Cypress Reports Fourth-Quarter and Year-End 2013 Results

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CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
       
December 29, December 30,
2013 2012
 
ASSETS
 
Cash, cash equivalents and short-term investments $ 104,462 $ 117,210
Accounts receivable, net 81,084 82,920
Inventories (a) 100,612 127,596
Property, plant and equipment, net 258,585 274,427
Goodwill and other intangible assets, net 106,523 113,410
Other assets   113,707     116,066  
Total assets $ 764,973   $ 831,629  
 
LIABILITIES AND EQUITY
 
Accounts payable $ 47,893 $ 58,704
Deferred margin on sales to distributors 122,578 131,192
Income tax liabilities 29,001 47,454
Other liabilities 159,866 185,418
Long-term revolving credit facility   227,000     232,000  
Total liabilities   586,338     654,768  
Total Cypress stockholders' equity 183,109 180,900
Noncontrolling interest   (4,474 )   (4,039 )
Total equity   178,635     176,861  
Total liabilities and equity $ 764,973   $ 831,629  
 

(a)

 

Inventories include $5.3 million and $2.8 million of capitalized inventories related to stock-based compensation expense, as of December 29, 2013 and December 30, 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 29, September 29, December 30, December 29, December 30,
2013 2013 2012 2013 2012

 

Revenues $ 167,776 $ 188,723 $ 180,282

 

$ 722,693 $ 769,687
Cost of revenues   91,328     97,070     96,088     384,121     376,887  
Gross margin 76,448 91,653 84,194 338,572 392,800
Operating expenses:
Research and development 42,343 50,429 47,075 190,906 189,897
Selling, general and administrative 43,623 45,533 52,183 182,671 211,959
Amortization of acquisition-related intangibles 1,850 1,987 1,826 7,833 3,996
Restructuring charges (469 ) 3,693 2,976 15,357 4,258
Loss on divestiture - - 1,605 - 1,605
         
Total operating expenses, net   87,347     101,642     105,665     396,767     411,715  
Operating income (loss) (10,899 ) (9,989 ) (21,471 ) (58,195 ) (18,915 )
Interest and other income (expense), net   (805 )   427     (1,749 )   2,225     (2,745 )
Income (loss) before income taxes -

 

(9,562 ) (23,220 ) (55,970 ) (21,660 )
Income tax provision (benefit)   2,210     (774 )   417     (7,761 )   2,324  
Income (loss), net of taxes (13,914 ) (8,788 ) (22,803 ) (48,209 ) (23,984 )
Adjust for net loss attributable to noncontrolling interest   337     430     584     1,845     1,614  
Net income (loss) attributable to Cypress $ (13,577 ) $ (8,358 ) $ (22,219 ) $ (46,364 ) $ (22,370 )
 
Net income (loss) per share attributable to Cypress:
Basic $ (0.09 ) $ (0.06 ) $ (0.15 ) $ (0.31 ) $ (0.15 )
Diluted $ (0.09 ) $ (0.06 ) $ (0.15 ) $ (0.31 ) $ (0.15 )
Cash dividend declared per share $ 0.11 $ 0.11 $ 0.11 $ 0.44 $ 0.44
Shares used in net income (loss) per share calculation:
Basic 151,580 149,679 143,605 148,558 149,266
Diluted   151,580       149,679       143,605     148,558       149,266  
 
       
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 29, September 29, December 30, December 29, December 30,
2013 2013 2012 2013 2012
 
GAAP gross margin $ 76,448 $ 91,653 $ 84,194 $ 338,572 $ 392,800
Stock-based compensation expense 3,088 2,804 2,195 12,789 18,519
Acquisition-related expense 5,562 6,849 3,545 24,805 3,545
Changes in value of deferred compensation plan 136 265 (66 ) 854 372
Impairment of assets and other 269 (64 ) 2,137 241 3,581
Patent license fee - - - - 7,100
(Gain) loss on divestiture   -     -     776     -     776  
Non-GAAP gross margin $ 85,503   $ 101,507   $ 92,781   $ 377,261   $ 426,693  
 
GAAP research and development expenses $ 42,343 $ 50,429 $ 47,074 $ 190,906 $ 189,897
Stock-based compensation expense (7,356 ) (6,806 ) (2,345 ) (26,042 ) (19,800 )
Acquisition-related expense - (19 ) (2,703 ) (252 ) (2,703 )
Non-cash compensation - - (433 ) - (433 )
Changes in value of deferred compensation plan (282 ) (548 ) 155 (1,744 ) (568 )
(Gain) loss on divestiture - - (306 ) - (307 )
Impairment of assets and other   1,368     (1,078 )   -     (1,104 )   -  
Non-GAAP research and development expenses $ 36,074   $ 41,978   $ 41,442   $ 161,764   $ 166,086  
 
GAAP selling, general and administrative expenses $ 43,623 $ 45,533 $ 52,182 $ 182,671 $ 211,959
Stock-based compensation expense (10,432 ) (9,701 ) (2,724 ) (34,187 ) (36,013 )
Acquisition-related expense (148 ) (366 ) (6,545 ) (1,168 ) (9,095 )
Non-cash compensation - - (500 ) - (500 )
Changes in value of deferred compensation plan (607 ) (1,181 ) 306 (3,795 ) (1,710 )
Impairment of assets and other (244 ) 131 (220 ) (450 ) (173 )
(Gain) loss on divestiture   -     -     (664 )   -     (664 )
Non-GAAP selling, general and administrative expenses $ 32,192   $ 34,416   $ 41,835   $ 143,071   $ 163,804  
 
GAAP operating income (loss) $ (10,899 ) $ (9,989 ) $ (21,470 ) (58,195 ) $ (18,915 )
Stock-based compensation expense 20,877 19,311 7,264 73,020 # 74,332
Acquisition-related expense 7,558 9,221 14,618 34,056 19,337
Non-cash compensation - - 933 - 933
Changes in value of deferred compensation plan 1,026 1,994 (528 ) 6,393 2,650
Impairment of assets and other (854 ) 883 2,361 1,795 3,758
Restructuring charges (470 ) 3,693 2,975 15,357 4,258
Patent license fee - - - - 7,100
(Gain) loss on divestiture and expenses   -     -     3,351     -     3,351  
Non-GAAP operating income $ 17,238   $ 25,113   $ 9,504   $ 72,426   $ 96,804  
 
GAAP net income (loss) attributable to Cypress $ (13,577 ) $ (8,358 ) $ (22,219 ) $ (46,364 ) $ (22,370 )
Stock-based compensation expense 20,877 19,311 7,264 73,020 74,332
Acquisition-related expense 7,558 9,221 14,618 34,056 19,337
Non-cash compensation - - 933 - 933
Changes in value of deferred compensation plan (535 ) (97 ) (530 ) 22 (507 )
Impairment of assets and other (854 ) 883 292 1,794 3,758
Restructuring charges (470 ) 3,693 2,975 15,357 4,258
Tax and tax-related items 1,065 (2,638 ) (555 ) (12,398 ) (1,502 )
Investment-related gains/losses 930 - 2,171 (2,266 ) 2,760
Patent license fee - - - - 7,100
(Gain) loss on divestiture and expenses   -     -     3,351     -     3,351  
Non-GAAP net income attributable to Cypress $ 14,994   $ 22,015   $ 8,300   $ 63,221   $ 91,450  
 
GAAP net income (loss) per share attributable to Cypress - diluted $ (0.09 ) $ (0.06 ) $ (0.15 ) $ (0.31 ) $ (0.15 )
Stock-based compensation expense 0.13 0.12 0.04 0.45 0.45
Acquisition-related expense 0.05 0.02 0.08 0.21 0.12
Impairment of assets and other (0.01 ) 0.05 - 0.01 0.02
Non-cash compensation - - 0.01 - -
Restructuring charges - 0.02 0.02 0.10 0.03
Tax and tax-related items 0.01 (0.02 ) - (0.08 ) (0.01 )
Investment-related gains/losses 0.01 - 0.02 (0.01 ) 0.02
Non-GAAP share count adjustment (0.01 ) 0.01 0.01 0.02 0.01
Patent license fee - - - - 0.04
(Gain) loss on divestiture and expenses   -     -     0.02     -     0.02  
Non-GAAP net income per share attributable to Cypress - diluted $ 0.09     $ 0.14     $ 0.05   $ 0.39     $ 0.55  
 

(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 29,   September 29,   December 30, December 29   December 30,
2013 2013 2012 2013 2012

Selected Cash Flow Data (Preliminary):

Net cash provided by operating activities $ 20,171 $ 7,905 $ 17,302 $ 66,696 $ 134,997
Net cash provided by (used in) investing activities $ 569 $ (2,080 ) $ (95,562 ) $ 1,139 $ (113,036 )
Net cash provided by (used in) financing activities $ (11,276 ) $ 108 $ (20,866 ) $ (45,024 ) $ (58,475 )
 

Other Supplemental Data (Preliminary):

Capital expenditures $ 8,750 $ 10,808 $ 7,809 $ 36,627 $ 33,013
Depreciation $ 9,436 $ 9,745 $ 11,419 $ 39,572 $ 44,904
Payment of dividend $ 16,578 $ 16,258 $ 16,057 $ 64,819 $ 63,227
Dividend paid per share $ 0.11 $ 0.11 $ 0.11 $ 0.44 $ 0.44
Dividend yield per share (a)   4.3 %     4.9 %     4.2 %   4.3 %     4.2 %
 

(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.

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

Three Months Ended

 

Twelve Months Ended

December 29, September 29, December 30, December 29, December 30,
2013 2013 2012 2013 2012
GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP
 
Net income (loss) attributable to Cypress $ (13,577 ) $ 14,992 $ (8,358 ) $ 22,015 $ (22,219 ) $ 8,300 $ (46,364 ) $ 63,221 $ (22,370 ) $ 91,450
 
Weighted-average common shares outstanding (basic) 151,580 151,580 149,679 149,679 143,605 143,605 148,558 148,558 149,266 149,266
Effect of dilutive securities:
Stock options, unvested restricted stock and other   -     14,224   -     12,525   -     13,723   -     12,954   -     16,063
Weighted-average common shares outstanding for diluted computation   151,580     165,804   149,679     162,204   143,605     157,328   148,558     161,512   149,266     165,329
 
Net income (loss) per share attributable to Cypress - basic $ (0.09 ) $ 0.10 $ (0.06 ) $ 0.15 $ (0.15 ) $ 0.06 $ (0.31 ) $ 0.43 $ (0.15 ) $ 0.61
Net income (loss) per share attributable to Cypress - diluted $ (0.09 ) $ 0.09 $ (0.06 ) $ 0.14 $ (0.15 ) $ 0.05 $ (0.31 ) $ 0.39 $ (0.15 ) $ 0.55
                                       
 
                                       
December 29, September 30, December 30, December 29, December 30,
2013 2012 2012 2013 2012
 
Average stock price for the period ended $9.45 $11.70 $10.19 $10.59 $13.26
Common stock outstanding at period end (in thousands) 153,214 150,833 144,224 153,214 144,224
 

Notes to Non-GAAP Financial Measures

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