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Spansion Inc. Reports Fourth Quarter 2011 Results | Cypress Semiconductor

Spansion Inc. Reports Fourth Quarter 2011 Results

Last Updated: January 26, 2012

SUNNYVALE, Calif., Jan. 26, 2012 -- Spansion Inc. (NYSE: CODE), a leading provider of Flash memory solutions, today announced operating results for its fourth fiscal quarter ended December 25, 2011.

On a U.S. GAAP basis, Spansion reported fourth quarter net sales of $220 million, operating loss of $63.9 million, net loss of $74.4 million, and gross margin of 1%.

On a non-GAAP basis, adjusted net sales totaled $220 million, and excluding $33.4 million in non-cash charges for inventory reserves related to restructuring, adjusted gross margin was 24.2%, adjusted operating income was $3.3 million and adjusted net loss was $7.3 million.

For reconciliation of non-GAAP to GAAP results, see accompanying table "Reconciliation of Non-GAAP to Non-GAAP Adjusted Results" on page 2.

Fourth Quarter 2011 Financial Highlights:

  • Revenue of $220 million
  • Non-GAAP adjusted gross margin of 24.2%
  • Non-GAAP adjusted operating income of $3.3 million or 1.5% of revenue
  • Adjusted EBITDA of $25 million
  • Cash, cash equivalents and short term investments of $263 million


Fourth Quarter 2011 Business Highlights:

  • Industry's first 4 Gb Parallel NOR in production
  • Industry's fastest Serial NOR in production at 128Mb and 256Mb densities
  • 45nm NOR qualification underway
  • 450 new design wins in Q4 2011


"We delivered a solid fourth quarter amid challenging market conditions," said John Kispert, president and CEO. "We continue to execute against our objectives, strengthen customer relationships and accelerate design win momentum. 2011 was a year of transition and intense product development. Spansion is now well-positioned for growth in the future in areas such as automotive, industrial, communications and gaming as the widespread usage of connected, feature-rich embedded devices is on the rise and requires Flash memory as a critical component."  

Quarterly Conference Call and Accompanying Slide Presentation

Spansion will host a conference call Thursday, January 26, 2012 at 1:30 pm PDT / 4:30 pm EDT to discuss its fourth quarter 2011 results. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the investor relations section of Spansion's website at http://investor.spansion.com/.

Dial-in: 1-866-783-2138 (US), 1-857-350-1597 (International), Passcode: 56071471

An audio replay will be available within two hours of the call and may be accessed via dial-in at 1-888-286-8010 (US), 1-617-801-6888 (International), with the Passcode 45968394 or by webcast on the investor relations section of Spansion's website at http://investor.spansion.com/.

Fourth Quarter 2011 Results



U.S. GAAP results, in $millions except per share data and percentages



Q4 2011

Q3 2011

Q4 2010

Net sales

$220.0

$258.2

$327.7

Gross margin

1.0%

28.5%

20.9%

Operating income (loss)

($63.9)

$23.2

($1.4)

Operating margin

(29.0%)

9.0%

(0.4%)

Net income(loss) attributable to Spansion Inc. common
stockholders

($74.4)

$7.3

($13.6)

Diluted net income (loss) per share

($1.25)

$0.12

($0.22)



Reconciliation of Non-GAAP to Non-GAAP Adjusted Results, in $millions except percentages



Q4 2011
(non-GAAP)

Inventory
reserves
related to
restructuring

Q4 2011
(non-GAAP excl.
inventory reserves)

Q3 2011

Q4 2010

Adjusted net sales

$220.0

-

$220.0

$258.2

$330.3

Gross Profit

$19.9

$33.4

$53.3

$93.4

$122.6

Adjusted Gross Margin

9.0%

-

24.2%

36.2%

37.1%

Adjusted operating income

($30.1)

$33.4

$3.3

$46.7

$64.0

Adjusted net income/(loss)

($40.7)

$33.4

($7.3)

$30.3

$51.8

Adjusted EBITDA

($8.6)

$33.4

$24.8

$69.3

$88.4





Business Outlook

For the first quarter of 2012, Spansion estimates U.S. GAAP net sales in the range of $210 million to $230 million and GAAP net income per share of ($0.34) to ($0.21).

The following charges are included in the guidance above:



($ in millions)

Favorable/(Unfavorable)

COGS

R&D

SG&A

Operating
Income

Tax

Net Income

Intangible Amortization

7

-

-

7

-

7

Stock Based Compensation

1-2

1-2

3-4

6-7

-

6-7

Restructuring

4-8

-

-

4-8

-

4-8

Total

12-17

1-2

3-4

17-22

-

17-22





Excluding the above items, first quarter 2012 gross margin will be 29.5% to 31.5%, operating margin will be 4.5% to 7.0%, and EPS is expected to be between $0.01 and $0.07.

Use of Non-GAAP Financial Information

The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for or superior to, the company's financial results presented in accordance with U.S. GAAP. The non-GAAP financial measures presented by the company may be different than non-GAAP financial measures presented by other companies.

The non-GAAP and supplemental information is provided to enhance the user's overall understanding of the company's operating performance. Specifically, the company believes the non-GAAP information provides useful measures to investors regarding the company's financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with U.S. GAAP. A reconciliation of each non-GAAP financial measure to the most direct, comparable GAAP financial measure is included below.

Upon emergence from bankruptcy on May 10, 2010, Spansion adopted fresh start accounting in accordance with U.S. GAAP. The adoption of fresh start accounting resulted in Spansion becoming a new entity for financial reporting purposes, whereby the U.S. GAAP financial statements on or after May 10, 2010 are not comparable to the financial statements prior to that date. Fresh start accounting required resetting the historical net book values of Spansion's assets and liabilities to the related fair values.

About Spansion

Spansion's (NYSE: CODE) technology is at the heart of electronics systems, powering everything from the internet of today to the smart grid of tomorrow, positively impacting people's daily lives at work and play. Spansion's broad Flash memory product portfolio, smart innovation and industry leading service and support are enabling customers to achieve greater efficiency and success in their target markets. For more information, visit http://www.spansion.com.

Spansion®, the Spansion logo, MirrorBit®, MirrorBit® Eclipse™ and combinations thereof, are trademarks and registered trademarks of Spansion LLC in the United States and other countries. Other names used are for informational purposes only and may be trademarks of their respective owners.

Cautionary Statement

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements. The risks and uncertainties include the company's ability to: execute its business strategy; drive new design wins; reduce operating expenses; strengthen customer relations; accelerate the adoption of new products and obtain the anticipated cost savings.  Additional risks related to the company's emergence from bankruptcy include: any negative impact on the company's business, results of operations, financial position or cash management arrangements; and the negative impact on relationships with employees, customers, suppliers, contract manufacturers and other stakeholders. In addition, the instability of the global economy and tight credit markets could continue to adversely impact the company's business in several respects, including adversely impacting: the credit quality and insolvency risk of the company and its customers and business partners, including suppliers and distributors; bookings; and demand for Spansion products. The company urges investors to review in detail the risks and uncertainties discussed in the company's Securities and Exchange Commission filings, including but not limited to the company's most recent Annual Report on Form 10-K for fiscal 2010 and Quarterly Reports on Form 10-Q. Unless otherwise required by applicable laws, the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Company News:

Investor Relations Web site:

http://www.spansion.com

http://investor.spansion.com





Spansion Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share amounts)


Three Months
Ended
December 25, 2011

Three Months
Ended
September 25, 2011

Three Months
Ended
December 26, 2010

Net sales

$220,015

$258,163

$ 327,723

Cost of sales

(217,810)

184,486

259,130

Gross Profit

2,205

73,677

68,593





Research and development

24,525

21,721

25,748

Sales, general and administrative

29,273

28,728

44,271

Restructuring  charges

12,295

-

-

Operating income (loss)

(63,888)

23,228

(1,426)

Interest & other income
(expense), net

2,721

775

(1,567)

Interest expense

(7,687)

(7,629)

(10,179)





Income (loss) before income taxes

(68,854)

16,374

(13,172)

Provision for income taxes

5,649

8,560

454

Net income (loss)

$(74,503)

$7,814

$ (13,626)

    Less: Net income (loss) attributable
to non-controlling  interest



(134)



472



-

Net income (loss) attributable to Spansion Inc.



$(74,369)



$7,342



$(13,626)





Net income (loss) per common share
attributable to Spansion Inc. common
stockholders




    Basic

$(1.25)

$ 0.12

$ 0.22

    Diluted

$(1.25)

$ 0.12

$ 0.22

Shares used in per share calculation




    Basic

59,574

61,530

62,314

    Diluted

59,574

62,607

62,314






Spansion Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands)


Assets

December 25, 2011

September 25, 2011

December 26, 2010

Current assets:





Cash and cash equivalents

$194,850

$ 235,520

$ 329,294


Short term investments

67,855

65,263

24,979


Accounts receivable, net

110,343

105,576

165,975


Inventories

174,089

210,722

168,937

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