Attached files
file | filename |
---|---|
8-K - CURRENT REPORT ON FORM 8-K - CYPRESS SEMICONDUCTOR CORP /DE/ | d8k.htm |
Exhibit 99.1
Contacts:
Brad W. Buss
EVP Finance & Administration and CFO
(408) 943-2754
Joseph L. McCarthy
Director Corporate Communications
(408) 943-2902
FOR IMMEDIATE RELEASE
Cypress Reports First-Quarter 2011 Results
SAN JOSE, Calif., April 21, 2011 Cypress Semiconductor Corp. (NASDAQ: CY) today announced the results of the first quarter of 2011, which included the following highlights and remarks from its president and CEO, T.J. Rodgers.
| First-quarter results exceeded guidance |
| TrueTouch revenue exceeded expectations and hit all-time record |
| Repurchased 12.5 million shares of common stock, year-to-date |
| Q2 guidance to be better than seasonal |
Fellow shareholders:
Our revenue and earnings for the quarter are given below, compared with the prior-quarter and prior-year results:
NON-GAAP | GAAP | |||||||||||||||||||||||
Quarter | Q1 2011 | Q4 2010 | Q1 2010 | Q1 2011 | Q4 2010 | Q1 2010 | ||||||||||||||||||
Revenue |
$ | 233,110 | $ | 226,564 | $ | 202,271 | $ | 233,110 | $ | 220,314 | $ | 202,271 | ||||||||||||
Gross margin |
58.1 | % | 59.2 | % | 55.7 | % | 55.2 | % | 55.9 | % | 52.6 | % | ||||||||||||
Pretax margin |
21.3 | % | 23.6 | % | 18.7 | % | 24.3 | % | 8.3 | % | 7.3 | % | ||||||||||||
Net income |
$ | 48,483 | $ | 50,389 | $ | 34,256 | $ | 55,374 | $ | 9,053 | $ | 12,674 | ||||||||||||
Diluted net income per share |
$ | 0.24 | $ | 0.25 | $ | 0.17 | $ | 0.28 | $ | 0.05 | $ | 0.07 |
(In thousands, except per-share data)
First-quarter revenue grew 3% sequentially, better than our historical seasonal performance and exceeding our guidance. As we expected, our revenue growth was driven by record TrueTouch touchscreen controller shipments. Touchscreen popularity has already extended from smartphones into other high-volume consumer products, such as digital cameras, automotive dashboards, GPS devices, printers, Internet-protocol (IP) phones, e-books and tablet computers. In recent quarters, we have announced TrueTouch design wins in Garmin and TomTom GPS systems, Cisco IP phones, HP printers and a Sony state-of-the-art camera.
During the quarter, the Consumer and Computation Division (CCD), which makes PSoC®, posted 45% year-on-year growth and remained our largest division. It also introduced our first USB 3.0 product, capable of moving data at five gigabits per second, more than 10 times faster than todays USB 2.0 technology. The Memory Products Division (MPD) continued to be our most-profitable division, contributing 34% PBT in Q1. The Data Communications Division (DCD), grew 8% sequentially due to strong shipments of West Bridge into the handset market. The Emerging Technology Division (ETD) realized Q1 revenue growth of 55% quarter-on-quarter, and 134% year-on-year as our ONS finger navigation products began their volume ramp into the handset market.
Our year-on-year revenue growth of 15.2% was surpassed by our non-GAAP EPS growth of 40.4% due to our continued focus on managing fixed cost and increasing financial leverage. Bookings remained strong in Q2 and Q3, especially for our rapidly growing touchscreen controller and SRAM businesses, providing us with excellent booking visibility. Our book-to-bill ratio at the end of Q1 was 1.07. We have record backlog entering Q2, are 100% booked for the quarter and expect better than seasonal sequential revenue growth.
BUSINESS REVIEW
+ Our non-GAAP1 consolidated gross margin for the first quarter was 58.1%, down 1.1 percentage points from the previous quarter mainly due to higher factory absorption charges as we proactively reduced SRAM wafer starts to balance the inventory needed for shorter lead-times. We expect to increase capacity significantly in Q2. On a GAAP basis, our first-quarter consolidated gross margin was 55.2%.
+ Net inventory at the end of the first quarter increased 2% quarter-on-quarter due to planned builds of die bank inventory to support Q2 revenue growth in PSoC and TrueTouch. SRAM inventory decreased as planned during the quarter.
+ Cash and investments for the first quarter totaled $280 million, or $1.64 per basic share, down $178 million from the prior quarter. We used $245 million during the quarter to repurchase 8.4 million shares and to prepay for an additional 4 million shares in our Yield Enhancement Program (YEP). Since we announced our $600-million stock repurchase program in October 2010, we have repurchased 14.2 million shares through April 20, 2011 and have approximately $324 million remaining under the authorized repurchase program.
Our divisional revenue and gross margins are detailed below:
BUSINESS UNIT SUMMARY FINANCIALS (UNAUDITED)
THREE MONTHS ENDED
April 3, 2011
CCD2 | DCD2 | MPD2 | Core Semi4 |
Emerging Tech.3 |
Consolidated | |||||||||||||||||||
REVENUE ($M) |
107.8 | 27.4 | 91.8 | 227.0 | 6.1 | 233.1 | ||||||||||||||||||
Percentage of total revenues |
46.2 | % | 11.8 | % | 39.4 | % | 97.4 | % | 2.6 | % | 100.0 | % | ||||||||||||
GROSS MARGIN (%) |
||||||||||||||||||||||||
On a GAAP basis |
55.4 | % | 63.3 | % | 54.2 | % | 55.9 | % | 31.8 | % | 55.2 | % | ||||||||||||
On a non-GAAP1 basis |
58.2 | % | 66.2 | % | 57.1 | % | 58.7 | % | 34.7 | % | 58.1 | % |
THREE MONTHS ENDED
January 2, 2011
CCD2 | DCD2 | MPD2 | Core Semi4 |
Emerging Tech.3 |
Consolidated | |||||||||||||||||||
REVENUE ($M) |
100.9 | 25.4 | 90.1 | 216.4 | 3.9 | 220.3 | ||||||||||||||||||
Percentage of total revenues |
45.8 | % | 11.5 | % | 40.9 | % | 98.2 | % | 1.8 | % | 100.0 | % | ||||||||||||
NON-GAAP REVENUE ($M) |
100.9 | 25.4 | 96.4 | 222.7 | 3.9 | 226.6 | ||||||||||||||||||
Percentage of total revenues |
44.5 | % | 11.2 | % | 42.6 | % | 98.3 | % | 1.7 | % | 100.0 | % | ||||||||||||
GROSS MARGIN (%) |
||||||||||||||||||||||||
On a GAAP basis |
59.5 | % | 66.9 | % | 50.2 | % | 56.5 | % | 21.1 | % | 55.9 | % | ||||||||||||
On a non-GAAP1 basis |
61.6 | % | 69.0 | % | 55.6 | % | 59.9 | % | 23.2 | % | 59.2 | % |
1. | 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 managements 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. |
2. | CCD Consumer and Computation Division; DCDData Communications Division; MPDMemory Products Division. |
3. | Emerging Technology Businesses outside our core semiconductor businesses outlined in footnote 4. Includes subsidiaries Cypress Envirosystems and AgigA Tech, as well as the ONS (Optical Navigation System) Business Unit, the China Business Unit and our foundry-support business. |
4. | Core Semiconductor Includes CCD, DCD and MPD and excludes Emerging Technology. |
FIRST-QUARTER 2011 HIGHLIGHTS
+ Cypress and Qualcomm Inc. have partnered to provide mobile phone manufacturers with joint touchscreen reference designs. The reference designs and Forward-Looking User Interface Device (FLUID) Development Kits showcase Qualcomms popular Snapdragon processor family and Cypresss TrueTouch controllers.
+ Cypresss flagship TrueTouch touchscreen solutions picked up two more major design wins during the quarter: Acer Inc. chose TrueTouch for its Liquid MT smartphone and Fujitsu Limited selected TrueTouch for its DoCoMo PRIME series F-01C phone. We expect to achieve another revenue record for TrueTouch as we ramp additional projects and customers in the handset and tablet markets.
+ Cypress announced TrueTouch support for the Google Android 3.0 Honeycomb operating system, which enables tablet PCs to generate a revolutionary holographic-quality display.
+ Cypress introduced two TrueTouch touchscreen controllers that support ultrathin styluses on capacitive touchscreens, enabling the reliable input of complex Asian-language characters.
+ Cypress unveiled Charger Armor functionality for its TrueTouch controllers. The new technology enables touchscreen handsets, cameras, GPS systems and other mobile devices to maintain superior performance even when connected to the noisiest low-cost USB chargers, which produce large voltage spikes and other extreme AC conditions.
+ Luxury vehicle manufacturer, BMW, has chosen Cypresss CapSense® capacitive touch solution for the infotainment system inside BMW 5-, 6-, and 7-Series cars, as well as 5GT, X5 and X6 models. CapSense technology programs up to eight capacitive switches for a multi-use dashboard that includes navigation.
+ Cypresss next-generation PSoC 3 programmable system-on-chip solution has secured more than 250 design wins to date and is ramping more than three times as fast as PSoC 1 at a similar phase of development. Oscium selected PSoC 3 for its revolutionary new iMSO-104 mixed-signal oscilloscope for the iPhone and iPad.
+ Cypress, introduced a superspeed USB 3.0 controller, the EZ-USB® FX3. The USB 3.0 protocol delivers a transfer speed of 5 gigabits-per-second more that 10x current high-speed USB 2.0 controllers. The new Cypress controller targets high-throughput video, imaging, printing and scanning applications.
+ The QDR® Consortium, which includes Cypress and Renesas Electronics Corp., announced the industrys fastest Quad Data Rate (QDR) SRAMs, operating at clock speeds up to 633 MHz. The QDRII+ Xtreme devices are fit-, form- and function-compatible with existing QDR II+ devices, allowing manufacturers of network switches, routers and aggregation platforms to boost performance simply by increasing system clock speeds without changing their board design.
+ Cypress introduced a new family of serial nonvolatile Static Random Access Memories (nvSRAMs) with I2C and SPI interfaces frequently used in metering, industrial and automotive data event recorder applications. The new devices feature an optional integrated real-time clock that enables time-stamping of critical backup data.
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® programmable system-on-chip families and derivatives such as PowerPSoC® solutions for high-voltage and LED lighting applications, 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. Cypress is also a leader in high-performance memories and programmable timing devices. 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 the remainder of fiscal year 2011 and the future 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, including our TrueTouch and PSoC product families, our expectations regarding our Q211 bookings, revenue and earnings, the expected retirement of our YEP shares, our ability to outperform seasonal trends, the demand and growth in the markets we serve, our expectations regarding product and design wins, our expectations for sales and profit throughout 2011, our increased manufacturing capacity in Q211and our expected revenue from our Emerging Technology Division. 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 the state of and future of the global economy, business conditions and growth trends in the semiconductor market, our ability to enter into new markets with our portfolio of products, whether our products perform as expected, whether the demand for our proprietary and programmable products, including especially our TrueTouch and PSoC products, is fully realized, whether our product and design wins result in increased sales, customer acceptance of Cypress and its subsidiaries products, seasonality in the markets we serve, our ability to achieve lower operating expenses and maintain a solid balance sheet, any impact to our operations due to recent events that have taken place in Japan, the actions of our competitors, the behavior of our supply chain, our ability to manage our business to have strong earnings and cash flow leverage, factory utilization, the strength or softness of the markets we serve and whether those markets achieve expected growth, our ability to maintain and improve our gross margins and realize our bookings, our ability to continue to focus on fixed costs, the financial performance of our subsidiaries and Emerging Technology Division, our ability to outgrow the market in revenue once the economy recovers 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, PSoC, CapSense, PowerPSoC, West Bridge, EZ-USB and QDR are registered trademarks of Cypress Semiconductor Corp. Programmable System-on-Chip, TrueTouch, SmartSense, Charger Armor, and PSoC Creator 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)
April 3, 2011 |
January 2, 2011 |
|||||||
ASSETS |
||||||||
Cash, cash equivalents and short-term investments (a) |
$ | 260,919 | $ | 434,261 | ||||
Accounts receivable, net |
173,389 | 117,726 | ||||||
Inventories, net (b) |
104,122 | 101,763 | ||||||
Property, plant and equipment, net |
267,033 | 260,122 | ||||||
Goodwill and other intangible assets, net |
43,765 | 44,335 | ||||||
Other assets |
144,713 | 114,594 | ||||||
Total assets |
$ | 993,941 | $ | 1,072,801 | ||||
LIABILITIES AND EQUITY |
||||||||
Accounts payable |
$ | 64,528 | $ | 59,817 | ||||
Deferred income |
178,181 | 131,757 | ||||||
Income tax liabilities |
66,437 | 65,461 | ||||||
Other accrued liabilities |
115,989 | 112,873 | ||||||
Total liabilities |
425,135 | 369,908 | ||||||
Total Cypress stockholders equity |
570,533 | 704,436 | ||||||
Noncontrolling interest |
(1,727 | ) | (1,543 | ) | ||||
Total equity |
568,806 | 702,893 | ||||||
Total liabilities and equity |
$ | 993,941 | $ | 1,072,801 | ||||
(a) | Cash, cash equivalents and short-term investments do not include $19 million and $24 million of auction rate securities which are classified as long-term investments in Other assets as of April 3, 2011 and January 2, 2011, respectively. |
(b) | Net inventories included approximately $3 million and $5 million as of April 3, 2011 and January 2, 2011, respectively related to the last-time-build program for Cypresss Texas manufacturing facility, which ceased operations at the end of fiscal 2008. In addition, inventories include $5 million and $6 million of capitalized inventories related to stock compensation expense, as of April 3, 2011 and January 2, 2011, respectively. |
CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ON A GAAP BASIS
(In thousands, except per-share data)
(Unaudited)
Three Months Ended | ||||||||||||
April 3, 2011 |
January 2, 2011 |
April 4, 2010 |
||||||||||
Revenues (b) |
$ | 233,110 | $ | 220,314 | $ | 202,271 | ||||||
Cost of revenues |
104,334 | 97,256 | 95,784 | |||||||||
Gross margin (a) |
128,776 | 123,058 | 106,487 | |||||||||
Operating expenses: |
||||||||||||
Research and development (a) |
47,865 | 47,909 | 40,049 | |||||||||
Selling, general and administrative (a) |
58,652 | 58,679 | 51,281 | |||||||||
Amortization of acquisition-related intangibles |
698 | 812 | 776 | |||||||||
Restructuring charges (credits) |
734 | (283 | ) | 327 | ||||||||
Gain on Divestiture |
(34,291 | ) | | | ||||||||
Total operating expenses, net |
73,658 | 107,117 | 92,433 | |||||||||
Operating income (loss) |
55,118 | 15,941 | 14,054 | |||||||||
Interest and other income, net (a) |
1,606 | 2,246 | 730 | |||||||||
Income before income taxes |
56,724 | 18,187 | 14,784 | |||||||||
Income tax provision |
1,350 | 9,134 | 2,110 | |||||||||
Income, net of taxes |
55,374 | 9,053 | 12,674 | |||||||||
Noncontrolling interest, net of taxes |
(184 | ) | (375 | ) | (163 | ) | ||||||
Net income |
55,190 | 8,678 | 12,511 | |||||||||
Less: net loss attributable to noncontrolling interest |
184 | 375 | 163 | |||||||||
Net income attributable to Cypress |
$ | 55,374 | $ | 9,053 | $ | 12,674 | ||||||
Net income per share attributable to Cypress: |
||||||||||||
Basic |
$ | 0.32 | $ | 0.05 | $ | 0.08 | ||||||
Diluted |
$ | 0.28 | $ | 0.05 | $ | 0.07 | ||||||
Shares used in net income (loss) per share calculation: |
||||||||||||
Basic |
171,346 | 165,873 | 158,931 | |||||||||
Diluted |
199,943 | 197,556 | 190,892 | |||||||||
(a) Includes the following credit (expense) related to Cypresss deferred compensation plan: |
| |||||||||||
Gross margin |
$ | (204 | ) | $ | (195 | ) | $ | (142 | ) | |||
Research and development |
$ | (509 | ) | $ | (581 | ) | $ | (290 | ) | |||
Selling, general and administrative |
$ | (923 | ) | $ | (913 | ) | $ | (596 | ) | |||
Interest and other income, net |
$ | 1,474 | $ | 1,690 | $ | 835 | ||||||
(b) Includes a reduction of $6.3 million related to the SRAM legal settlement in the fourth quarter of fiscal 2010. |
|
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (a)
(In thousands)
(Unaudited)
Three Months Ended April 3, 2011 | ||||||||||||||||||||||||
CCD (b) | DCD (b) | MPD (b) | Core Semi (c) | Emerging Technologies (d) |
Consolidated | |||||||||||||||||||
GAAP gross margin |
$ | 59,679 | $ | 17,376 | $ | 49,792 | $ | 126,847 | $ | 1,929 | $ | 128,776 | ||||||||||||
Stock-based compensation expense |
3,010 | 766 | 2,565 | 6,341 | 169 | 6,510 | ||||||||||||||||||
Changes in value of deferred compensation plan (e) |
94 | 24 | 80 | 198 | 6 | 204 | ||||||||||||||||||
Impairment of assets |
(29 | ) | (7 | ) | (25 | ) | (61 | ) | (2 | ) | (63 | ) | ||||||||||||
Non-GAAP gross margin |
$ | 62,754 | $ | 18,159 | $ | 52,412 | $ | 133,325 | $ | 2,102 | $ | 135,427 | ||||||||||||
Three Months Ended January 2, 2011 | ||||||||||||||||||||||||
CCD (b) | DCD (b) | MPD (b) | Core Semi (c) | Emerging Technologies (d) |
Consolidated | |||||||||||||||||||
GAAP gross margin |
$ | 60,018 | $ | 16,992 | $ | 45,222 | $ | 122,232 | $ | 826 | $ | 123,058 | ||||||||||||
Stock-based compensation expense |
1,952 | 491 | 1,863 | 4,306 | 76 | 4,382 | ||||||||||||||||||
SRAM legal settlement |
| | 6,250 | 6,250 | | 6,250 | ||||||||||||||||||
Changes in value of deferred compensation plan (e) |
87 | 22 | 83 | 192 | 3 | 195 | ||||||||||||||||||
Impairment of assets |
133 | 34 | 127 | 294 | 5 | 299 | ||||||||||||||||||
Non-GAAP gross margin |
$ | 62,190 | $ | 17,539 | $ | 53,545 | $ | 133,274 | $ | 910 | $ | 134,184 | ||||||||||||
Three Months Ended April 4, 2010 | ||||||||||||||||||||||||
CCD (b) | DCD (b) | MPD (b) | Core Semi (c) | Emerging Technologies (d) |
Consolidated | |||||||||||||||||||
GAAP gross margin |
$ | 40,568 | $ | 18,673 | $ | 47,421 | $ | 106,662 | $ | (175 | ) | $ | 106,487 | |||||||||||
Stock-based compensation expense |
2,189 | 796 | 2,909 | 5,894 | 76 | 5,970 | ||||||||||||||||||
Changes in value of deferred compensation plan (e) |
52 | 19 | 69 | 140 | 2 | 142 | ||||||||||||||||||
Non-GAAP gross margin |
$ | 42,809 | $ | 19,488 | $ | 50,399 | $ | 112,696 | $ | (97 | ) | $ | 112,599 | |||||||||||
(a) | Please refer to the accompanying Notes to Non-GAAP Financial Measures for a detailed discussion of managements use of non-GAAP financial measures. |
(b) | CCD - Consumer and Computation Division; DCD - Data Communications Division; MPD - Memory Product Division. |
(c) | Core Semi Includes CCD, DCD and MPD divisions and excludes Emerging Technologies. |
(d) | Emerging Technologies Activities outside our core semiconductor businesses outlined in footnote (c). Includes wholly owned subsidiaries Cypress Envirosystems, AgigA Tech and other. |
(e) | Consistent with current presentation, all prior periods have been recast to reflect changes in deferred compensation plan as a Non-GAAP adjustment. |
CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (a)
(In thousands, except per-share data)
(Unaudited)
Three Months Ended | ||||||||||||
April 3, 2011 |
January 2, 2011 |
April 4, 2010 |
||||||||||
GAAP revenue |
$ | 233,110 | $ | 220,314 | $ | 202,271 | ||||||
SRAM legal settlement |
| 6,250 | | |||||||||
Non-GAAP revenue |
$ | 233,110 | $ | 226,564 | $ | 202,271 | ||||||
GAAP research and development expenses |
$ | 47,865 | $ | 47,909 | $ | 40,049 | ||||||
Stock-based compensation expense |
(5,473 | ) | (5,792 | ) | (4,357 | ) | ||||||
Acquisition-related expense |
| | (2 | ) | ||||||||
Gain on sale of long-term asset |
| | | |||||||||
Changes in value of deferred compensation plan (b) |
(509 | ) | (581 | ) | (290 | ) | ||||||
Non-GAAP research and development expenses |
$ | 41,883 | $ | 41,536 | $ | 35,400 | ||||||
GAAP selling, general and administrative expenses |
$ | 58,652 | $ | 58,679 | $ | 51,281 | ||||||
Stock-based compensation expense |
(8,854 | ) | (11,422 | ) | (11,247 | ) | ||||||
Acquisition-related expense |
| 7 | (6 | ) | ||||||||
Changes in value of deferred compensation plan (b) |
(923 | ) | (913 | ) | (596 | ) | ||||||
SRAM legal settlement |
| (1,000 | ) | | ||||||||
Building donation |
(4,125 | ) | | | ||||||||
Impairment of assets |
| (4,927 | ) | | ||||||||
Non-GAAP selling, general and administrative expenses |
$ | 44,750 | $ | 40,424 | $ | 39,432 | ||||||
GAAP operating income |
$ | 55,118 | $ | 15,941 | $ | 14,054 | ||||||
Stock-based compensation expense |
20,837 | 21,596 | 21,574 | |||||||||
Gain on divestitures |
(34,291 | ) | | | ||||||||
License royalty |
| | | |||||||||
Acquisition-related expense |
698 | 805 | 784 | |||||||||
Gain on sale of long-term asset |
| | | |||||||||
Changes in value of deferred compensation plan (b) |
1,636 | 1,689 | 1,027 | |||||||||
Restructuring charges |
734 | (283 | ) | 327 | ||||||||
SRAM legal settlement |
| 7,250 | | |||||||||
Building donation |
4,125 | |||||||||||
Impairment of assets and other |
(62 | ) | 5,226 | | ||||||||
Non-GAAP operating income |
$ | 48,795 | $ | 52,224 | $ | 37,766 | ||||||
GAAP net income attributable to Cypress |
$ | 55,374 | $ | 9,053 | $ | 12,674 | ||||||
Stock-based compensation expense |
20,837 | 21,596 | 21,574 | |||||||||
Gain on divestiture |
(34,291 | ) | | | ||||||||
Acquisition-related expense |
698 | 805 | 784 | |||||||||
Gain on sale of long-term asset |
| | | |||||||||
Changes in value of deferred compensation plan (b) |
162 | (1 | ) | 192 | ||||||||
Restructuring charges |
734 | (283 | ) | 327 | ||||||||
Investment-related gains/losses |
71 | 400 | | |||||||||
SRAM legal settlement |
| 7,250 | | |||||||||
Building donation |
4,125 | | | |||||||||
Impairment of assets and other |
(62 | ) | 5,226 | | ||||||||
Tax effects |
835 | 6,343 | (1,295 | ) | ||||||||
Non-GAAP net income attributable to Cypress |
$ | 48,483 | $ | 50,389 | $ | 34,256 | ||||||
GAAP net income per share attributable to Cypress - diluted |
$ | 0.28 | $ | 0.05 | $ | 0.07 | ||||||
Stock-based compensation expense |
0.10 | 0.11 | 0.11 | |||||||||
Gain on divestiture |
(0.17 | ) | | | ||||||||
Acquisition-related expense |
0.01 | | | |||||||||
SRAM legal settlement |
| 0.04 | | |||||||||
Building donation |
0.02 | | | |||||||||
Impairment of assets and other |
| 0.02 | | |||||||||
Tax effects |
| 0.03 | (0.01 | ) | ||||||||
Non-GAAP net income per share attributable to Cypress - diluted |
$ | 0.24 | $ | 0.25 | $ | 0.17 | ||||||
(a) | Please refer to the accompanying Notes to Non-GAAP Financial Measures for a detailed discussion of managements use of non-GAAP financial measures. |
(b) | Consistent with current presentation, all prior periods have been recast to reflect changes in deferred compensation plan as a Non-GAAP adjustment. |
CYPRESS SEMICONDUCTOR CORPORATION
CONSOLIDATED DILUTED EPS CALCULATION
(In thousands, except per-share data)
(Unaudited)
Three Months Ended | ||||||||||||||||||||||||
April 3, 2011 |
January 2, 2011 |
April 4, 2010 |
||||||||||||||||||||||
GAAP | Non-GAAP | GAAP | Non-GAAP | GAAP | Non-GAAP | |||||||||||||||||||
Net income (loss) attributable to Cypress |
$ | 55,374 | $ | 48,483 | $ | 9,053 | $ | 50,389 | $ | 12,674 | $ | 34,256 | ||||||||||||
Weighted-average common shares outstanding (basic) |
171,346 | 171,346 | 165,873 | 165,873 | 158,931 | 158,931 | ||||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||||||||||
Stock options, unvested restricted stock and other |
28,597 | 33,650 | 31,683 | 36,377 | 31,961 | 39,966 | ||||||||||||||||||
Weighted-average common shares outstanding for diluted computation |
199,943 | 204,996 | 197,556 | 202,250 | 190,892 | 198,897 | ||||||||||||||||||
Net income (loss) per share attributable to Cypress - basic |
$ | 0.32 | $ | 0.28 | $ | 0.05 | $ | 0.30 | $ | 0.08 | $ | 0.22 | ||||||||||||
Net income (loss) per share attributable to Cypress - diluted |
$ | 0.28 | $ | 0.24 | $ | 0.05 | $ | 0.25 | $ | 0.07 | $ | 0.17 |
April 3, 2011 |
January 2, 2010 |
April 4, 2010 |
||||||||||
Average stock price for the period ended |
$ | 20.68 | $ | 15.51 | $ | 11.52 | ||||||
Common stock outstanding at period end (in thousands) |
171,232 | 170,753 | 161,764 | |||||||||
Includes unvested restricted stock awards of approximately 1.0 million shares at April 3, 2011 and 1.9 million shares at January 2, 2011 and April 4, 2010. |
CYPRESS SEMICONDUCTOR CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
Three Months Ended | ||||||||||||
April 3, 2011 |
January 2, 2011 |
April 4, 2010 |
||||||||||
Selected Cash Flow Data (Preliminary): |
||||||||||||
Net cash provided by operating activities |
$ | 35,343 | $ | 69,187 | $ | 38,123 | ||||||
Net cash provided by (used in) investing activities |
$ | 30,711 | $ | (96,099 | ) | $ | (43,757 | ) | ||||
Net cash provided by (used in) financing activities |
$ | (209,639 | ) | $ | (23,485 | ) | $ | (20,883 | ) | |||
Other Supplemental Data (Preliminary): |
||||||||||||
Capital expenditures |
$ | 19,309 | $ | 13,666 | $ | 17,872 | ||||||
Depreciation |
$ | 12,373 | $ | 12,402 | $ | 11,461 |
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 Cypresss operations that, when viewed in conjunction with Cypresss GAAP results, provide a more comprehensive understanding of the various factors and trends affecting Cypresss 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 Cypresss 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 managements internal comparisons to Cypresss historical operating results and comparisons to competitors operating results.
Cypress believes that providing these non-GAAP financial measures, in addition to the GAAP financial results, are useful to investors because they allow investors to see Cypresss results through the eyes of management as these non-GAAP financial measures reflect Cypresss internal measurement processes. Management believes that these non-GAAP financial measures enable investors to better assess changes in each key element of Cypresss operating results across different reporting periods on a consistent basis. Thus, management believes that each of these non-GAAP financial measures provides investors with another method for assessing Cypresss operating results in a manner that is focused on the performance of its ongoing operations.
There are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. In addition, non-GAAP financial measures may be limited in value because they exclude certain items that may have a material impact upon Cypresss reported financial results. Management compensates for these limitations by providing investors with reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP financial measures. The non-GAAP financial measures supplement, and should be viewed in conjunction with, GAAP financial measures. Investors should review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the accompanying press release.
As presented in the Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items:
| Stock-based compensation expense. |
Stock-based compensation expense relates primarily to the equity awards such as stock options and restricted stock. Stock-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Cypresss control. As a result, management excludes this item from Cypresss internal operating forecasts and models. Management believes that non-GAAP measures adjusted for stock-based compensation provide investors with a basis to measure Cypresss core performance against the performance of other companies without the variability created by stock-based compensation as a result of the variety of equity awards used by companies and the varying methodologies and subjective assumptions used in determining such non-cash expense.
| Changes in value of Cypresss key employee deferred compensation plan. |
Cypress sponsors a voluntary deferred compensation plan which provides certain key employees with the option to defer the receipt of compensation in order to accumulate funds for retirement. The amounts are held in a trust and Cypress does not make contributions to the deferred compensation plan or guarantee returns on the investment. Changes in the value of the investments under the plan are excluded from the non-GAAP measures. Management believes that such non-cash item is not related to the ongoing core business and operating performance of Cypress, as the investment contributions are made by the employees themselves.
| Restructuring charges. |
Restructuring charges primarily relate to activities engaged by management to make changes related to its infrastructure in an effort to reduce costs. Restructuring charges are excluded from non-GAAP financial measures because they are not considered core operating activities and such costs have not historically occurred in each year. Although Cypress has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. As such, management believes that it is appropriate to exclude restructuring charges from Cypresss non-GAAP financial measures, as it enhances the ability of investors to compare Cypresss period-over-period operating results from continuing operations.
| Gains on divestitures. |
Cypress recognizes gains resulting from the exiting of certain non-strategic businesses that no longer align with Cypresss long-term operating plan. Cypress excludes these items from its non-GAAP financial measures primarily because it is not reflective of the ongoing operating performance of Cypresss business and can distort the period-over-period comparison.
| Building donation. |
Cypress committed to donate an unused building to a charitable entity. Cypress excludes these items because the expense is not reflective of its ongoing operating results. Excluding this data allows investors to better compare Cypresss period-over-period performance without such expense.
| Acquisition-related expense. |
Acquisition-related expense primarily includes: (1) amortization of intangibles, which include acquired intangibles such as purchased technology, patents and trademarks, and (2) earn-out compensation expense, which include compensation resulting from the achievement of milestones established in accordance with the terms of the acquisitions. In most cases, these acquisition-related charges are not factored into managements evaluation of potential acquisitions or Cypresss performance after completion of acquisitions, because they are not related to Cypresss core operating performance. Adjustments of these items provide investors with a basis to compare Cypress against the performance of other companies without the variability caused by purchase accounting.
| Investment-related gains/losses. |
Investment-related gains/losses primarily include: (1) impairment loss related to Cypresss investment when it determines the decline in fair value is other-than-temporary in nature, and (2) gains/losses related to the sales of its debt and equity investments. These items are excluded from non-GAAP financial measures because they are not related to the core operating activities and operating performance of Cypress, and in most cases, such transactions have not historically occurred in every quarter. As such, management believes that it is appropriate to exclude investment-related gains/losses from Cypresss non-GAAP financial measures, as it enhances the ability of investors to compare Cypresss period-over-period operating results.
| Impairment of assets. |
Cypress wrote down the book value of certain assets to its estimated fair value as management determined these assets will be donated, sold or will have no future benefit. Cypress excludes these items because the expense is not reflective of its ongoing operating results. Excluding this data allows investors to better compare Cypresss period-over-period performance without such expense.
| SRAM legal settlement. |
Cypress has settled the SRAM civil antitrust lawsuits. Cypress excludes these items because the legal settlements are not reflective of its ongoing operating results. Excluding this data allows investors to better compare Cypresss period-over-period performance without such expense.
| License royalty. |
License royalty represents the historical impact of a license agreement signed in the fourth quarter of 2009. These historical costs are excluded from Cypresss non-GAAP financial measures primarily because it is not reflective of the ongoing operating performance of Cypresss business and can distort the period-over-period comparison.
| Gains on sales of long-term assets. |
Cypress recognizes gains resulting from the sale of certain long-term assets that no longer align with Cypresss long-term operating plan. Cypress excludes these items from its non-GAAP financial measures primarily because it is not reflective of the ongoing operating performance of Cypresss business and can distort the period-over-period comparison.
| Tax effects. |
Cypress adjusts for the income tax effect that resulted from the non-GAAP adjustments as described above. Additionally, Cypress also excludes the impact of items that are related to historical activities in nature and not reflective of the ongoing operating results of Cypress.