Cypress Reports Fourth Quarter 2003 Results.Business Editors SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Jan. 22, 2004 Cypress Semiconductor Cypress Semiconductor is a semiconductor design and manufacturing company. It began operations in 1982 and listed publicly in 1986. Two years later, the company shifted over to the New York Stock Exchange under the symbol, (NYSE: CY). Corporation (NYSE NYSE See: New York Stock Exchange :CY) today announced that revenue for the 2003 fourth quarter was $236.0 million, up 9% from prior-quarter revenue of $216.6 million and up 35% from year-ago fourth-quarter revenue of $174.4 million. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the 2003 fourth quarter was $24.9 million, resulting in diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.16, compared with prior-quarter diluted earnings per share of $0.08 and a year-ago fourth-quarter loss per share of $0.12. Including amortization of intangibles and other acquisition-related, restructuring and special charges and credits, Cypress posted GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income of $23.2 million for the 2003 fourth quarter, resulting in diluted earnings per share of $0.15, compared with prior-quarter earnings per share of $0.12 and a year-ago fourth-quarter loss per share of $1.02. For the fiscal year 2003, Cypress reported revenue of $836.8 million, an increase of 8% from fiscal year 2002 revenue of $774.7 million. On a pro forma basis, net income for the fiscal year 2003 was $26.9 million, resulting in diluted earnings per share of $0.19, compared with a fiscal year 2002 pro forma net loss of $37.0 million, or $0.30 per share. On a GAAP basis, the net loss for fiscal year 2003 was $5.3 million, resulting in a loss per share of $0.04, compared with a 2002 GAAP net loss of $249.1 million or $2.02 per share. Gross margin for the 2003 fourth quarter increased to 51%, aided by flattening
The flattening, ellipticity, or oblateness of an oblate spheroid is the "squashing" of the spheroid's pole, down towards its equator. of ASP pricing trends after a two-year period of accelerated ASP declines. Cypress ended the quarter with total cash (including cash, investments and restricted cash) of $379.9 million, up by $60.6 million over the third quarter. Cypress President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. T.J. Rodgers said, "The fourth quarter marks our fourth sequential quarterly improvement in revenue and pro forma profit since the 2001-2002 semiconductor recession bottomed in the fourth quarter of 2002. Strengthening end-market demand, particularly in the networking business, and longer lead times have combined to create a strong booking environment, prompting us to increase our market guidance twice during the fourth quarter. Booking momentum has continued into the early part of the first quarter. The book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can in the quarter was 1.12, with all segments posting a book-to-bill of greater than unity." Rodgers continued, "We shipped an all-time record 168.4 million units in the fourth quarter. Strong end-market demand across the board has put some of our products in short supply, particularly our SRAMs and USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. controllers. Last quarter's indications of increased sales on the enterprise side of the networking business have blossomed into a broader-based revival that includes our traditional wireline accounts. I said in the third-quarter report that if the early signs of recovery in the communications business turned into a bona fide [Latin, In good faith.] Honest; genuine; actual; authentic; acting without the intention of defrauding. A bona fide purchaser is one who purchases property for a valuable consideration that is inducement for entering into a contract and without suspicion of being upswing Upswing An upward turn in a security's price after a period of falling prices. , joining the already strong consumer and wireless markets, 2004 would be a solid year for Cypress and the semiconductor industry. At this point, it seems to us that a positive, sustainable trend in networking has materialized, and that the year ahead will be a robust one." MARKET SEGMENTS Wide Area Networks and Storage Area Networks (WAN/SAN) Revenue from the WAN/SAN segment, which accounted for 35% of fourth-quarter revenue, increased 22% from the prior quarter. The segment posted a gross margin of 56%. Earlier signs of improvement in enterprise networking The networking infrastructure in a large enterprise with multiple computer systems and networks of different types is extraordinarily complex. Due to the myriad of interfaces that are required, much of what goes on has little to do with the real data processing of the payroll and orders. have been followed by increases in broader-based networking sales. Cypress experienced positive growth and new design wins in a broad range of products, including specialty memories, framers and synchronous RAMs, and a significant increase in its network search engine business. We expect continued growth in WAN/SAN in the first quarter. Segment highlights include: + Cypress announced two new network search engine (NSE NSE - Network Software Environment: a proprietary CASE framework from Sun Microsystems. ) architectures. The ternary (programming) ternary - A description of an operator taking three arguments. The only common example is C's ?: operator which is used in the form "CONDITION ? EXP1 : EXP2" and returns EXP1 if CONDITION is true else EXP2. content-addressable memory Content-addressable memory (CAM) is a special type of computer memory used in certain very high speed searching applications. It is also known as associative memory, associative storage, or associative array (TCAM (TeleCommunications Access Method) IBM communications software widely used to transfer data between mainframes and 3270 terminals. See access method. )-based Ayama(TM) 20000 NSE is the industry's highest-performance solution at 266 million searches per second (MSPS MSPS Mega-Samples Per Second MSPS Million Samples Per Second MSPS Michigan Society of Professional Surveyors MSPS Modular Synthesis Plug-In System MSPS Million Symbols per Second MSPS mobilization stationing and planning system (US DoD) ). The Sahasra(TM) 50000 family of algorithmic NSEs achieves four times the capacity of the largest TCAM-based NSE. Cypress is the only company to offer both types of search solutions. Cypress enjoyed 39 new NSE designs which went into production in the fourth quarter. Among companies with search engines in production, we now have the broadest customer base outside Cisco. + Cypress announced the availability of Ayama 20000 NSE models, which enable software engineers to perform early prototyping and software development, shortening design cycle time and speeding time to market. The 18-Mbit Ayama 20000 NSE provides support for Intel IXP (1) (Internet EXchange Processor) See IXA. (2) (Internet eXchange Point) A public junction point on the Internet that provides an on-ramp to the Internet as well as a location for carriers to exchange traffic. 2400/2800/2850 network processors. + Cypress sampled 55 new customers for its 18-Mbit family of Quad Data Rate Quad data rate (or quad pumping) is a communication signalling technique wherein data is transmitted at both the rising and falling edges of the clock signal, much the same way DDR technology works, but with two clock signals 90° out of phase from each other, effectively (TM) (QDR QDR Quadrennial Defense Review (US DoD) QDR Quad Data Rate (Memory Technology) QDR Quality Deficiency Report QDR Quality, Durability and Reliability (Toyota Motor Company) (TM)) and QDR II memories, manufactured on its proprietary 0.15-micron RAM7(TM) technology. QDR memories increase system bandwidth in network switches and routers. Cypress increased its QDR shipments fivefold fivefold Adjective 1. having five times as many or as much 2. composed of five parts Adverb by five times as many or as much Adj. 1. quarter on quarter. + Cypress shipped its state-of-the-art POSIC POSIC Partially-Connected Ordered Successive-Interference Cancellation 2GVC GVC Grand View College (Des Moines, IA) GVC Gruppo Volontariato Civile GVC Global Value Chain GVC Gastrovascular Cavity GVC Global Visibility Capability GVC Goddard Voice Control (TM) Packet-Over-SONET Integrated Circuit integrated circuit (IC), electronic circuit built on a semiconductor substrate, usually one of single-crystal silicon. The circuit, often called a chip, is packaged in a hermetically sealed case or a nonhermetic plastic capsule, with leads extending from it for (POSIC(TM)) framer to 11 customers during the quarter. The POSIC2GVC device is the industry's most advanced OC-48 (2.5 gigabits per second (Gbps)) SONET/SDH framer, capable of packing multiple protocols such as Ethernet, Fibre Channel and ESCON (Enterprise Systems CONnection) An IBM S/390 fiber-optic channel that transfers 17 Mbytes/sec over distances up to 60 km depending on connection type. ESCON allows peripheral devices to be located across large campuses and metropolitan areas. (R) onto SONET systems over 16 channels, with bandwidth allocated dynamically according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. need and protocol requirements. + Cypress achieved volume production of its 18-Mbit FLEx72(TM) Dual-Port memory, the highest-density, highest-performance memory of its kind, with 19.2 Gbps of bandwidth. Wireless Terminals and Wireless Infrastructure (WIT/WIN) Revenue from the WIT/WIN segment, which accounted for 29% of fourth-quarter revenue, increased 6% from the prior quarter. The revenue increase is attributable to the continued expansion of our customer base and the ongoing deployment of 2.5G cellular networks. The gross margin for the segment was 44%. We are expecting a modest improvement in WIT/WIN sales in the first quarter, primarily due to market-share gains. Segment highlights include: + Cypress announced the acquisition of Cascade Semiconductor Corporation, a company specializing in one-transistor (1T) Pseudo-SRAM (PSRAM PSRAM Pseudo-Static Random Access Memory PSRAM Pseudo Static Ram ) products for wireless applications, including cell phones. 1T PSRAM devices offer higher density than conventional SRAMs at a lower cost, enabling new features in next-generation phones. The transaction closed January 6, 2004. + Cypress ramped production of its 16-Mbit, second-generation More Battery Life(TM) (MoBL2(TM)) MicroPower(TM) SRAM See static RAM. SRAM - static random-access memory , manufactured with the company's proprietary 0.13-micron RAM8(TM) technology. The CY7C62167/8DV device is the world's smallest low-power 16-Mbit SRAM, increasing battery life, talk time and data storage capabilities in cell phones. Computation and Consumer Revenue from the computation and consumer segment, which accounted for 32% of fourth-quarter revenue, was essentially flat from the prior quarter and posted a gross margin of 50%. Seasonal weakness in the consumer business was offset by strong sales of high-speed USB controllers. We expect first-quarter revenue to remain seasonally flat. Highlights include: + Cypress announced full production of its WirelessUSB(TM) LS solution -- the industry's most affordable 2.4-GHz radio system-on-a-chip -- and its associated WirelessUSB LS development kit for mice, keyboards, game controllers, remote controls and other cordless devices. Priced under $2 in volume quantities, WirelessUSB LS eclipses the price/performance benefits of Bluetooth(R), ZigBee(TM) and proprietary 27-MHz solutions. Electronic Products, a U.S. trade publication, named WirelessUSB LS its 2003 Product of the Year, the third such award the product has received. + Cypress unveiled a high-performance reference design kit targeting USB streaming video A one-way video transmission over a data network. It is widely used on the Web as well as company networks to play video clips and video broadcasts. Computers in home networks stream video to digital media hubs connected to a home theater. applications. The reference design extends the plug-and-play simplicity of USB to more complex, bandwidth-hungry applications, including USB-enabled television tuners, personal video recorders See DVR. and video compression Encoding digital video to take up less storage space and transmission bandwidth. See video codec and data compression. video compression - Compression of sequences of images. devices. + Cypress and Twin Paradox In physics, the twin paradox refers to a thought experiment in Special Relativity, in which a person who makes a journey into space in a high-speed rocket will return home to find they have aged less than an identical twin who stayed on Earth. jointly developed the industry's first dual-ported, CompactFlash(R) USB host adapter Also called a "controller" or "host bus adapter," it is a device that connects one or more peripheral units to a computer. It is typically an expansion card that plugs into the bus. IDE and SCSI are examples of peripheral interfaces that call their controllers host adapters. See host. card for personal digital assistants (PDAs). The card enables mobile professionals to hook up their PDAs to multiple USB devices, such as miniature hard drives and full-size keyboards and printers. + In the timing technology market, Cypress sampled clocks with voltage-controlled crystal oscillators An oscillator that uses a quartz crystal to generate a frequency. Such devices generally output a fixed frequency, but some can be controlled by a tuning voltage over a small range. Contrast with VCO. (VCXOs). These devices target set-top box The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. , HDTV (High Definition TV) A set of digital television (DTV) standards that offer the highest resolution and sharpest picture. Although some HDTV sets are available in standard (rather square) screen sizes, the overwhelming majority of sets are wide screen, which eliminates , plasma display Also called "gas discharge display," a flat-screen technology that uses tiny cells lined with phosphor that are full of inert ionized gas (typically a mix of xenon and neon). Three cells make up one pixel (one cell has red phosphor, one green, one blue). TV, liquid crystal display liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. TV and DVD-R (DVD-Recordable) A write-once (read only) DVD disc for both movies and data endorsed by the DVD Forum. DVD-Rs are often called "DVD Dash Rs" or "DVD Minus Rs" to distinguish them from the competing "Plus R" format (see DVD+R). applications. These markets are expected to grow as new services emerge for Internet television Internet television (or Internet TV) is television distributed via the Internet. Overview In the past, television was only distributed by cable, satellite, or terrestrial systems. and other interactive services. + Cypress sampled the CY28411 clock for portable PCs using Intel's Alviso chipset. Supporting the Tejas processor, the new device clocks PCI Express A high-speed peripheral interconnect from Intel introduced in 2002. Note that although sometimes abbreviated "PCX," PCI Express is not the same as "PCI-X" (see PCI-SIG and PCI-X for comparison). As a result of the confusion, "PCI-E" or "PCIe" is the accepted abbreviation. (TM) components and is backward-compatible with legacy PCI (1) (Payment Card Industry) See PCI DSS. (2) (Peripheral Component Interconnect) The most widely used I/O bus (peripheral bus). (TM). The CY28411 also integrates state-of-the-art spread-spectrum technology for electromagnetic interference See EMI. (EMI (ElectroMagnetic Interference) An electrical disturbance in a system due to natural phenomena, low-frequency waves from electromechanical devices or high-frequency waves (RFI) from chips and other electronic devices. Allowable limits are governed by the FCC. ) reduction. + Cypress sampled the CY28326 clock and the CY28354 memory clock buffer to support VIA Technologies' PT880 chipset. Operating at 800 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. , these devices generate the timing requirements for Pentium(R) 4-based systems with a dual double data rate (DDR (Double Data Rate) Refers to an SDRAM memory chip that increases performance by doubling the effective data rate of the frontside bus. For more details, see SDRAM. DDR - Double Data Rate Random Access Memory ) memory architecture. Cypress Subsidiaries Revenue from Cypress subsidiaries, which accounted for 4% of fourth-quarter revenue, was up 7% from the prior quarter. The subsidiaries posted a gross margin of 74%. Cypress anticipates continued progress in the performance of its subsidiaries as new products from the group reach the marketplace. Segment highlights include: + SunPower Corporation, which produces the world's most-efficient, low-cost silicon solar cells, increased the production of its A-300 solar cells at Cypress's Fab 7 pilot line in Round Rock, Texas. The revolutionary A-300 cells are based on a unique rear-contact design that maximizes the working cell area, hides unsightly un·sight·ly adj. un·sight·li·er, un·sight·li·est Unpleasant or offensive to look at; unattractive. See Synonyms at ugly. un wires and makes automated production easier. The National Renewable Energy Laboratory The National Renewable Energy Laboratory (NREL), located in Golden, Colorado, as part of the U.S. Department of Energy, is the United States' primary laboratory for renewable energy and energy efficiency research and development. (NREL NREL National Renewable Energy Laboratory NREL Natural Resource Ecology Laboratory (Colorado State University, Fort Collins, CO) ) recently measured an A-300 solar cell at 21.5% efficiency under standard test conditions. The figure is a world record for production silicon solar cells; competing products are in the 12%-15% range. + SunPower installed a five-kilowatt solar power system at the NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. Dryden Flight Research Center The Dryden Flight Research Center (DFRC), located inside Edwards Air Force Base, is an aeronautical research center operated by NASA. On March 26, 1976 it was named in honor of the late Hugh L. near California's Edwards Air Force Base Edwards Air Force Base, U.S. military installation, 301,000 acres (121,805 hectares), S Calif., NE of Lancaster; est. 1933. It is one of the largest air force bases in the United States and has the world's longest runway. . The project, which is the first to use A-300 solar cells, is a key milestone as SunPower moves toward volume production later in 2004. The SunPower system at NASA Dryden will provide clean electricity while helping to educate visitors about the benefits of renewable energy Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. . NASA has partnered with SunPower on a range of projects in recent years: SunPower solar cells were used on the NASA-sponsored "Helios" solar-powered airplane that flew to a record altitude of 96,863 feet in 2001. Conclusion Rodgers said, "The recovery is progressing, but is still in its early phase. Strong consumer and wireless sales in the third quarter of 2003 have now been followed by a significant rebound in networking during the fourth quarter. We expect the current strength in our markets to preclude the usual seasonal first-quarter revenue dip, allowing us to grow revenue in the first quarter of 2004." About Cypress Cypress Semiconductor Corporation (NYSE:CY) is Connecting from Last Mile to First Mile(TM) with high-performance solutions for personal, network access, enterprise, metro switch and core communications-system applications. Cypress Connects(TM) using wireless, wireline, digital and optical transmission standards, including USB, Fibre Channel, SONET/SDH, Gigabit Ethernet An Ethernet standard that transmits at 1 Gbps. Used mostly to connect high-end workstations and servers as well as for network backbones, Gigabit Ethernet transmits full duplex from point to point using switches and half duplex in a shared environment (CSMA/CD) using a hub. and DWDM (Dense WDM) The term given to wavelength division multiplexing (WDM) when significantly more channels were being added. Since WDM is increasingly more "dense" all the time, both terms are used synonymously. See WDM. DWDM - wavelength division multiplexing . Leveraging its process and system-level expertise, Cypress makes industry-leading physical layer devices, framers and network search engines, along with a broad portfolio of high-bandwidth memories, timing technology solutions and reconfigurable mixed-signal arrays. More information about Cypress is accessible online at www.cypress.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Statements herein that are not historical facts and that refer to Cypress's plans and expectations for the first quarter of 2004 and the future are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " involving risks and uncertainties, including but not limited to: the recovery, the expected growth for our WAN/SAN segment in the first quarter, the expectation of modest sales improvement in the WIT/WIN segment in the first quarter primarily due to market-share gains, the expectation of seasonally flat revenue in the first quarter in the computation and consumer segment, expected continued progress in subsidiary segment performance, expected market growth, our expected revenue growth in the first quarter of 2004, the belief that 2004 would be a strong year for Cypress and the semiconductor industry, and that a positive, sustainable trend in networking has materialized. Actual results may differ materially from Cypress's projections. Please refer to Cypress's Securities and Exchange Commission filings for a discussion of such risks. Cypress and the Cypress logo are registered trademarks of Cypress Semiconductor Corporation. Ayama, Sahasra, FLEx72, RAM7, POSIC2GVC, POSIC, More Battery Life, MoBL2, MicroPower, WirelessUSB, RAM8, Connecting from Last Mile to First Mile and Cypress Connects are trademarks of Cypress Semiconductor Corporation. PCI Express and PCI are trademarks of PCI-SIG. ZigBee is a trademark of the ZigBee Alliance. Quad Data Rate(TM) SRAM and QDR(TM) SRAM comprise a new family of products developed by Cypress, IDT IDT Integrated Device Technology, Inc. (Santa Clara, CA, USA) IDT I Don't Think IDT Identity Theft IDT Interrupt Descriptor Table IDT Integrated DNA Technologies IDT Inactive Duty Training IDT Instructional Design & Technology , NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. and Samsung. ESCON is a registered trademark of International Business Machines Corporation. Bluetooth is a registered trademark of the Bluetooth Special Interest Group The Bluetooth Special Interest Group (SIG) is the body that oversees the development of Bluetooth standards and the licensing of the Bluetooth technologies and trademarks to manufacturers. . Pentium is a registered trademark of Intel Corporation (company) Intel Corporation - A US microelectronics manufacturer. They produced the Intel 4004, Intel 8080, Intel 8086, Intel 80186, Intel 80286, Intel 80386, Intel 486 and Pentium microprocessor families as well as many other integrated circuits and personal computer networking . CompactFlash is a registered trademark of the CompactFlash Association (CompactFlash Association, Palo Alto, CA, www.compactflash.org) A membership organization founded in 1995 by SanDisk, Canon, Motorola, HP and others. Its goal is to promote CompactFlash as the premier open standard for storage for digital appliances and handheld devices. See CompactFlash. . All other trademarks or registered trademarks are the property of their respective owners.
CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
Dec 28, Dec 29,
2003 2002(c)
----------- -----------
ASSETS
Cash, cash equivalents, and
investments(a) $379,867 $206,891
Accounts receivable, net 113,568 89,355
Inventories 72,085 92,721
Property and equipment, net 442,887 496,566
Goodwill and other intangible assets 375,483 411,284
Other assets 183,608 256,095
----------- -----------
Total assets $1,567,498 $1,552,912
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $155,693 $173,674
Deferred income on sales to
distributors 20,104 22,075
Convertible subordinated notes 668,652 468,900
Income tax liabilities 101,254 151,367
Other liabilities 52,607 63,273
----------- -----------
Total liabilities 998,310 879,289
Stockholders' equity(b) 569,188 673,623
----------- -----------
Total liabilities and stockholders'
equity $1,567,498 $1,552,912
=========== ===========
(a) Cash, cash equivalents, and investments includes restricted
amounts totaling $62.8 million and $62.4 million as of December
28, 2003 and December 29, 2002, respectively. Approximately $15.6
million of investments related to Cypress's key employee deferred
compensation plan, at December 29, 2002, has been reclassified to
Other assets to conform with our current presentation.
(b) Common stock, $.01 par value, 650,000 and 650,000 shares
authorized; 120,483 and 123,743 outstanding as of December 28,
2003 and December 29, 2002, respectively.
(c) Certain prior year amounts have been reclassified to conform with
current year presentation.
CYPRESS SEMICONDUCTOR CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
THREE MONTHS ENDED
(Unaudited)
-------------------------------
Dec 28 Dec 29 Sep 28
2003 2002 2003
--------- ---------- ---------
Revenues $236,031 $174,449 $216,642
Costs of revenues 115,090 102,713 111,444
--------- ---------- ---------
Gross margin 120,941 71,736 105,198
Operating expenses:
Research and development 58,795 61,138 61,175
Selling, general and
administrative 34,135 31,828 33,007
--------- ---------- ---------
Total operating costs 92,930 92,966 94,182
--------- ---------- ---------
Operating income (loss) 28,011 (21,230) 11,016
Net interest income (expense) and other (585) 515 334
--------- ---------- ---------
Income (loss) before income tax 27,426 (20,715) 11,350
Income tax (provision) benefit (2,530) 5,801 (299)
--------- ---------- ---------
Net income (loss) $24,896 $(14,914) $11,051
========= ========== =========
Basic net income (loss) per share $0.21 $(0.12) $0.09
Diluted net income (loss) per share $0.16 $(0.12) $0.08
Shares used in calculation:
Basic 119,940 123,731 118,116
Diluted 168,988 123,731 163,175
Reconciliation of our GAAP Net Income (Loss) to our Pro
Forma Net Income (Loss):
GAAP Net Income (Loss) $23,163 $(126,157) $17,267
Adjustments:
Cost of revenues (acquisition related
costs) 139 438 55
Restructuring costs (4,337) 44,528 (5,523)
Amortization of intangibles 9,441 11,966 9,444
Operating expenses (acquisition
related costs) 2,130 2,650 985
Employee loan reserve - 98 -
(Gain) loss on retirement of bonds - - 6,278
Impairments, asset write-downs and
other (3,510) 43,807 (17,876)
Tax effects on pro forma adjustments (2,130) 7,756 421
--------- ---------- ---------
Pro Forma Net Income (Loss) $24,896 $(14,914) $11,051
========= ========== =========
TWELVE MONTHS ENDED
(Unaudited)
----------------------
Dec 28 Dec 29
2003 2002
----------- ----------
Revenues $836,756 $774,746
Costs of revenues 435,056 441,733
----------- ----------
Gross margin 401,700 333,013
Operating expenses:
Research and development 238,832 249,582
Selling, general and administrative 129,565 132,952
----------- ----------
Total operating costs 368,397 382,534
----------- ----------
Operating income (loss) 33,303 (49,521)
Net interest income (expense) and other (3,554) (1,871)
----------- ----------
Income (loss) before income tax 29,749 (51,392)
Income tax (provision) benefit (2,829) 14,390
----------- ----------
Net income (loss) $26,920 $(37,002)
=========== ==========
Basic net income (loss) per share $0.22 $(0.30)
Diluted net income (loss) per share $0.19 $(0.30)
Shares used in calculation:
Basic 121,509 123,112
Diluted 149,590 123,112
Reconciliation of our GAAP Net Income (Loss) to our Pro
Forma Net Income (Loss):
GAAP Net Income (Loss) $(5,331) $(249,098)
Adjustments:
Cost of revenues (acquisition related costs) 693 1,632
Restructuring costs (6,685) 38,251
Amortization of intangibles 37,715 44,111
Operating expenses (acquisition related costs) 13,143 42,265
Employee loan reserve 241 14,799
(Gain) loss on retirement of bonds 7,524 (5,946)
Impairments, asset write-downs and other (20,373) 59,756
Tax effects on pro forma adjustments (7) 17,228
----------- ----------
Pro Forma Net Income (Loss) $26,920 $(37,002)
=========== ==========
To supplement the consolidated financial results prepared under
generally accepted accounting principles ("GAAP"), Cypress uses a
non-GAAP conforming, or pro forma, measure of net income that is GAAP
net income adjusted to exclude certain costs, expenses and gains. Pro
forma net income gives an indication of Cypress's baseline performance
before gains, losses or other charges that are considered by
management to be outside of the company's core operating results. In
addition, pro forma net income (loss) is among the primary indicators
management uses as a basis for planning and forecasting future
periods. Cypress computes pro forma net income (loss) by adjusting
GAAP net income (loss) with the impact of acquisition-related charges
(intangible asset amortization, deferred stock compensation and
charges related to milestone achievements), restructuring charges, and
other non-recurring charges and gains. Cypress provides pro forma
results as additional information for its operating results. These
measures are not in accordance with, or an alternative for, generally
accepted accounting principles and may be different from pro forma
measures used by other companies.
CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
THREE MONTHS ENDED
(Unaudited)
-------------------------------
Dec 28 Dec 29 Sep 28
2003 2002 2003
--------- ---------- ---------
Revenues $236,031 $174,449 $216,642
Costs of revenues 115,229 103,151 111,499
Cost of revenues 115,090 102,713 111,444
Acquisition related costs 139 438 55
--------- ---------- ---------
Gross margin 120,802 71,298 105,143
Operating expenses:
Research and development 58,795 61,138 61,175
Selling, general and
administrative 34,135 31,828 33,007
Restructuring costs (4,337) 44,528 (5,523)
Amortization of intangibles 9,441 11,966 9,444
Acquisition related costs 2,130 2,650 985
Employee loan reserve - 98 -
Non-recurring charges (3,500) 40,765 -
--------- ---------- ---------
Total operating costs 96,664 192,973 99,088
--------- ---------- ---------
Operating income (loss) 24,138 (121,675) 6,055
Net interest income (expense) and other (575) (2,527) 11,932
Gain (loss) on retirement of bonds - - (6,278)
Impairments, asset write-downs and
other 10 (3,042) 17,876
Net interest income (expense) and
other (585) 515 334
--------- ---------- ---------
Income (loss) before income tax 23,563 (124,202) 17,987
Income tax (provision) benefit (400) (1,955) (720)
--------- ---------- ---------
Net income (loss) $23,163 $(126,157) $17,267
========= ========== =========
Basic net income (loss) per share $0.19 $(1.02) $0.15
Diluted net income (loss) per share $0.15 $(1.02) $0.12
Shares used in calculation:
Basic 119,940 123,731 118,116
Diluted 168,988 123,731 163,175
TWELVE MONTHS ENDED
(Unaudited)
----------------------
Dec 28 Dec 29
2003 2002
----------- ----------
Revenues $836,756 $774,746
Costs of revenues 435,749 443,365
Cost of revenues 435,056 441,733
Acquisition related costs 693 1,632
----------- ----------
Gross margin 401,007 331,381
Operating expenses:
Research and development 238,832 249,582
Selling, general and administrative 129,565 132,952
Restructuring costs (6,685) 38,251
Amortization of intangibles 37,715 44,111
Acquisition related costs 13,143 42,265
Employee loan reserve 241 14,799
Non-recurring charges (3,500) 40,765
----------- ----------
Total operating costs 409,311 562,725
----------- ----------
Operating income (loss) (8,304) (231,344)
Net interest income (expense) and other 5,795 (14,916)
Gain (loss) on retirement of bonds (7,524) 5,946
Impairments, asset write-downs and other 16,873 (18,991)
Net interest income (expense) and other (3,554) (1,871)
----------- ----------
Income (loss) before income tax (2,509) (246,260)
Income tax (provision) benefit (2,822) (2,838)
----------- ----------
Net income (loss) $(5,331) $(249,098)
=========== ==========
Basic net income (loss) per share $(0.04) $(2.02)
Diluted net income (loss) per share $(0.04) $(2.02)
Shares used in calculation:
Basic 121,509 123,112
Diluted 121,509 123,112
Prepared in accordance with GAAP
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