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Cypress Reports Fourth-Quarter And Year-End 2012 Results

+ Cypress officially completed its merger with Ramtron International on November 20, 2012, and is now actively supporting Ramtron’s Ferroelectric Random Access Memory (F-RAM) products. The merger effectively gives Cypress the world’s broadest portfolio of fast-write nonvolatile memories, including F-RAMs and Cypress’s nonvolatile static random access memories (nvSRAMs). Ramtron’s F-RAMs are the industry’s lowest-power fast-write nonvolatile memories, and dominate the serial nvSRAM market.

+ 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 27, 2012. The dividend was paid on January 17, 2013.

ABOUT CYPRESS

Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC 1, PSoC 3, and PSoC 5 programmable system-on-chip families and derivatives, CapSense touch sensing and TrueTouch solutions for touchscreens. Cypress is the world leader in USB controllers, including the high-performance West Bridge® solution that enhances connectivity and performance in multimedia handsets, PCs and tablets. Cypress is also the world leader in SRAM memories. Cypress serves numerous markets, including consumer, mobile handsets, computation, data communications, automotive, industrial, and military. Cypress trades on the NASDAQ Global Select Market under the ticker symbol CY. Visit Cypress online at 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 Q1 2013 and 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 semiconductor market, the strength and growth of our proprietary and programmable products, our expectations regarding our Q1 2013 revenue and earnings, margins, profit and cash flow; the results of our return on capital strategies and cost-saving measures, including our dividend and stock repurchase programs; our expectations regarding the demand for our products and how our products are expected to perform, as well as our future design win activity and market share gains. 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 a variety of uncertainties and risk factors, including, but not limited to, our ability to close and successfully integrate Ramtron into our operations, 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 result in increased sales, our ability to manage our business to have strong earnings, reduce operating expenses and cash flow leverage, 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.

Statements made in this release that are not historical in nature and that refer to Cypress plans and expectations for the future, including, but not limited to, the Company’s future financial performance and results of operations, design-win penetration, cost-management strategies, competitive position and product offerings, set forth above are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially due a variety of factors, including but not limited to the risks identified in this press release as well as in our filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Cypress as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statement. We use words such as “anticipates,” “believes,” “expects,” “future,” “look forward,” “planning,” “intends” and similar expressions to identify such forward-looking statements.

Cypress, the Cypress logo, TrueTouch, PSoC, EZ-USB, CapSense, and West Bridge are registered trademarks, and PSoC Creator, FX3, PRoC, and WirelessUSB 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)
       
December 30, January 1,
  2012     2012  
 
ASSETS
 
Cash, cash equivalents and short-term investments $ 117,209 $ 166,330
Accounts receivable, net 82,920 103,524
Inventories (a) (b) 126,106 92,304
Property, plant and equipment, net 276,852 284,979
Goodwill and other intangible assets, net 112,081 40,462
Other assets   113,065     122,491  
Total assets $ 828,233   $ 810,090  
 
LIABILITIES AND EQUITY
 
Accounts payable $ 66,522 $ 52,868
Deferred margin on sales to distributors 131,192 150,568
Income tax liabilities 45,793 43,239
Other liabilities 176,358 165,573
Long-term revolving credit facility   232,000     -  
Total liabilities   651,865     412,248  
Total Cypress stockholders' equity 184,214 400,267
Noncontrolling interest   (7,846 )   (2,425 )
Total equity   176,368     397,842  
Total liabilities and equity $ 828,233   $ 810,090  
 

(a)

 

Included in this amount is approximately $44.7 million of net inventory, which has a fair market component of approximately $23.3 million, resulting from the acquisition of Ramtron.

(b)

Inventories include $2.8 million and $4.6 million of capitalized inventories related to stock-based compensation expense, as of December 30, 2012 and January 1, 2012, 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
December 30,   September 30,   January 1, December 30,   January 1,
  2012     2012     2012     2012     2012  

 

Revenues $ 180,283 $ 203,015 $ 242,373

 

$ 769,687 $ 995,204
Cost of revenues   96,595     92,959     112,521     377,393     448,602  
Gross margin 83,688 110,056 129,852 392,294 546,602
Operating expenses:
Research and development 46,636 46,908 46,561 189,458 189,970
Selling, general and administrative 51,994 47,328 55,388 211,771 227,976
Amortization of acquisition-related intangibles 1,833 707 731 4,002 2,892
Restructuring charges 2,975 66 932 4,258 6,336
Gain (loss) on divestiture - - - - (34,291 )
         
Total operating expenses, net   103,438     95,009     103,612     409,489     392,883  
Operating income (loss) (19,750 ) 15,047 26,240 (17,195 ) 153,719
Interest and other income (expense), net   (2,175 )   (1,330 )   2,789     (3,170 )   1,859  
Income (loss) before income taxes (21,925 )

 

13,717 29,029 (20,365 )

 

155,578
Income tax provision (benefit)   2,544     (241 )   (2,353 )   5,285     (11,379 )
Income (loss), net of taxes (24,469 ) 13,958 31,382 (25,650 ) 166,957
Adjust for net loss attributable to noncontrolling interest   264     374     279     1,294     882  
Net income (loss) attributable to Cypress $ (24,205 ) $ 14,332   $ 31,661   $ (24,356 ) $ 167,839  
 
Net income (loss) per share attributable to Cypress:
Basic $ (0.17 ) $ 0.10 $ 0.21 $ (0.16 ) $ 1.02
Diluted $ (0.17 ) $ 0.09 $ 0.18 $ (0.16 ) $ 0.90
Cash dividend declared per share $ 0.11 $ 0.11 $ 0.09 $ 0.44 $ 0.27
Shares used in net income (loss) per share calculation:
Basic 143,605 147,673 154,045 149,266 164,495
Diluted   143,605       160,300       172,079     149,266       186,895  
 
CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (a)
(In thousands)
(Unaudited)
   

Three Months Ended December 30, 2012

        Emerging  
PSD (b) MPD (b) DCD (b) Core Semi (c) Technologies (d) Consolidated
GAAP gross margin $ 37,078 $ 41,607 $ 7,239 85,924 $ (2,236 ) $ 83,688
Stock-based compensation expense 1,234 1,123 239 2,596 19 2,615
Changes in value of deferred compensation plan (32 ) (29 ) (6 ) (67 ) - (67 )
Impairment of assets and other 2,247 2,044 435 4,726 33 4,759
Gain (loss) on divestiture - - - - 776 776
Acquisition-related expense   -     646     -     646     -     646  
Non-GAAP gross margin $ 40,527   $ 45,391   $ 7,907   $ 93,825   $ (1,408 ) $ 92,417  
 
Three Months Ended September 30, 2012
Emerging
PSD (b) MPD (b) DCD (b) Core Semi (c) Technologies (d) Consolidated
GAAP gross margin $ 47,406 $ 53,915 $ 8,863 $ 110,184 $ (128 ) $ 110,056
Stock-based compensation expense 2,087 1,968 419 4,474 52 4,526
Changes in value of deferred compensation plan 101 94 20 215 2 217
Impairment of assets and other   521     491     105     1,117     12     1,129  
Non-GAAP gross margin $ 50,115   $ 56,468   $ 9,407   $ 115,990   $ (62 ) $ 115,928  
 
Three Months Ended January 1, 2012
Emerging
PSD (b) MPD (b) DCD (b) Core Semi (c) Technologies (d) Consolidated
GAAP gross margin $ 70,835 $ 50,755 $ 8,864 $ 130,454 $ (602 ) $ 129,852
Stock-based compensation expense 3,006 2,046 427 5,479 25 5,504
Changes in value of deferred compensation plan 135 92 19 246 1 247
Impairment of assets   163     111     23     297     1     298  
Non-GAAP gross margin $ 74,139   $ 53,004   $ 9,333   $ 136,476   $ (575 ) $ 135,901  
 
Twelve Months Ended December 30, 2012
Emerging
PSD (b) MPD (b) DCD (b) Core Semi (c) Technologies (d) Consolidated
GAAP gross margin $ 170,905 $ 194,076 $ 33,332 $ 398,313 $ (6,019 ) $ 392,294
Stock-based compensation expense 8,806 8,075 1,880 18,761 179 18,940
Changes in value of deferred compensation plan 166 165 38 369 3 372
Impairment of assets and other 2,768 2,535 540 5,843 359 6,202
Patent license fee 4,283 - 2,817 7,100 - 7,100
Gain (loss) on divestiture - - - - 776 776
Acquisition-related expense   -     646     -     646     -     646  
Non-GAAP gross margin $ 186,928   $ 205,497   $ 38,607   $ 431,032   $ (4,702 ) $ 426,330  
 
Twelve Months Ended January 1, 2012
Emerging
PSD (b) MPD (b) DCD (b) Core Semi (c) Technologies (d) Consolidated
GAAP gross margin $ 264,790 $ 225,006 $ 58,567 $ 548,363 $ (1,761 ) $ 546,602
Stock-based compensation expense 11,409 9,475 2,737 23,621 109 23,730
Changes in value of deferred compensation plan (61 ) (35 ) (13 ) (109 ) (2 ) (111 )
Impairment of assets   137     83     14     234     1     235  
Non-GAAP gross margin $ 276,275   $ 234,529   $ 61,305   $ 572,109   $ (1,653 ) $ 570,456  
                     
 

(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)

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

(c)

“Core Semi” – Includes PSD, DCD and MPD and excludes “Emerging Technologies.”

(d)

“Emerging Technologies” – Activities outside our core semiconductor businesses outlined in footnote (c) Includes majority-owned subsidiaries Cypress Envirosystems Inc., AgigA Tech Inc. and Deca Technologies Inc.

 

CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (a)
(In thousands, except per-share data)
(Unaudited)
       
Three Months Ended Twelve Months Ended
December 30,   September 30,   January 1, December 30,   January 1,
  2012     2012     2012     2012     2012  
 
GAAP research and development expenses $ 46,636 $ 46,908 $ 46,561 $ 189,458 $ 189,970
Stock-based compensation expense (3,805 ) (5,062 ) (5,989 ) (21,260 ) (24,297 )
Changes in value of deferred compensation plan 155 (389 ) (524 ) (568 ) 114
Gain (loss) on divestiture (307 ) - - (307 ) -
Acquisition-related expense   (926 )   -     -     (926 )   -  
Non-GAAP research and development expenses $ 41,753   $ 41,457   $ 40,048   $ 166,397   $ 165,787  
 
GAAP selling, general and administrative expenses $ 51,994 $ 47,328 $ 55,388 $ 211,771 $ 227,976
Stock-based compensation expense (4,967 ) (6,513 ) (13,876 ) (38,256 ) (52,754 )
Acquisition-related expense (5,503 ) (547 ) - (8,053 ) -
Changes in value of deferred compensation plan 306 (945 ) (1,084 ) (1,710 ) 460
Building donation - - - - (4,125 )
Impairment of assets and other - - (105 ) 47 (3,811 )
Gain (loss) on divestiture   (664 )   -     -     (664 )   -  
Non-GAAP selling, general and administrative expenses $ 41,166   $ 39,323   $ 40,323   $ 163,135   $ 167,746  
 
GAAP operating income (loss) $ (19,750 ) $ 15,047 $ 26,240 $ (17,195 ) $ 153,719
Stock-based compensation expense 11,387 16,101 25,369 78,455

 

100,781
Acquisition-related expense 8,682 1,254 731 13,401 2,892
Changes in value of deferred compensation plan (529 ) 1,551 1,854 2,649 (685 )
Patent license fee - - - 7,100 -
Gain (loss) on divestiture 1,746 - - 1,746 (34,291 )
Restructuring charges 2,976 66 932 4,259 6,336
Building donation - - - - 4,125
Impairment of assets and other   4,986     1,129     404     6,383     4,045  
Non-GAAP operating income $ 9,498   $ 35,148   $ 55,530   $ 96,798   $ 236,922  
 
GAAP net income (loss) attributable to Cypress $ (24,205 ) $ 14,332 $ 31,661 $ (24,356 ) $ 167,839
Stock-based compensation expense 11,387 16,101 25,369 78,455 100,781
Acquisition-related expense 8,682 1,254 731 13,401 2,892
Changes in value of deferred compensation plan (527 ) 48 (150 ) (504 ) 177
Patent license fee - - - 7,100 -
Gain (loss) on divestiture 3,288 - - 3,288 (34,291 )
Restructuring charges 2,976 66 932 4,259 6,336
Building donation - - - - 4,125
Impairment of assets and other 5,088 1,129 404 8,554 4,047
Investment-related gain (loss) (1,121 ) 1,638 - (532 ) -
Tax effects   2,406     (2,246 )   (2,128 )   1,459     (14,373 )
Non-GAAP net income attributable to Cypress $ 7,974     $ 32,322     $ 56,819   $ 91,124     $ 237,533  
               
GAAP net income (loss) per share attributable to Cypress - diluted $ (0.17 ) $ 0.09 $ 0.18 $ (0.16 ) $ 0.90
Stock-based compensation expense 0.07 0.10 0.15 0.47 0.53
Acquisition-related expense 0.06 0.01 - 0.08 0.02
Patent license fee - - - 0.04 -
Gain (loss) on divestiture 0.02 - - 0.02 (0.18 )
Restructuring charges 0.02 - 0.01 0.03 0.04
Building donation - - - - 0.02
Impairment of assets and other 0.03 0.01 - 0.05 0.02
Investment-related gain (loss) (0.01 ) 0.01 - - -
Tax effects 0.02 (0.02 ) (0.01 ) 0.01 (0.08 )
Non-GAAP share count adjustment   0.01     -     (0.01 )   0.01     (0.02 )
Non-GAAP net income per share attributable to Cypress - diluted $ 0.05     $ 0.20     $ 0.32   $ 0.55     $ 1.25  
 

(a)

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

 
CYPRESS SEMICONDUCTOR CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
       
Three Months Ended Twelve Months Ended
December 30,   September 30,   January 1, December 30   January 1,
  2012     2012     2012     2012     2012  

Selected Cash Flow Data (Preliminary):

Net cash provided by operating activities $ 18,727 $ 58,065 $ 65,481 $ 136,422 $ 283,808
Net cash provided by (used in) investing activities $ (106,198 ) $ 30,510 $ 1,731 $ (123,672 ) $ 69,100
Net cash provided by (used in) financing activities $ (11,656 ) $ (44,508 ) $ (31,755 ) $ (49,265 )

 

$ (516,374 )
 

Other Supplemental Data (Preliminary):

Capital expenditures $ 7,809 $ 5,488 $ 8,758 $ 33,013 $ 80,556
Depreciation $ 11,419 $ 11,790 $ 9,872 $ 45,559

 

$ 48,632
Payment of dividend $ 16,057 $ 16,660 $ 13,786 $ 63,227 $ 29,048
Dividend paid per share $ 0.11 $ 0.11 $ 0.09 $ 0.44 $ 0.27
Dividend yield per share (a) (b)   4.2 %     4.1 %     2.2 %   4.2 %     2.2 %

(a)

 

Dividend yield per share is calculated based on the annualized dividend paid per share divided by the common stock share price at the end of the period.

(b)

Actual dividend paid for fiscal year 2011 consists of $0.09 paid per share in the third and forth quarter of 2011.

 
CYPRESS SEMICONDUCTOR CORPORATION
CONSOLIDATED DILUTED EPS CALCULATION
(In thousands, except per-share data)
(Unaudited)
         

 

Three Months Ended

 

Twelve Months Ended

December 30,     September 30,     January 1, December 30,     January 1,
2012 2012 2012 2012 2012
GAAP   Non-GAAP GAAP   Non-GAAP GAAP   Non-GAAP GAAP   Non-GAAP GAAP   Non-GAAP
 
Net income (loss) attributable to Cypress $ (24,205 ) $ 7,974 $ 14,332 $ 32,322 $ 31,661 $ 56,819 $ (24,356 ) $ 91,124 $ 167,839 $ 237,533

 

Weighted-average common shares outstanding (basic) 143,605 143,605 147,673 147,673 154,045 154,045 149,266 149,266 164,495 164,495
Effect of dilutive securities:
Stock options, unvested restricted stock and other   -     13,723   12,627   13,902   18,034   21,416   -     16,063   22,400   26,192
Weighted-average common shares outstanding for diluted computation   143,605     157,328   160,300

 

  161,575   172,079   175,461   149,266     165,329   186,895   190,687
 
Net income (loss) per share attributable to Cypress - basic $ (0.17 ) $ 0.06 $ 0.10 $ 0.22 $ 0.21 $ 0.37 $ (0.16 ) $ 0.61 $ 1.02 $ 1.44
Net income (loss) per share attributable to Cypress - diluted $ (0.17 ) $ 0.05 $ 0.09 $ 0.20 $ 0.18 $ 0.32 $ (0.16 ) $ 0.55 $ 0.90 $ 1.25

 

                                         
 
                                         

December 30,

September 30,

January 1,

December 30,

January 1,
2012 2012 2012 2012 2012
 
Average stock price for the period ended $9.99 $11.72 $17.68 $12.94 $19.23
 
Common stock outstanding at period end (in thousands) 144,222 145,668 154,172 144,222 154,172

Outstanding as of January 1, 2012 includes unvested restricted stock awards of approximately 0.9 million shares. Unvested restricted stock awards as of December 30, 2012 and September 30, 2012 were not material.

                     
 

Notes to Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, Cypress uses non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude certain items, as described in details below. 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. Non-GAAP financial measures used by Cypress include:

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

Cypress uses each of these non-GAAP financial measures for internal managerial purposes, when providing its financial results and business outlook to the public, and to facilitate period-to-period comparisons. Management believes that these non-GAAP measures provide meaningful supplemental information regarding Cypress’s operational and financial performance of current and historical results. 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.

Stock quotes in this article: CY 

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