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Cypress Reports Fourth-Quarter And Year-End 2012 Results

Stocks in this article: CY

Our fourth-quarter book-to-bill of 0.88 was up sequentially in every division for the first time all year. We now expect our first quarter, due to the seasonality of our business, to be the revenue bottom of the current semiconductor slump, with revenue growth thereafter.

BUSINESS REVIEW

+ Our non-GAAP 4 consolidated gross margin for the fourth quarter was 51.3%, down 5.8 percentage points from the previous quarter due mainly to product mix, factory absorption, and Ramtron charges and inventory reserves. Our GAAP fourth-quarter consolidated gross margin was 46.4%.

+ Net inventory at the end of the fourth quarter was $126.1 million, up $36.8 million from the third quarter. The inventory acquired from Ramtron (plus the related purchase accounting fair value adjustment) totaled $44.7 million. Excluding the Ramtron acquisition, inventory decreased 9% sequentially, and distributor inventory dollars on hand decreased 16% sequentially.

+ Cash and investments for the fourth quarter totaled $117.2 million, a decrease of $102.2 million from the prior quarter. During the quarter, we used $102.2 million to complete the acquisition of Ramtron, $32.3 million to repurchase 3.2 million shares, and paid our regular quarterly dividend of $16.1 million. Since we announced our $400-million stock repurchase program in September 2011, we have repurchased 23.1 million shares through December 30, 2012, and have approximately $88.4 million remaining under the authorized repurchase program.

Our divisional revenue and gross margins are detailed below:

BUSINESS UNIT SUMMARY FINANCIALS (UNAUDITED)

 
THREE MONTHS ENDED
December 30, 2012
 
  PSD 1  

DCD 1

 

MPD 1

 

Core Semi 2

 

Emerging Tech. 3

 

Consolidated

REVENUE ($M) 85.1   16.5   77.4   179.0   1.3   180.3

Percentage of total revenues

47.2 % 9.2 % 42.9 % 99.3 % 0.7 % 100.0 %
 

GROSS MARGIN (%)

On a non-GAAP 4 basis

47.6 % 48.0 % 58.6 % 52.4 % -109.4 % 51.3 %

On a GAAP basis

43.6 % 43.9 % 53.7 % 48.0 % -173.7 % 46.4 %
 
THREE MONTHS ENDED
September 30, 2012
 

PSD 1

 

DCD 1

 

MPD 1

 

Core Semi 2

 

Emerging Tech. 3

 

Consolidated

REVENUE ($M)

93.6

18.8

88.3

200.7

2.3

203.0

Percentage of total revenues

46.1

%

9.3

%

43.5

%

98.9

%

1.1

%

100.0

%

 

GROSS MARGIN (%)

 

On a non-GAAP 4 basis

53.5

%

50.0

%

64.0

%

57.8

%

-2.7

%

57.1

%

On a GAAP basis

50.6

%

47.1

%

61.1

%

54.9

%

-5.5

%

54.2

%

 
TWELVE MONTHS ENDED
December 30, 2012
 
  PSD 1   DCD 1   MPD 1  

Core Semi 2

 

Emerging Tech. 3

  Consolidated
REVENUE ($M) 356.4   75.6   330.5   762.5   7.2   769.7
Percentage of total revenues 46.3 % 9.8 % 43.0 % 99.1 % 0.9 % 100.0 %
 
GROSS MARGIN (%)
On a non-GAAP 4 basis 52.4 % 51.0 % 62.2 % 56.5 % -65.6 % 55.4 %
On a GAAP basis 48.0 % 44.1 % 58.7 % 52.2 % -84.0 % 51.0 %
 
TWELVE MONTHS ENDED
January 1, 2012
 
  PSD 1   DCD 1   MPD 1  

Core Semi 2

 

Emerging Tech. 3

  Consolidated
REVENUE ($M) 482.9   112.7   394.8   990.4   4.8   995.2
Percentage of total revenues 48.5 % 11.3 % 39.7 % 99.5 % 0.5 % 100 %
 
GROSS MARGIN (%)
On a non-GAAP 4 basis 57.2 % 54.4 % 59.4 % 57.8 % -34.5 % 57.3 %
On a GAAP basis 54.8 % 52.0 % 57.0 % 55.4 % -36.7 % 54.9 %
 
1. PSD, Programmable System Division; DCD, Data Communications Division; MPD, Memory Products Division.
2. “Core Semiconductor” includes PSD, DCD and MPD and excludes “Emerging Technology.”
3. “Emerging Technology” includes businesses outside our core semiconductor businesses outlined in footnote 2. Includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry-support business. Cypress Envirosystems Inc. was sold in Q4 2012. The non-GAAP results include Cypress Envirosystems expenses for all periods prior to Q4 2012. The GAAP results include Cypress Envirosystems expenses for all periods presented.
4. Refer to “Reconciliation of GAAP 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.
 

FOURTH-QUARTER 2012 HIGHLIGHTS

+ Cypress introduced the fully qualified low-power version of PSoC ® 5LP programmable system-on-chip family, which operates on a meager four milliamperes of total current (at 25 MHz). The new ARM ® Cortex™-M3-based family provides exceptional processor performance, along with significant programmable analog and digital resources. PSoC 5LP also allows designers to reduce power consumption by customizing each peripheral Component. Components are free “Virtual Chips” used to integrate multiple ICs and system interfaces into one PSoC device.

+ Cypress’s online PSoC World developers conference attracted 4,677 attendees worldwide. Presented with Cypress partners, including ARM, Arrow Electronics, Macnica, TED, and Axios, PSoC World featured presentations from industry visionaries, hands-on tutorials for system and embedded designs with live Q&A, and an outside expert panel evaluating the PSoC architecture. All of the content is available at www.PSoCWorld.com.

+ Cypress introduced PSoC Designer™ 5.3, a new version of its integrated development environment for the PSoC 1 Programmable System-on-Chip architecture. The update includes more than 30 new or enhanced User Modules—free “Virtual Chips” used to integrate multiple ICs into a single PSoC 1 device.

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