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Cypress Reports First-Quarter 2015 Results | Cypress Semiconductor

Cypress Reports First-Quarter 2015 Results

Last Updated: April 30, 2015
SAN JOSE, Calif., April 30, 2015—Cypress Semiconductor Corp. (NASDAQ: CY) today announced its first-quarter 2015 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included:
Closed $5 billion merger with Spansion Inc. on March 12, earlier than anticipated
Revenue of $209.1 million that included 18 days of Spansion results, with revenue of $173.9 million for existing Cypress business in line with guidance
Non-GAAP loss per share of ($0.45) that included $107 million adjustment for aged and excess inventory acquired through merger
$8.4 million in annualized synergies already realized
Declared dividend of $36 million to combined shareholders at a current yield of 3.4%
Fellow shareholders: 
Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year: 
(In thousands, except per-share data)
* For a reconciliation of GAAP to non-GAAP results, see accompanying tables “Reconciliation of U.S. GAAP to Non-GAAP Financial Measures.”
We are pleased to have closed our merger with Spansion earlier than expected, and we are encouraged by the strategic opportunities ahead of us. Our post-merger company, which we internally refer to as New Cypress, is the No. 1 provider of SRAMs and the No. 1 provider of NOR Flash memories. This has helped to position us as the No. 3 provider of automotive MCUs and memories with $500 million in revenue and preferred supplier status to the Top 25 global automotive manufacturers. We are making excellent progress on integration—for example, we have completed more than half of the headcount reductions we planned for the year and we have already achieved $8.4 million in annualized synergies in the first quarter. 
We remain committed to expanding gross and operating margins as the embedded memory leader and through our continued focus on automotive and industrial markets.
+ Our consolidated non-GAAP financials include 18 days of Spansion results due to the merger closing on March 12, 2015. On a standalone basis, Cypress’s first-quarter non-GAAP results would have been 50.8% gross margin (53.1% excluding the Emerging Technologies Division) and $0.10 earnings per share.
+ Net inventory at the end of the first quarter was $389.0 million, up 341% from the fourth quarter. The increase is primarily related to inventories acquired from Spansion, which totaled approximately $305 million, including the fair value adjustment mandated by purchase accounting.
+ 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 March 26, 2015. This dividend was paid on April 16, 2015.
(In thousands, except percentages)
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 outlined in Footnote 1. Includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.
3. Our net sales includes the results of legacy Spansion operations for March 12, 2015 through March 29, 2015.
+ Cypress and Spansion closed their merger in an all-stock, tax-free transaction valued at approximately $5 billion. In a special meeting, Cypress shareholders approved the issuance of 2.457 shares of Cypress stock to Spansion shareholders for each Spansion share they owned. The merger is expected to achieve more than $135 million in cost synergies on an annualized basis within three years and to be accretive to non-GAAP earnings within the first full year after the transaction closes. The combined company plans to continue to pay $0.11 per share in quarterly dividends, considerably enhancing shareholder returns.
+ Cypress expanded its Traveo™ microcontroller family with a cost-effective line of MCUs that enables 2-D and 3-D graphics in the dashboards, heads-up displays and HVAC systems of compact cars. The new family builds on the Traveo MCU family that Spansion announced in the fourth quarter of 2014 for midsize cars. Traveo enables the first 3-D-capable ARM® Cortex®-R5 MCU automotive cluster (dashboard) displays.
+ Cypress introduced a fingerprint reader solution designed to bring reliable, easy-to-use authentication to smartphones, tablets, wearables and other mobile devices. The TrueTouch® Fingerprint Reader provides access to one of the fastest-growing markets in semiconductors. 
+ Cypress introduced the PSoC® 4 M-Series, designed to upgrade designs with legacy 8- and 16-bit applications with the 32-bit ARM-Cortex-M0 core. The PSoC 4 M-Series brings the design flexibility of the PSoC architecture to a wide range of sensor-based systems in home appliance, automotive and system management control applications.
+ Spansion expanded its portfolio of human-machine interface ICs for industrial, consumer and home appliance applications with two new ARM Cortex-M4-based microcontrollers. The new products enable the integration of advanced graphics, video and voice-command capabilities in the consumer and Internet of Things (IoT) markets. 
+ Cypress and Arrow Electronics announced a design contest that challenges engineers to design solutions for the IoT using Cypress’s PSoC 4 Bluetooth® Low Energy (BLE) solution, the industry’s most-integrated programmable one-chip solution.
+ Kyocera selected Cypress’s TrueTouch TMA445 capacitive touchscreen controller for its ruggedized DuraForce smartphone. The Cypress-enabled, 4.5-inch touchscreen display allows users to make calls, check messages, send email and take pictures even if they are wearing thick gloves or the screen is wet.  
+ The premium Chinese smartphone brand, vivo, selected Cypress’s TrueTouch TMA545 capacitive touchscreen controller for its next-generation vivo Y29 smartphone. TrueTouch allows users to “wake up” their phone from sleep mode by drawing a letter on the screen with their finger. 
+ Cypress sampled the industry’s first programmable USB Type-C port controller solution: EZ-PD™ CCG1. The new super-slim 2.4-mm USB Type-C connector standard—which transmits multiple data protocols and delivers up to 100 W of power—is the sole data and power connector on the newest Apple® MacBook® computer. 
+ Cypress also sampled its second-generation USB Type-C controller solution. Available in a Wafer Level Chip Scale Package, the EZ-PD CCG2 controller is optimized for Type-C cable connectors. In order to transmit and receive USB, DisplayPort and HDMI protocols, along with power, every Type-C cable must have an embedded Type-C chip, which greatly expands the USB market.
+ Cypress introduced the small-form-factor, fully certified EZ-BLE™ PRoC™ module, which significantly accelerates time-to-market for Bluetooth Smart products such as remote controls, toys, health and fitness equipment and home appliances. The new Bluetooth Low Energy (BLE) standard has become the overwhelming choice for short-range, wireless connectivity. Customers prefer integrated BLE modules because they reduce manufacturing costs and eliminate the need for costly, time-consuming certification by the FCC and equivalent bodies worldwide. Bluetooth Smart device shipments will grow from 165 million in 2014 to 1.2 billion in 2018 for a 64% CAGR, according to market analysis firm IHS.
+ Networking equipment maker Exablaze selected Cypress’s QDR®-IV SRAMs for its ExaLINK Fusion networking switch. QDR-IV offers the industry’s highest-performance SRAM solutions with a random transaction rate (RTR) of up to 2.132 billion transactions per second. RTR, the number of fully random memory accesses per second, is the critical memory performance metric for increased line card and switching rates. 
+ Ikegami Tsushinki Corp., the world’s leading manufacturer of advanced HD cameras and production equipment, selected Cypress’s high-density First-In, First-Out (FIFO) memory for its 3G-ready fiber transmission camera control unit and base station. 
+ Spansion launched its HyperRAM™ memory, the industry’s first Pseudo SRAM (PSRAM) device with HyperBus™—a simple 12-pin interface for fast, random and continuous read throughput up to 333 megabytes per second (MBps). HyperBus devices enable external RAM expansion, fast boot times and high-resolution graphics displays for applications such as automotive instrument clusters. HyperRAM joins HyperFlash™, the world's fastest NOR flash memory, in Cypress's growing portfolio of memories supporting the HyperBus standard.
+ Spansion introduced a 512Mb, 1.8-V Serial Peripheral Interface (SPI) NOR flash memory in 65nm MirrorBit® technology with the industry’s fastest read time. The new chip targets automotive infotainment systems, telematics, road-tolling systems and wireless base stations. With an 80-MHz Quad DDR (Double Data Rate) SPI interface and 80-MBps bandwidth, the chip is 50% faster than competing high-density 1.8-V SPI NOR flash devices.
+ In February, Spansion announced that it will jointly develop and manufacture 3-D NAND flash memories with XMC, China’s fastest-growing 300-mm semiconductor foundry company. The new, post-merger Cypress will combine its innovative charge-trap and 3-D technologies with XMC’s high-volume, state-of-the art manufacturing capabilities.
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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
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for Q2 2015 and the remainder of fiscal year 2015 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 expected timing and costs related to the integration of the Company with Spansion as a result of our recent merger; our ability to execute on planned synergies related to the merger with Spansion; our expectations regarding dividends; the semiconductor market; the strength and growth of our proprietary and programmable products; our expectations regarding our revenue growth and earnings leverage; our expectation that our ETD division will significantly contribute to our 2015 revenue growth; as well as 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 state of and future of the global economy, business conditions and growth trends in the semiconductor market, our ability to effectively integrate our company with Spansion in a timely manner; our ability to attract and retain key personnel; whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, our ability to manage our business to have strong earnings and significant revenue growth, reduce operating expenses, 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 our 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, TrueTouch, PSoC, CapSense and MirrorBit are registered trademarks and EZ-PD, EZ-BLE, PRoC, F-RAM, HyperRAM, HyperBus, HyperFlash and Traveo are trademarks of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners.