Cypress Semiconductor Corporation
Jan 28, 2016

Cypress Reports Fourth Quarter and Year-End 2015 Results

SAN JOSE, Calif., Jan. 28, 2016 /PRNewswire/ -- Cypress Semiconductor Corp. (NASDAQ: CY) today announced its fourth-quarter and fiscal-year 2015 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included (all financial comments are based on non-GAAP results, unless otherwise noted):

  • Revenue of $456.4 million and earnings per share of $0.13, in line with guidance
  • $137.7 million in realized annualized synergies, remaining ahead of plan
  • $56.5 million common stock repurchase, part of a $450 million repurchase program
  • Dividend payment of $36.9 million ($0.11 per share, equal to a 4.5% annualized yield as of December 31, 2015)

Fellow shareholders: 

Our revenue and earnings for the quarter are given below, compared with those of the prior quarter:

(In thousands, except per-share data)



NON-GAAP


GAAP



Q4 2015


Q3 2015


Q4 2015


Q3 2015

Revenue


$456,378


$470,060


$450,128


$463,810










Gross margin


39.8%


41.2%


32.1%


34.6%










Pretax margin


10.6%


13.2%


(13.8%)


6.9%










Net income (loss)


$45,528


$60,040


$(77,259)


$30,312










Diluted EPS (loss)


$0.13


$0.17


$(0.23)


$0.08










Our revenue and earnings for the fiscal year are given below, compared with those of the prior year:

(In thousands, except per-share data)



NON-GAAP


GAAP



FY 20151


FY 2014


FY 20151


FY 2014

Revenue


$1,626,603


$725,497


$1,607,853


$725,497










Gross margin


35.3%


52.6%


24.9%


50.1%










Pretax margin


4.8%


12.6%


(23.0%)


2.1%










Net income (loss)


$70,532


$87,291


$(383,796)


$17,936










Diluted EPS (loss)


$0.21


$0.52


$(1.27)


$0.11



1.

2015 includes results of the merger with Spansion as of March 12, 2015.

Fourth-quarter revenue declined 2.9% sequentially in a seasonally soft semiconductor market. This performance was in line with the high end of our guidance. We remained ahead of our three-year merger synergy plan of $160 million in cost synergies, achieving $137.7 million in annualized synergies as of the end of the first year. Gross margin dropped to 39.8% due primarily to our lean inventory initiative, under which we are running our wafer fabs at a rate lower than actual demand capacity to burn off excess inventory.

Cypress remains committed to the task of building on our position as a leading provider of high-performance embedded solutions for the automotive and industrial markets and other promising markets such as Home Appliances and the Internet of Things (IoT). Our revenue in automotive and industrial continues to grow: Revenue from these segments increased to 55% of our total revenues in the fourth quarter, up from 52% in the fourth quarter of 2014. We continue to be a source of technology leadership in these markets. For example, our IoT wireless beacon solution, which is discussed in the new-product section below, was named one of the 10 best technologies at the CES tradeshow earlier this month.

We remain committed to the return of capital to our shareholders through quarterly dividends and stock repurchases. The return of capital this quarter was $93.4 million, with a dividend payout of $36.9 million and a $56.5 million buyback.

BUSINESS REVIEW

  • Our non-GAAP consolidated gross margin for the fourth quarter was 39.8%, consistent with the lower fab utilization inherent in our lean inventory initiative, which will run through the third quarter of 2016. In addition, excluding our Emerging Technologies Division (ETD), our core semiconductor gross margin was 40.3%. Fab utilization was roughly 60% in the fourth quarter. It will drop to approximately 50% in the first quarter of 2016, reducing gross margin.
  • Net inventory at the end of the fourth quarter was $243.6 million, down 12.7% from the third quarter and down 37.4% from the first quarter. This steep inventory reduction is the intended benefit of our lean inventory initiative.
  • 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 31, 2015. This dividend was paid on January 21, 2016.

FIRST QUARTER 2016 FINANCIAL OUTLOOK

For the first quarter of 2016, Cypress estimates non-GAAP financial results as follows: net sales in the range of $410 million to $440 million, gross margin of 36%, and diluted EPS in the range of $0.04 to $0.08. 1

1.

These estimates exclude amortization of intangibles of approximately $36 million, equity compensation expense of approximately $27 million, and restructuring charges, depreciation or amortization related to accounting for the Spansion merger of approximately $28 million.

 


NET SALES SUMMARY

(In thousands, except percentages)

(Unaudited)




THREE MONTHS ENDED






Jan. 3,


Sept. 27,


Sequential


Business Unit


2016


2015


Change


PSD1


$157,763


$178,503


(12%)


MPD1,3


$259,402


$260,897


(1%)


DCD1


$17,522


$17,617


(1%)


ETD2


$21,691


$13,043


66%


Total


$456,378


$470,060


(3%)










Geographic








China and ROW


41%


39%


5%


Americas


16%


14%


14%


Europe


14%


14%


0%


Japan


29%


33%


(12%)


Total


100%


100%












Channel








Distribution


67%


71%


(6%)


Direct


33%


29%


14%


Total


100%


100%












1.

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

2.

ETD, Emerging Technologies Division includes businesses outside our core semiconductor businesses named in Footnote 1. ETD includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.

3.

Our net sales for the third and fourth quarters of 2015 and our estimates for the first quarter of 2016 include $6.25 million of legacy Spansion non-GAAP licensing revenue in MPD, APAC region and direct channel.

 



TWELVE MONTHS ENDED






Jan. 3,


 Dec. 28,


Sequential


Business Unit


20161


2014


Change


PSD2


$613,884


$283,206


117%


MPD2, 4


$890,390


$347,903


156%


DCD2


$72,791


$70,378


3%


ETD 3


$49,538


$24,010


106%


Total


$1,626,603


$725,497


124%










Geographic








China and ROW


41%


61%


(33%)


Americas


15%


16%


(6%)


Europe


14%


14%


0%


Japan


30%


9%


233%


Total


100%


100%












Channel








Distribution


70%


69%


1%


Direct


30%


31%


(3%)


Total


100%


100%












1.

2015 includes results of the merger with Spansion as of March 12, 2015

2.

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

3.

ETD, Emerging Technologies Division includes businesses outside our core semiconductor businesses named in Footnote 1. ETD includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.

4.

Our net sales for twelve months ended 2015 and our estimates for the first quarter of 2016 include $18.75 million and $6.25 million of legacy Spansion non-GAAP licensing revenue in MPD, APAC region and direct channel, respectively.

FOURTH-QUARTER 2015 HIGHLIGHTS

Cypress introduced 12 new products during the quarter, mostly in its targeted automotive and industrial markets:

  • The first Traveo™ automotive microcontrollers in an advanced 40-nm process, expanding Cypress's market-share-leading portfolio of MCUs for automotive instrument cluster systems.
  • The industry's most compact, highly integrated automotive power management ICs (PMICs), which regulate the power supply from a car battery, safely managing extreme voltage fluctuations in Advanced Driver Assistance Systems (ADAS), body-control modules and instrument cluster systems.
  • An automotive LED driver that is unique in its ability to drive a single LED at a high 2.1-MHz switching frequency in headlights and other front-lighting systems. High switching frequency reduces component size, enabling the industry's smallest LED headlight driving solutions.
  • A transceiver for the Clock Extension Peripheral Interface (CXPI), a new standard backed by Toyota that is designed to succeed the ubiquitous Local Interconnect Network (LIN) protocol for internal automotive communications. Cypress is the only supplier to provide a complete CXPI solution, offering a transceiver and automotive CXPI-enabled MCUs.
  • Two new NOR Flash memories with Quad Serial Peripheral Interfaces. Cypress's Quad SPI memories are used wherever a lot of data is required to boot up embedded automotive systems such as ADAS, instrument cluster and infotainment systems. The new 1.8-V, 64Mb FS-S NOR Flash device features the industry's highest read bandwidth and fastest program time.
  • A high-performance FM4 (Flexible Microcontroller) based on the 200-MHz ARM® Cortex®-M4 core, targeting motor control, home appliance applications and solutions for Industry 4.0 smart factories.
  • Two new FM0+ energy-efficient MCUs based on the ARM Cortex-M0+ core. The MCUs provide the market's best combination of power consumption, performance and peripheral integration for wearables and other Internet of Things (IoT) applications.
  • The PSoC® 4 L-Series programmable system-on-chip, the industry's most flexible single-chip 32-bit ARM-Cortex-M0-based solution. This new PSoC adds a USB controller to the PSoC 4 architecture for robust digital audio, and it features Cypress's industry-leading CapSense® capacitive sensing technology. The solution addresses a range of industrial and consumer applications.
  • The newest PSoC-based Bluetooth® Low Energy devices, the industry's first to be qualified for the latest Bluetooth 4.2 security, privacy and data throughput standards.
  • The PSoC-based USB EZ-PD™ CCG4 controller to support the new Type-C USB standard in desktops and notebooks.
  • VentureBeat, a technology publication, named Cypress's PSoC-based BLE solution for IoT beacons one of the 10 best technologies at the Consumer Electronics Show (CES). The solution is based on Cypress's EZ-BLE™ PRoC™ Bluetooth Smart module and its Energy-Harvesting PMIC, which eliminate the need for batteries—instead using heat, vibration or light for power. Wireless beacons can be used to send information to smartphones over short ranges, for example, communicating product markdowns to shoppers in a department store every second.  
  • Cypress also showcased three new BLE modules with a Bluetooth Smart Mesh demo at CES. Mesh networking, which is critical to many emerging IoT applications, extends Bluetooth's limited transmission range, enabling transmissions to hop to their destinations on intermediate nodes. For example, a BLE-based on-off switch signal might hop over several BLE-enabled lights before turning on a burglar alarm.
  • Canadian-based Hexoskin selected Cypress's EZ-BLE PRoC module for use in its "smart shirts," which collect and transmit vital statistics such as heart and respiratory rates to a user's smart device, where they can be analyzed and tracked over time. The low-power PRoC module enabled Hexoskin to more than double the battery life of its first-generation shirts.

FOLLOW CYPRESS ONLINE

ABOUT CYPRESS

Cypress (NASDAQ: CY) delivers high-performance, high-quality solutions at the heart of today's most advanced embedded systems, from automotive, industrial and networking platforms to highly interactive consumer and mobile devices. With a broad, differentiated product portfolio that includes NOR flash memories, F-RAM™ and SRAM, Traveo™ microcontrollers, the industry's only PSoC® programmable system-on-chip solutions, analog and PMIC Power Management ICs, CapSense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth Low-Energy and USB connectivity solutions, Cypress is committed to providing its customers worldwide with consistent innovation, best-in-class support and exceptional system value. To learn more, go to 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 future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," "future," "continue" or other wording indicating future results or expectations to identify such forward-looking statements that include, but are not limited to, statements related to our estimated non-GAAP revenue, non-GAAP gross margin and non-GAAP EPS in our financial outlook; the expected synergies related to our integration with Spansion Inc. ("Spansion"); our ability to execute on planned synergies related to our integration with Spansion; the semiconductor market; the expected benefits of our lean inventory initiative; the continued growth of our products in the automotive and industrial markets; our ability to penetrate the Home Appliance and Internet of Things markets; our expectations regarding our revenue growth and earnings leverage;  and our expectations regarding the demand for our products and how our products are expected to perform. 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 to a variety of uncertainties and risk factors, including, but not limited to, the risk that that future revenues, margins and earnings may not be achieved as expected; the state of and future of the global economy, business conditions and growth trends in the semiconductor market; our ability to continue to realize synergies from our integration with Spansion; our ability to attract and retain key personnel; whether our products perform as expected; whether the demand for our products in the automotive and industrial markets is fully realized; our ability to manage our business to have strong earnings and significant revenue growth and reduce operating expenses; our cash flows from operations; our ability to effectively implement third party wafer processes; 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 Technologies Division; and other risks described in "Risk Factors" in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

Cypress, the Cypress logo, Spansion, the Spansion logo, and combinations thereof, PSoC and CapSense are registered trademarks and EZ-PD, EZ-BLE, PRoC, F-RAM and Traveo 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)








January 3,


December 28,



2016


2014

ASSETS





Cash, cash equivalents and short-term investments


$                  227,561


$                  118,812

Accounts receivable, net


292,736


75,984

Inventories, net (a)


243,595


88,227

Property, plant and equipment, net


425,003


237,763

Goodwill and other intangible assets, net


2,528,077


99,615

Other assets


281,597


122,880

Total assets


$               3,998,569


$                  743,281

LIABILITIES AND EQUITY





Accounts payable


$                  137,690


$                    42,678

Deferred margin and allowances on sales to distributors


73,370


95,187

Income tax liabilities


59,932


21,494

Other liabilities


336,232


144,950

Revolving credit facility and long-term debt


678,659


237,107

Total liabilities


1,285,883


541,416

Total Cypress stockholders' equity


2,720,849


207,757

Noncontrolling interest


(8,163)


(5,892)

Total equity


2,712,686


201,865

Total liabilities and equity


$               3,998,569


$                  743,281


(a) Inventories include $4.3 million and $2.0 million of capitalized inventories related to stock-based compensation expense, 'as of January 3, 2016 'and December 28, 2014, 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



January 3,


September 27,


December 28,


January 3,


December 28,



2016


2015


2014


2016


2014

Revenues


$        450,128


$            463,810


$        184,097


$    1,607,853


$          725,497

Cost of revenues


305,819


303,434


90,395


1,206,789


361,820

Gross margin 


144,309


160,376


93,702


401,064


363,677

Operating expenses:











Research and development


$          75,195


$              75,960


$          39,677


$       282,904


$          164,560

Selling, general and administrative


86,112


74,627


37,746


297,721


163,488

Acquisition costs and amortization of acquisition-related intangibles


37,710


32,359


8,558


138,661


13,936

Gain on divestiture of TrueTouch business


-


(66,472)


-


(66,472)


-

Restructuring charges (benefit)


1,406


2,924


72


90,084


(1,180)

Total operating expenses, net


200,423


119,398


86,053


742,898


340,804

Operating income (loss)


$        (56,114)


$              40,978


$            7,649


$     (341,834)


$            22,873

Interest and other income (loss), net


(5,886)


(8,884)


(2,759)


(27,273)


(7,528)

Income (loss) before income taxes


(62,000)


32,094


4,890


(369,107)


15,345

Income tax provision (benefit)


15,726


2,303


1,814


16,960


(1,173)

Income (loss), net of taxes


(77,726)


29,791


3,076


(386,067)


16,518

Adjust for net loss attributable to noncontrolling interest


467


521


426


2,271


1,418

Net Income (loss) attributable to Cypress


$        (77,259)


$              30,312


$            3,502


$     (383,796)


$            17,936

Net Income (loss) per share attributable to Cypress:











Basic


$            (0.23)


$                  0.09


$              0.02


$           (1.27)


$                0.11

Diluted


$            (0.23)


$                  0.08


$              0.02


$           (1.27)


$                0.11

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


334,447


335,299


161,864


302,036


159,031

Diluted


334,447


357,657


169,148


302,036


169,122

 

CYPRESS SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES  (a)

(In thousands, except per-share data)

(Unaudited)
















Three Months Ended



January 3,


% of


September 27,


% of


December 28,


% of



2016


Revenue


2015


Revenue


2014


Revenue

GAAP Revenues


$        450,128




$          463,810




$         184,097



Revenue from intellectual property license (b)


6,250




6,250






Non-GAAP Revenues


$        456,378




$          470,060




$         184,097



GAAP gross margin


$        144,309


32.1%


$          160,376


34.6%


$           93,702


50.9%

Stock-based compensation expense


4,460


1.0%


4,357


0.9%


2,759


1.5%

Changes in value of deferred compensation plan


53


0.0%


(326)


-0.1%


(44)


—%

Ramtron acquisition related expense



(—)%



0.0%


22


—%

Impairment of assets, restructuring and other charges



(—)%


(372)


-0.1%



0.0%

Effect of Non-GAAP revenue from intellectual property license


6,250


0.9%


6,250


0.8%



0.0%

Spansion merger costs and related amortization


26,361


5.9%


23,164


5.0%



0.0%

Non-GAAP gross margin


$        181,433


39.8%


$          193,449


41.2%


$           96,439


52.4%

GAAP research and development expenses


$          75,195




$            75,960




$           39,677



Stock-based compensation expense


(7,782)




(7,346)




(2,553)



Changes in value of deferred compensation plan


(103)




1,105




128



Impairment of assets, restructuring and other charges


(87)




(81)




(252)



Spansion merger costs and related amortization


(893)




(831)






Non-GAAP research and development expenses


$          66,330




$            68,807




$           37,000



GAAP selling, general and administrative expenses


$          86,112




$            74,627




$           46,376



Stock-based compensation expense


(14,796)




(13,253)




(1,436)



Changes in value of deferred compensation plan


(313)




1,959




229



Ramtron acquisition related expense








(8,602)



Impairment of assets, restructuring and other charges








(72)



Legal and other


(102)




(443)




(1,330)



Spansion merger costs and related amortization


(7,701)




(2,376)






Non-GAAP selling, general and administrative expenses


$          63,200




$            60,514




$           35,165



GAAP operating income (loss)


$         (56,114)




$            40,978




$             7,649



Stock-based compensation expense


27,038




24,956




6,748



Gain from divestiture transaction





(66,472)







Ramtron acquisition-related expense


1,305




1,305




8,622



Changes in value of deferred compensation plan


468




(3,389)




(402)



Impairment of assets, restructuring and other charges








328



Legal and other


188




150






Effect of Non-GAAP revenue from intellectual property license


6,250




6,250






Spansion merger costs and related amortization


72,766




60,350






Non-GAAP operating income (loss)


$          51,901




$            64,128




$           22,945



GAAP pretax profit (loss)


$         (62,000)


-13.8%


$            32,094


6.9%


$             4,890


2.7%

Stock-based compensation expense


27,038


6.0%


24,956


5.4%


6,748


3.7%

Gain from divestiture transaction



(—)%


(66,472)


-14.3%




(—)%

Ramtron acquisition-related expense


1,305


0.3%


1,305


0.3%


8,622


4.7%

Changes in value of deferred compensation plan


(317)


-0.1%


(50)


0.0%


(1,048)


(0.6)%

Impairment of assets, restructuring and other charges



0.0%



0.0%


327


0.2%

Legal and other


188


0.0%


151


0.0%


1,330


0.7%

Effect of Non-GAAP revenue from intellectual property license


5,791


1.2%


6,250


1.2%



(—)%

Investment related losses (gains)


291


0.1%


2,709


0.6%


1,495


0.8%

Tax-related, interest income, interest expense and other expenses

741


0.2%


(1,157)


-0.2%


(618)


(0.3)%

Losses from equity method investment


2,330


0.5%


1,800


0.4%


1,403


0.8%

Spansion merger costs and related amortization


72,766


16.2%


60,350


13.0%



(—)%

Non-GAAP pretax profit (loss)


$          48,133


10.6%


$            61,936


13.2%


$           23,149


12.6%

GAAP net income (loss) attributable to Cypress


$         (77,259)




$            30,312




$             3,502



Stock-based compensation expense


27,038




24,956




6,748



Gain from divestiture transaction





(66,472)






Ramtron acquisition-related expense


1,305




1,305




8,622



Changes in value of deferred compensation plan


(317)




(50)




(1,048)



Impairment of assets, restructuring and other charges








327



Legal and other


188




151




1,330



Effect of Non-GAAP revenue from intellectual property license


5,791




6,250






Investment related losses (gains)


291




2,709




1,495



Tax-related, interest income, interest expense and other expenses

13,395




(1,271)




(324)



Losses from equity method investment


2,330




1,800




1,403



Spansion merger costs and related amortization


72,766




60,350






Non-GAAP net income attributable to Cypress


$          45,528




$            60,040




$           22,055



GAAP net income (loss) per share attributable to
   Cypress - diluted


$             (0.23)




$                0.08




$               0.02



Stock-based compensation expense


0.08




0.07




0.04



Gain from divestiture transaction





(0.18)






Ramtron acquisition-related expense








0.05



Changes in value of deferred compensation plan








(0.01)



Impairment of assets, restructuring and other charges










Effect of Non-GAAP revenue from intellectual property license


0.02




0.02






Investment related losses (gains)





0.01




0.01



Tax-related, interest income, interest expense and other expenses

0.04









Losses from equity method investment


0.01




0.01




0.01



Legal and other








0.01



Spansion merger costs and related amortization


0.21




0.17






Non-GAAP net income per share attributable to Cypress - diluted


$              0.13




$                0.17




$               0.13





























(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) Non-GAAP revenue includes $6.25 million of Samsung intellectual property licensing revenue, not included in GAAP revenue as a result of the effects of purchase accounting for the Spansion merger.

 

CYPRESS SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES  (a)

(In thousands, except per-share data)

(Unaudited)












Twelve Months Ended



January 3,


% of


December 28,


% of



2016


Revenue


2014


Revenue

GAAP Revenues


$                     1,607,853




$              725,497



Revenue from intellectual property license (b)


18,750






Non-GAAP Revenues


$                     1,626,603




$              725,497



GAAP gross margin


$                        401,064


24.9%


$              363,677


50.1%

Stock-based compensation expense


16,838


1.0%


13,209


1.8%

Changes in value of deferred compensation plan


(37)


0.0%


427


0.1%

Ramtron acquisition related expense




0.0%


(86)


0.0%

Impairment of assets, restructuring and other charges


73


0.0%


4,489


0.6%

Effect of Non-GAAP revenue from intellectual property license


18,750


0.8%



0.0%

Spansion merger costs and related amortization


136,830


8.5%



0.0%

Non-GAAP gross margin


$                        573,518


35.3%


$              381,716


52.6%

GAAP research and development expenses


$                        282,904




$              164,560



Stock-based compensation expense


(27,885)




(16,187)



Changes in value of deferred compensation plan


232




(793)



Impairment of assets, restructuring and other charges


(326)




(482)



Spansion merger costs and related amortization


(2,681)






Non-GAAP research and development expenses


$                        252,244




$              147,098



GAAP selling, general and administrative expenses


$                        297,721




$              176,244



Stock-based compensation expense


(53,735)




(20,774)



Changes in value of deferred compensation plan


260




(1,855)



Ramtron acquisition related expense






(14,330)



Impairment of assets, restructuring and other charges


(36)




(97)



Legal and other


(1,198)




(1,330)



Spansion merger costs and related amortization


(11,814)






Non-GAAP selling, general and administrative expenses


$                        231,198




$              137,858



GAAP operating income (loss)


$                      (341,834)




$                22,873



Stock-based compensation expense


98,458




50,170



Gain from divestiture transaction


(66,472)






Ramtron acquisition-related expense


5,220




14,244



Changes in value of deferred compensation plan


(531)




3,075



Impairment of assets, restructuring and other charges


182




5,067



Legal and other


1,450




1,330



Effect of Non-GAAP revenue from intellectual property license


18,750






Spansion merger costs and related amortization


374,852






Non-GAAP operating income (loss)


$                          90,075




$                96,759



GAAP pretax profit (loss)


$                      (369,107)


(23.0)%


$                15,345


2.1%

Stock-based compensation expense


98,458


6.1%


50,170


6.9%

Gain from divestiture transaction


(66,472)


(4.1)%




0.0%

Ramtron acquisition-related expense


5,220


0.3%


14,244


2.0%

Changes in value of deferred compensation plan


820


0.1%


61


0.0%

Impairment of assets, restructuring and other charges


455


0.0%


3,737


0.5%

Legal and other


1,452


0.1%


1,330


0.2%

Effect of Non-GAAP revenue from intellectual property license


18,291


1.1%




0.0%

Investment related losses (gains)


4,058


0.3%


1,495


0.2%

Tax-related, interest income, interest expense and other expenses


3,039


0.2%


(263)


0.0%

Losses from equity method investment


7,148


0.3%


5,068


0.7%

Spansion merger costs and related amortization


374,852


23.3%



0.0%

Non-GAAP pretax profit (loss)


$                          78,214


4.8%


$                91,187


12.6%

GAAP net income (loss) attributable to Cypress


$                      (383,796)




$                17,936



Stock-based compensation expense


98,458




50,170



Gain from divestiture transaction


(66,472)




-



Ramtron acquisition-related expense


5,220




14,244



Changes in value of deferred compensation plan


821




61



Impairment of assets, restructuring and other charges


455




3,737



Legal and other


1,451




1,330



Effect of Non-GAAP revenue from intellectual property license


18,291




-



Investment related losses (gains)


4,058




1,495



Tax-related, interest income, interest expense and other expenses


10,046




(6,750)



Losses from equity method investment


7,148




5,068



Spansion merger costs and related amortization


374,852






Non-GAAP net income attributable to Cypress


$                          70,532




$                87,291



GAAP net income (loss) per share attributable to
   Cypress - diluted


$                            (1.27)




$                    0.11



Stock-based compensation expense


0.33




0.30



Gain from divestiture transaction


(0.22)






Ramtron acquisition-related expense


0.02




0.08



Changes in value of deferred compensation plan







Impairment of assets, restructuring and other charges





0.02



Effect of Non-GAAP revenue from intellectual property license


0.06






Investment related losses (gains)


0.01




0.01



Tax-related, interest income, interest expense and other expenses


0.02




(0.04)



Losses from equity method investment


0.02




0.03



Legal and other





0.01



Spansion merger costs and related amortization


1.24






Non-GAAP net income per share attributable to Cypress - diluted


$                              0.21




$                    0.52












(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) Non-GAAP revenue includes $6.25 million of Samsung intellectual property licensing revenue, not included in GAAP revenue as a result of the effects of purchase accounting for the Spansion merger.

 

CYPRESS SEMICONDUCTOR CORPORATION

SUPPLEMENTAL FINANCIAL DATA

(In thousands)

(Unaudited)













Three Months Ended


Twelve Months Ended



January 3,


September 27,

December 28,


January 3,


December 28,



2016


2015

2014


2016


2014

Selected Cash Flow Data (Preliminary):










Net cash provided by (used in) operating activities


$       42,094


$             19,724

$          25,514


$        8,801


$          103,336

Net cash provided by (used in) investing activities


$      (24,351)


$             80,574

$         (13,736)


$     (79,088)


$          (42,156)

Net cash provided by (used in) financing activities


$       15,188


$           (30,679)

$         (13,126)


$    193,240


$          (43,453)

Other Supplemental Data (Preliminary):










Capital expenditures


$         9,227


$             12,748

$            3,769


$      47,206


$            20,947

Depreciation


$       39,443


$             36,665

$          10,013


$    126,496


$            39,724

Payment of dividend


$       36,914


$             36,748

$          17,728


$    127,995


$            69,248

Dividend paid per share


$           0.11


$                 0.11

$              0.11


$          0.11


$                0.11

Dividend yield per share (a)


4.5%


5.1%

3.0%


4.5%


3.0%

 

CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED DILUTED EPS CALCULATION

(In thousands, except per-share data)

(Unaudited)
























Three Months Ended


Twelve Months Ended



January 3,


September 27,


December 28,


January 3,


December 28,



2016


2015


2014


2016


2014



GAAP


Non-GAAP


GAAP


Non-GAAP


GAAP


Non-GAAP


GAAP


Non-GAAP


GAAP


Non-GAAP

Net income (loss) attributable to Cypress


$          (77,259)


$              45,528


$            30,312


$           60,040


$                 3,502


$           22,055


$     (383,796)


$        70,532


$         17,936


$        87,291

Weighted-average common shares outstanding basic


334,447


334,447


335,299


335,299


161,864


161,864


302,036


302,036


159,031


159,031

Effect of dilutive securities:





















Stock options, unvested restricted stock and other



15,363


9,161


14,549


7,284


8,892



21,223


10,091


9,331

Impact of convertible bond



12,419


13,197


13,197





12,419



Weighted-average common shares 
outstanding for diluted computation


334,447


362,229


357,657


363,045


169,148


170,756


302,036


335,678


169,122


168,362

Net income (loss) per share attributable to Cypress - basic


$              (0.23)


$                  0.14


$                0.09


$               0.18


$                   0.02


$               0.14


$           (1.27)


$            0.23


$             0.11


$            0.55

Net income (loss) per share attributable to Cypress - diluted


$              (0.23)


$                  0.13


$                0.08


$               0.17


$                   0.02


$               0.13


$           (1.27)


$            0.21


$             0.11


$            0.52
























Three Months Ended


Twelve Months Ended













January 3,


September 27,


December 28,


January 3,


December 28,













2016


2015


2014


2016


2014











Average stock price for the period ended


$                9.87


$                10.64


$              10.77


$             12.10


$                 10.18











Common stock outstanding at period end (in thousands)


332,276


335,590


163,103


332,276


163,013











NOTES TO NON-GAAP FINANCIAL MEASURES

To supplement its consolidated financial results presented in accordance with GAAP, Cypress uses the following non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures:

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

The non-GAAP measures set forth above exclude charges related to our merger with Spansion, stock-based compensation, and other adjustments.  Non-GAAP revenue includes the effect of revenue from an intellectual property license agreement.  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.  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.  Pursuant to the requirements of Regulation G and to make clear to our investors the adjustments we make to GAAP measures, we have provided a reconciliation of the non-GAAP measures to the most directly comparable GAAP financial measures.

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SOURCE Cypress Semiconductor Corp.

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