Cypress Reports Fourth-Quarter and Year-End 2012 Results | Cypress Semiconductor
Cypress Reports Fourth-Quarter and Year-End 2012 Results
CLICK HERE FOR Q412 FINANCIAL RESULTS
SAN JOSE, Calif., January 24, 2013 — Cypress Semiconductor Corp. (NASDAQ: CY) today announced its fourth-quarter 2012 and fiscal year results, which included the following highlights and remarks from its president and CEO, T.J. Rodgers.
• Revenue and earnings exceeded the preliminary results issued on January 8
• Ramtron acquisition completed in the fourth quarter
• The divestiture of Cypress Envirosystems was completed
• 3.2 million shares repurchased in the fourth quarter; diluted share count at 7-year low
• Dividend yield was 4.2% with favorable tax treatment conditions
Our revenue and earnings for the quarter are given below and compared with those of the prior quarter and prior year:
(In thousands, except per-share data)
We did not perform well in 2012, including the fourth quarter. Yes, the economy is lackluster, but our performance was not good even in that environment. Our revenue was at the higher end of our preliminary financial announcement on January 8, 2013, but it decreased 11% sequentially—well below our expectations at the beginning of the fourth quarter. All divisions decreased sequentially and on a year-on-year basis. We are now cutting the company down structurally from four divisions to three to rapidly reduce our operating expenses. Our goal is to re-establish the drop-through earnings leverage that has characterized Cypress since the SunPower spinout.
Our fourth-quarter book-to-bill of 0.88 was up sequentially in every division for the first time all year. We now expect our first quarter, due to the seasonality of our business, to be the revenue bottom of the current semiconductor slump, with revenue growth thereafter.
Our non-GAAP4 consolidated gross margin for the fourth quarter was 51.3%, down 5.8 percentage points from the previous quarter due mainly to product mix, factory absorption, and Ramtron charges and inventory reserves. Our GAAP fourth-quarter consolidated gross margin was 46.4%.
Net inventory at the end of the fourth quarter was $126.1 million, up $36.8 million from the third quarter. The inventory acquired from Ramtron (plus the related purchase accounting fair value adjustment) totaled $44.7 million. Excluding the Ramtron acquisition, inventory decreased 9% sequentially, and distributor inventory dollars on hand decreased 16% sequentially.
Cash and investments for the fourth quarter totaled $117.2 million, a decrease of $102.2 million from the prior quarter. During the quarter, we used $102.2 million to complete the acquisition of Ramtron, $32.3 million to repurchase 3.2 million shares, and paid our regular quarterly dividend of $16.1 million. Since we announced our $400-million stock repurchase program in September 2011, we have repurchased 23.1 million shares through December 30, 2012, and have approximately $88.4 million remaining under the authorized repurchase program.
Our divisional revenue and gross margins are detailed below:
BUSINESS UNIT SUMMARY FINANCIALS (UNAUDITED)
1. PSD, Programmable System Division; DCD, Data Communications Division; MPD, Memory Products Division.
2. “Core Semiconductor” includes PSD, DCD and MPD and excludes “Emerging Technology.”
3. “Emerging Technology” includes businesses outside our core semiconductor businesses outlined in footnote 2. Includes subsidiaries AgigA Tech Inc., Deca Technologies Inc., and our foundry-support business. Cypress Envirosystems Inc. was sold in Q4 2012. The non-GAAP results include Cypress Envirosystems expenses for all periods prior to Q4 2012. The GAAP results include Cypress Envirosystems expenses for all periods presented.
4. Refer to “Reconciliation of GAAP to Non-GAAP Financial Measures” and “Notes to Non-GAAP Financial Measures” following this press release for a detailed discussion of management’s 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.
FOURTH-QUARTER 2012 HIGHLIGHTS
Cypress introduced the fully qualified low-power version of PSoC® 5LP programmable system-on-chip family, which operates on a meager four milliamperes of total current (at 25 MHz). The new ARM® Cortex™-M3-based family provides exceptional processor performance, along with significant programmable analog and digital resources. PSoC 5LP also allows designers to reduce power consumption by customizing each peripheral Component. Components are free “Virtual Chips” used to integrate multiple ICs and system interfaces into one PSoC device.
Cypress’s online PSoC World developers conference attracted 4,677 attendees worldwide. Presented with Cypress partners, including ARM, Arrow Electronics, Macnica, TED, and Axios, PSoC World featured presentations from industry visionaries, hands-on tutorials for system and embedded designs with live Q&A, and an outside expert panel evaluating the PSoC architecture. All of the content is available at www.PSoCWorld.com.
Cypress introduced PSoC Designer™ 5.3, a new version of its integrated development environment for the PSoC 1 Programmable System-on-Chip architecture. The update includes more than 30 new or enhanced User Modules—free “Virtual Chips” used to integrate multiple ICs into a single PSoC 1 device.
Cypress introduced its TrueTouch® Gen4X touchscreen controllers, which deliver 3X the noise-immunity of leading touchscreen controllers. The robust noise-immunity provides uninterrupted tracking of finger movements and smoother navigation in the presence of noisy chargers, displays, and RF signals. These controllers are already designed into both in-cell displays and smartphones in the rapidly growing Chinese market.
Cypress announced that Fujitsu selected its TrueTouch Gen4 solution to implement the touchscreen in the new Arrows V F-04E smartphone. The Fujitsu phone uses the Android operating system and runs on the 4G LTE network.
Cypress introduced CapSense® and CapSense Plus™ controllers with Cypress’s new QuietZone™ technology, which is the first capacitive sensing technology to provide a Signal-to-Noise Ratio (SNR) greater than 100:1. The new devices offer industry-leading features, including the ultra-low power consumption (down to 50 microwatts per channel), high-accuracy proximity detection and the water-tolerance needed by customers in the consumer, white goods, and small home-appliance markets. Cypress is the No. 1 supplier of capacitive-sensing solutions with a market share greater than 4X that of the nearest competitor.
Cypress announced that startup Leap Motion Inc. selected Cypress’s EZ-USB® FX3™ solution for its 3D motion sensing and control system. The breakthrough Leap Motion controller enables a user to operate a computer using free-form hand movements and intuitive gestures. FX3 rapidly transfers data from the system’s image sensors to a central processor, enabling an unparalleled 3D human interface.
Cypress announced two design wins for its proprietary 2.4-GHz wireless radio technologies: I-Rocks Technology’s wireless keyboard with a built-in trackpad, and ITON Technology’s RF module, which provides a turnkey solution for wireless mice, using a Cypress radio-on-chip.
Micron Technology and Cypress subsidiary AgigA Tech signed an agreement to develop and provide nonvolatile dual in-line memory module (nvDIMM) products, pin-compatible with the ubiquitous, super-high volume PC DIMM memory. Using Agiga Tech’s proprietary technology, these nvDIMMs provide performance, cost, and data security advantages for high-performance computing and storage platforms.
Cypress officially completed its merger with Ramtron International on November 20, 2012, and is now actively supporting Ramtron’s Ferroelectric Random Access Memory (F-RAM) products. The merger effectively gives Cypress the world’s broadest portfolio of fast-write nonvolatile memories, including F-RAMs and Cypress’s nonvolatile static random access memories (nvSRAMs). Ramtron’s F-RAMs are the industry’s lowest-power fast-write nonvolatile memories, and dominate the serial nvSRAM market.
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 27, 2012. The dividend was paid on January 17, 2013.
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 1, PSoC 3, and PSoC 5 programmable system-on-chip families and derivatives, 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, PCs and tablets. Cypress is also the world leader in SRAM memories. 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 https://www.cypress.com.
Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for Q1 2013 and the remainder of fiscal year 2013 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 semiconductor market, the strength and growth of our proprietary and programmable products, our expectations regarding our Q1 2013 revenue and earnings, margins, profit and cash flow; the results of our return on capital strategies and cost-saving measures, including our dividend and stock repurchase programs; our expectations regarding the demand for our products and how our products are expected to perform, as well as our future design win activity and market share gains. 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, our ability to close and successfully integrate Ramtron into our operations, the state of and future of the global economy, business conditions and growth trends in the semiconductor market, whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, whether our product and design wins result in increased sales, our ability to manage our business to have strong earnings, reduce operating expenses and cash flow leverage, factory utilization, 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 Technology 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.
Statements made in this release that are not historical in nature and that refer to Cypress plans and expectations for the future, including, but not limited to, the Company’s future financial performance and results of operations, design-win penetration, cost-management strategies, competitive position and product offerings, set forth above are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially due a variety of factors, including but not limited to the risks identified in this press release as well as in our filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Cypress as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statement. We use words such as “anticipates,” “believes,” “expects,” “future,” “look forward,” “planning,” “intends” and similar expressions to identify such forward-looking statements.
Cypress, the Cypress logo, TrueTouch, PSoC, EZ-USB, CapSense, and West Bridge are registered trademarks, and PSoC Creator, FX3, PRoC, and WirelessUSB are trademarks of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners.