | 162,204 | 156,262 | 159,787 | 160,300 | 161,575 | |||||||||||||
| Net income (loss) per share attributable to Cypress - basic | $ | (0.06 | ) | $ | 0.15 | $ | 0.03 | $ | 0.15 | $ | 0.10 | $ | 0.22 | ||||||
| Net income (loss) per share attributable to Cypress - diluted | $ | (0.06 | ) | $ | 0.14 | $ | 0.02 | $ | 0.14 | $ | 0.09 | $ | 0.20 | ||||||
| September 29, | June 30, | September 30, | |||||||||||||||||
| 2013 | 2013 | 2012 | |||||||||||||||||
| Average stock price for the period ended | $11.70 | $10.72 | $11.82 | ||||||||||||||||
| Common stock outstanding at period end (in thousands) | 150,833 | 147,972 | 145,668 | ||||||||||||||||
Notes to Non-GAAP Financial Measures
