Cypress Reports Third-Quarter 2012 Results

BUSINESS REVIEW

+ Non-GAAP ¹ consolidated gross margin for Q3 was 57.1%, up slightly from the previous quarter.

+ Net inventory at the end of Q3 was $89.3 million, down 2% from Q2. This was equivalent to 93 days, down three days from the prior quarter. We expect inventory to decrease slightly in Q4. Distributor weeks of inventory, which includes in-transit inventory, increased from 6.2 weeks to 7.0 weeks.

+ Cash and investments for Q3 totaled $219 million, an increase of $8.6 million from Q2. During Q3, we repurchased 7.3 million shares for $81.6 million, or an average of $11.20 per share. From September 2011, when we announced our $400 million stock-repurchase program, through September 30, 2012, we repurchased 19.9 million shares. We have approximately $120.7 million remaining under the authorized repurchase program.

+ Long-term debt under our revolving credit facility increased by $45 million to $198 million as we finished the preparations to fund the cash payments required under the Ramtron tender offer.

Our divisional revenue and gross margins are detailed below:

BUSINESS UNIT SUMMARY FINANCIALS (UNAUDITED)
THREE MONTHS ENDED
September 30, 2012
															Core				Emerging
			PSD 1				MPD 1				DCD 1				Semi 2				Tech. 3				Consolidated
REVENUE ($M)			93.6				88.3				18.8				200.7				2.3				203.0
Percentage of total revenues			46.1	%			43.5	%			9.3	%			98.9	%			1.1	%			100.0	%
GROSS MARGIN (%)
On a non-GAAP 4 basis			53.5	%			64.0	%			50.0	%			57.8	%			-2.7	%			57.1	%
On a GAAP basis			50.6	%			61.1	%			47.1	%			54.9	%			-5.5	%			54.2	%
THREE MONTHS ENDED
July 1, 2012
															Core				Emerging
			PSD 1				MPD 1				DCD 1				Semi 2				Tech. 3				Consolidated
REVENUE ($M)			96.1				83.0				20.4				199.5				1.8				201.3
Percentage of total revenues			47.8	%			41.2	%			10.1	%			99.1	%			0.9	%			100.0	%
GROSS MARGIN (%)
On a non-GAAP 4 basis			54.1	%			64.2	%			53.9	%			58.3	%			-77.7	%			57.0	%
On a GAAP basis			50.3	%			60.3	%			50.0	%			54.4	%			-98.6	%			53.0	%

1.		PSD – Programmable Systems Division; DCD – Data Communications Division; MPD – Memory Products Division.
2.		“Core Semiconductor” – Includes PSD, DCD and MPD and excludes “Emerging Technology.”
3.		“Emerging Technology” – Businesses outside our core semiconductor businesses outlined in footnote 2. Includes subsidiaries Cypress Envirosystems Inc., AgigA Tech Inc., Deca Technologies Inc., and our foundry-support business.
4.		Refer to “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” and “Notes to Non-GAAP Financial Measures” following this press release for a detailed discussion of management’s use of non-GAAP financial measures, as well as reconciliations of all non-GAAP financial measures presented in this press release to the most directly comparable GAAP financial measures.

THIRD-QUARTER 2012 HIGHLIGHTS

+ Cypress shipped its one-billionth capacitive touch-sensing unit. These shipments include TrueTouch ^® touchscreen controllers, CapSense ^® controllers for mechanical button and slider replacement, and trackpad units for cursor navigation in laptop computers. These units have shipped into a variety of end products, such as high-volume mobile handsets, tablets, automotive applications, consumer electronics, white goods, and industrial products. Cypress holds 47 touch-related patents and has 200 more in process.

+ Tesla Motors selected Cypress’s TrueTouch automotive touchscreen solution for the infotainment system in the Model S, the world’s first premium electrically powered sedan. The 17-inch touchscreen in the Model S is the largest in an automobile to date, and it is the first to integrate all functional controls.

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