Cypress Reports Fourth Quarter 2005 Results.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. -- 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). Corp. (NYSE NYSE See: New York Stock Exchange :CY) today announced that revenue for the 2005 fourth quarter was $238.5 million, up 5.0% from prior quarter revenue of $227.1 million and up 13.5% from year-ago fourth-quarter revenue of $210.2 million. Cypress Cypress, city, United States Cypress (sī`prəs), city (1990 pop. 42,655), Orange co., S Calif. near Long Beach; inc. 1956. Forest Lawn–Cypress, a branch of the famous cemetery in Glendale, Calif. posted a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss of $2.2 million in the 2005 fourth quarter, or a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share of $0.02. This compares with last quarter's diluted loss per share of $0.04. Diluted loss per share in the year-ago fourth quarter was $0.22 per share. On an adjusted-GAAP basis -- excluding the amortization of intangibles and other acquisition-related, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and special charges and credits -- the 2005 fourth quarter resulted in a net profit of $5.8 million, or 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 $0.04. This compares with the prior quarter's diluted earnings per share of $0.03. Diluted loss per share in the year-ago fourth quarter was $0.14. Gross margin for the fourth quarter was 41.1%, down 1.0% from the previous quarter, and was impacted by fab manufacturing constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. and a one-time $3.4 million back-end expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. charge associated with the ramp of the PSoC(R) (Programmable System-on-Chip(TM)) product to high volume. Net inventory was $73.6 million, down 4.5%, or $3.5 million, from the previous quarter. For the fiscal year 2005, Cypress posted total revenue of $886.4 million, a decrease of 6.5% from fiscal year 2004 revenue of $948.4 million. On a GAAP basis, Cypress's total year net loss was $92.2 million, or a diluted loss per share of $0.69. On an adjusted-GAAP basis, Cypress's total year net loss was $17.3 million, or a diluted loss per share of $0.13. The big difference between GAAP and adjusted-GAAP results for the year was due to the amortization of acquisition-related intangibles ($40.0 million), and a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. ($27.4 million). 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 marked our third straight quarter of sequential revenue growth, providing year-on-year growth of 13.5%. In addition, we achieved our third straight quarter of profit improvement and earned $0.04 per share on an adjusted-GAAP basis -- a substantial improvement over the prior year but not yet achieving our model profitability of 20%. "Investments in our subsidiaries and new products paid off well in 2005. Our subsidiary, SunPower, went public in November 2005 in one of the most successful IPOs of the year. Cypress holds 52 million shares (85%) of SunPower, worth $1.77 billion at quarter-end. Our subsidiary, Cypress MicroSystems Cypress MicroSystems (CMS) markets high-performance, field Programmable System-on-a-Chip (PSoC) integrated M8 micro-based solutions. CMS is based in Lynnwood, near Seattle, Washington and was established as a subsidiary of Cypress Semiconductor Corporation in the fourth quarter of (CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. ), inventor INVENTOR. One who invents or finds out something. 2. The patent laws of the United States authorize a patent to be issued to the original inventor; if the invention is suggested by another, he is not the inventor within the meaning of those laws; but in that of the PSoC device, reached $23.8 million in revenue in the quarter with 16.2% pre-tax profit, resulting in the acquisition of the 6.5% minority shareholder (employee) ownership by Cypress. CMS is now a business unit in our Consumer and Computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. Division. We expect both of these businesses to double in size in 2006. "In addition to the increased focus on our successful new business units, Cypress has taken a first step in the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of business units that are no longer aligned with our core objectives, by agreeing to sell the assets of our Network Search Engine (NSE NSE - Network Software Environment: a proprietary CASE framework from Sun Microsystems. ) business to NetLogic Microsystems for $50 million plus a potential $20 million earnout Earnout A contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals. Notes: The financial goals are usually stated as a percentage of gross sales or earnings. . We expect to garner a significant cost reduction from this transaction."
BUSINESS UNITS
Business Unit Summary Financials
Three Months Ended
January 1, 2006
CCD(3) DCD(3) MID(3) SUNPOWER OTHER TOTAL
REVENUE ($M) $90.0 $33.8 $75.6 $29.3 $9.8 $238.5
REVENUE % 37.7 14.2 31.7 12.3 4.1 100.0
GROSS MARGIN % 45.4 63.7 30.2 19.8 70.2 41.1
ADJUSTED-GAAP
EPS(1) $0.07 $0.02 ($0.05) $0.01 ($0.01) $0.04
GAAP EPS( 2) ($0.02)
Three Months Ended
October 2, 2005
CCD(3) DCD(3) MID(3) SUNPOWER OTHER TOTAL
REVENUE ($M) $82.2 $37.1 $76.5 $21.9 $9.4 $227.1
REVENUE % 36.2 16.4 33.7 9.6 4.1 100.0
GROSS MARGIN % 51.0 63.2 25.4 18.1 71.9 42.1
ADJUSTED-GAAP
EPS(1) $0.09 $0.02 ($0.07) $0.00 ($0.01) $0.03
GAAP EPS(2) ($0.04)
(1) Adjusted-GAAP EPS, shown here on a fully diluted basis, excludes
the amortization of intangibles and other acquisition-related,
restructuring and special charges and credits. Adjusted-GAAP EPS
by segment is calculated using the diluted weighted average share
count utilized for the consolidated reported results. Management
evaluates the company using the same weighted average share count
as utilized for consolidated reporting purposes.
(2) There is not a directly comparable GAAP measure for the segment
adjusted-GAAP EPS as management does not allocate GAAP
reconciliation items to the segments. The most directly comparable
GAAP measure is at the consolidated results level which is
presented above.
(3) CCD is the Consumer and Computation Division; DCD is the Data
Communications Division; MID is the Memory and Imaging Division.
Consumer and Computation Division (CCD CCD in full charge-coupled device Semiconductor device in which the individual semiconductor components are connected so that the electrical charge at the output of one device provides the input to the next device. ) CCD revenue was $90.0 million in the fourth quarter, up 9.5% from the prior quarter, consistent with our expectations. Revenue from the division accounted for 37.7% of fourth-quarter revenue -- CCD continues to be our largest and most profitable division. Growth in Q4 was driven by broad strength in the consumer segment, led by high demand for our PSoC devices and general-purpose clocks. Revenue for Q1 is expected to be flat to slightly down due to normal seasonality in consumer end markets. CCD posted a gross margin of 45.4% in the fourth quarter, down from 51.0% in the third quarter, due primarily to a one-time charge to expedite the first very large wave of PSoC material through a subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts assembly house. We expect gross margin to return to the 50% range in Q1. The division contributed $0.07(1) earnings per share to our adjusted-GAAP net income in the fourth quarter, compared with $0.09(1) in the third quarter. CCD's contributions to earnings per share are expected to be approximately the same in the first quarter. Fourth-quarter highlights for the division include: -- Cypress shipped its 50 millionth PSoC mixed-signal array, reaching more than 1,000 customers in the process. Recent growth in PSoC shipments has been accelerated by a broad demand for the PSoC-based CapSense solution, a capacitive touch sensor A device that measures or detects a real-world condition, such as motion, heat or light and converts the condition into an analog or digital representation. An optical sensor detects the intensity or brightness of light, or the intensity of red, green and blue for color systems. interface that replaces costly, mechanical buttons, switches and sliders sliders a species of tortoise kept as pets. They have a black shell and a red stripe behind the eye. Called also Chrysemys scripta elegans, red-eared sliders. with simple, touch-sensitive controls. -- LG Electronics Mobile Communications Company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. designed CapSense into its family of LG-KV5900 Cyon(TM) Slider A block of material that holds the read/write head of a magnetic disk. See flying head. mobile phones. The new interface enables the phone's slick See SLC. , nine-button, capacitive touch-based front panel, which is more reliable than exposed buttons and switches that can be damaged by spills and environmental wear-and-tear. -- Nintendo Co. Ltd. has selected Cypress's PSoC mixed-signal array for its new Game Boy(R) Micro portable game system. The PSoC array manages multiple system control functions, reducing board size, design time and cost. -- Horizon Hobby Horizon Hobby, Inc. is the second largest hobby product distributor in the United States and is headquartered in Champaign, Illinois. It currently manufactures various R/C (radio control) toys, as well as model trains, rockets, and die-cast models. , a maker of radio-controlled toys, has selected Cypress's 2.4-GHz Programmable Radio-on-a-Chip(TM) (PRoC(TM)) for its model planes and helicopters. PRoC, which is basically a PSoC chip with a radio link, enables the precise control of model aircraft at a distance of up to 500 meters. PRoC uses Direct Sequence Spread Spectrum (DSSS (Direct Sequence Spread Spectrum) See spread spectrum. ) technology to significantly improve system range, power consumption, latency (1) The time between initiating a request in the computer and receiving the answer. Data latency may refer to the time between a query and the results arriving at the screen or the time between initiating a transaction that modifies one or more databases and its completion. , and immunity immunity, ability of an organism to resist disease by identifying and destroying foreign substances or organisms. Although all animals have some immune capabilities, little is known about nonmammalian immunity. to noise and interference. -- Cypress's PRoC device won EDN EDN Endothelin EDN Eosinophil-Derived Neurotoxin EDN European Documentary Network (Denmark) EDN Earth Day Network EDN Electrodesiccation EDN Electrical Design News (periodical) China magazine's "Innovation of the Year" award in the "Digital ICs and Programmable Devices" category. China-based Electronic Engineering and Product World named PRoC the "Best New Embedded System Any electronic system that uses a CPU chip, but that is not a general-purpose workstation, desktop or laptop computer. Such systems generally use microprocessors, or they may use custom-designed chips or both. Technology," beating out products from Texas Instruments See TI. (company) Texas Instruments - (TI) A US electronics company. A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. , Microchip (1) Another term for a microminiaturized integrated circuit (a "chip"). (2) To insert an RFID tag beneath the skin of an animal. It is expected that some day, humans will be microchipped. , MIPS (Million Instructions Per Second) The execution speed of a computer. For example, .5 MIPS is 500,000 instructions per second; 100 MIPS is a hundred million instructions per second. , Philips, Maxim Maxim (măk`sĭm), name of a family of inventors and munition makers. Sir Hiram Stevens Maxim, 1840–1916, was born near Sangerville, Maine. and Xilinx. -- Cypress introduced WirelessUSB LP, a low-power, low-cost 2.4-GHz radio system on a chip, for use in keyboards, mice, remote controls, gamepads and other battery-operated devices. The solution extends battery life in wireless mice to more than a year. WirelessUSB LP features a data rate of up to 1 megabit per second A megabit per second (abbreviated as Mbit/s, Mbps, or mbps) is a unit of data transfer rate equal to 1,000,000 bits per second. Because there are 8 bits in a byte, a transfer speed of 8 megabits per second (8 Mbps) is equivalent to 1,000,000 bytes (Mbps), the rate required for applications such as wireless headsets See headset. . -- Cypress debuted the industry's first industrial grade, high-speed programmable 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. 2.0 microcontroller A single chip that contains the processor (the CPU), non-volatile memory for the program (ROM or flash), volatile memory for input and output (RAM), a clock and an I/O control unit. . Capable of operating at temperatures from -40 C to +105 C, the EZ-USB FX2LP(TM) device targets automobile telematics Originally coined to mean the convergence of telecommunications and information processing, the term later evolved to refer to automation in automobiles. GPS navigation, integrated hands-free cellphones, wireless communications and automatic driving assistance systems all come under the , navigation and entertainment systems; radio infrastructure and military equipment; and industrial measurement and automation systems. -- Cypress also announced the industry's smallest, high-speed USB 2.0 programmable microcontroller. The 5-mm(2) device enables the design of smaller mobile phones, portable media players, PDAs and webcams. EZ-USB LP uses a proprietary, 0.13-micron process technology to reduce dynamic and standby power Standby power, also called Vampire power, refers to the electric power consumed by electronic appliances in a standby mode. A very common "electricity vampire" is a power adaptor built on a plug with no power switch. consumption nearly 50 percent vs. competing solutions. -- Cypress introduced its enCoRe(TM) III (Enhanced Component Reduction) family of USB microcontrollers, adding 16-channel/10-bit analog-to-digital converters to serve demanding, full-speed USB applications, including voice-over-IP handsets and USB gamepads. Data Communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. Division (DCD (Document Content Description) An XML schema language from Textuality, Microsoft and IBM that is implemented as an RDF vocabulary. It supports data typing and schema reuse and is the successor to XML-Data. See XML schema, RDF and XML. ) DCD revenue was $33.8 million in the fourth quarter, down 8.9% from the prior quarter, consistent with our expectation. Revenue from the division accounted for 14.2% of fourth-quarter revenue. Revenue declined due to customer buying patterns in specialty memories and network search engines. DCD revenue is expected to decrease in Q1 due to the planned divestiture of the NSE business. DCD posted a gross margin of 63.7% in the fourth quarter, up slightly from 63.2% in the third quarter. The division contributed $0.02(1) earnings per share to our adjusted-GAAP net income in the fourth quarter, compared with $0.02(1) in the third quarter. DCD's contributions to earnings per share are expected to remain consistent in the first quarter. Fourth-quarter highlights for the division include: -- Cypress announced the acquisition of its standard NSE product lines by NetLogic Microsystems (NETL NETL - A semantic network language, for connectionist architectures. ["NETL: A System for Representing and Using Real-World Data", S.E. Fahlman, MIT Press 1979]. ) for approximately $50 million in NETL stock upon closing, and, if certain revenue targets are achieved in a 12-month time period, up to an additional $10 million in cash and approximately $10 million in NETL stock. The acquisition includes the Ayama(TM) 10000, Ayama 20000, and NSE70000 Network Search Engine families as well as the Sahasra(TM) 50000 algorithmic al·go·rithm n. A step-by-step problem-solving procedure, especially an established, recursive computational procedure for solving a problem in a finite number of steps. search engine family. Cypress will retain and continue to support its custom TCAM (TeleCommunications Access Method) IBM communications software widely used to transfer data between mainframes and 3270 terminals. See access method. 1 and TCAM2 products. The deal is scheduled to close late in the first quarter or early in the second quarter of 2006, pending regulatory and legal approval. Memory and Imaging Division (MID) MID revenue was $75.6 million in the fourth quarter, down 1.2% from the prior quarter, consistent with our expectations. Revenue from the division accounted for 31.7% of fourth-quarter revenue. Q4 revenue was driven by demand for high-density synchronous Refers to events that are synchronized, or coordinated, in time. For example, the interval between transmitting A and B is the same as between B and C, and completing the current operation before the next one is started are considered synchronous operations. Contrast with asynchronous. SRAMs, particularly 36-Mbit and 72-Mbit densities shipped into high-performance networking applications, as well as MoBL(R) (More Battery Life(TM)) SRAMs for low-power applications. Demand for these products is expected to remain strong in the first quarter, with overall revenue flat to slightly down. MID posted a gross margin of 30.2% in the fourth quarter, compared with 25.4% in the third quarter, a result of improved manufacturing efficiency. The division accounted for an adjusted-GAAP net loss of $0.05(1) per share in the fourth quarter, compared with a net loss per share of $0.07(1) in the third quarter. MID's loss per share is again expected to shrink shrink Vox populi noun A psychiatrist in the first quarter due to higher gross margins and a mix shift to 90-nm manufacturing processes. Fourth-quarter highlights for the division include: -- Cypress sampled two new 9-megapixel CMOS image sensors A CMOS-based chip that records the intensities of light as variable charges similar to a CCD chip. Although initially used in less expensive digital cameras, the quality of CMOS sensors has improved steadily. CMOS sensors have advantages over CCDs. for high-end digital still cameras. The CYIHDSC9000AA (color) and CYIHDSM9000AA (monochrome Also called "mono." Refers to display screens that use one foreground and one background color; for example, black on white, white on black or green on black. The first terminals connected to mainframes and minicomputers were monochrome, and monochrome screens were widely used on early ) sensors
Semiconductor devices wherein minority charge is stored in a spatially defined depletion region (potential well) at the surface of a semiconductor, and is moved about the surface by transferring this charge to similar adjacent wells. , delivering high-end image quality at an economical price. -- Cypress qualified a family of 4-Mbit MoBL SRAMs on its 90-nm, low-leakage technology. The new SRAMs support supply voltages from 1.65V to 5.0V, making them compatible with virtually all micropower systems. Cypress's 90-nm technology enables smaller, faster chips with a significant price/performance advantage relative to the competition. SunPower Corporation SunPower Corp., a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Cypress, went public in November 2005 and is now an independent company listed on Nasdaq under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors SPWR SPWR Special Pressurized-Water Reactor . Cypress continues to be SunPower's majority shareholder, with SunPower results consolidated in Cypress's results. Revenue from SunPower was $29.3 million in the fourth quarter, up 33.8% from the prior quarter, exceeding our expectations. Demand for SunPower's high-efficiency solar products remained very strong; additional manufacturing capacity added during the quarter enabled revenue to grow. SunPower revenue amounted to 12.3% of Cypress's fourth-quarter revenue. Strong demand for solar products and the ramping of additional manufacturing capacity are expected to drive continued revenue growth in the first quarter. SunPower posted a gross margin of 19.8% in the fourth quarter, compared with 18.1% in the third quarter. SunPower accounted for adjusted-GAAP earnings of $0.01(1) per share in the fourth quarter compared with break-even(1) results in the third quarter. SunPower's contribution to earnings per share is expected to increase in the first quarter. Fourth-quarter highlights include: -- SunPower announced a $330 million supply contract with PowerLight Corp. Under the agreement, SunPower will provide custom-designed panels for use in PowerLight's SunTile(TM) roof-integrated solar system solar system, the sun and the surrounding planets, natural satellites, dwarf planets, asteroids, meteoroids, and comets that are bound by its gravity. The sun is by far the most massive part of the solar system, containing almost 99.9% of the system's total mass. for new homes. Deliveries are expected to begin this year as SunPower ramps its manufacturing capacity. The contract extends through 2009. -- SunPower introduced two new high-efficiency inverters. The products convert the direct current generated by solar panels into the AC current used in homes. Rated at 4,600 watts and 5,200 watts respectively, the new inverters target larger solar installations. Both inverters meet or exceed the highest efficiency rating in their class and carry a 10-year warranty. -- A team of students from the University of Colorado University of Colorado may refer to:
Cypress Subsidiaries Revenue from Cypress subsidiaries was $9.8 million in the fourth quarter, up 4.3% from the prior quarter, in line with our expectations. We expect revenue from subsidiaries to be flat to slightly up in the first quarter. The gross margin for our subsidiaries was 70.2% in the fourth quarter, compared with 71.9% in the third quarter. Subsidiary businesses reported a net loss of $0.01(1) per share on an adjusted-GAAP basis in the fourth quarter, compared with a net loss of $0.01(1) in the third quarter. Subsidiary contributions to earnings per share are expected to be flat in the first quarter. -- Silicon Valley Technology Center, the R&D wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. process operation formed to offset the cost of underutilized fab equipment, achieved record revenue of $5.3 million in the quarter. SVTC SVTC Silicon Valley Toxics Coalition SVTC Secure Video Teleconference finished the year with revenue of $20.8 million, up 4.9% from 2004. SVTC doubled its customer base in 2005, capitalizing on third-party demand for access to advanced process development infrastructure. Other Developments -- Cypress announced a foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. partnership with China's Grace Semiconductor Manufacturing Corp., under which GSMC GSMC Great Smoky Mountain Council (Knoxville, Tennessee boy scouts) GSMC Global System for Mobile Communication GSMC Geospatial Standards Management Committee GSMC Ghana State Mining Corporation will leverage Cypress's 0.13-micron and other process technologies to make Cypress chips for a variety of applications. The collaboration Working together on a project. See collaborative software. marks a step forward for Cypress's new flexible manufacturing strategy, enabling it to optimize optimize - optimisation fab utilization and focus on its proprietary 90- and 65-nm processes, where the difference between foundry pricing and internal cost is the greatest. GSMC will provide Cypress with significant capacity to support the rapid growth of its leading products while decreasing its overall capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Qualification of the first product at GSMC is scheduled for the second half of this year. Conclusion Rodgers concluded, "2005 marked the beginning of a period of major strategic change for Cypress. We have revamped much of our data communications-based product portfolio to focus on large, diverse end markets -- such as PCs and peripherals, consumer products, and solar energy solar energy, any form of energy radiated by the sun, including light, radio waves, and X rays, although the term usually refers to the visible light of the sun. -- where we are well-positioned to grow revenue and market share and to increase profitability toward our goal of 20% PBT PBT Provider Backbone Transport (networking technology adding determinism to ethernet) PBT Polybutylene Terephthalate PBT Profit Before Tax PBT Paper Based Test (education) . We are planning to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. our NSE business and have launched a flexible manufacturing strategy to limit fab capital costs and allow for the steep ramps demanded by our consumer end-market customers. These significant changes for Cypress are focused on delivering increased profits and shareholder value. We expect to be able to grow revenue faster than the overall semiconductor market in 2006 and to exceed $1 billion in revenue for only the second time in our history." About Cypress Cypress solutions are at the heart of any system that is built to perform: consumer, computation, data communications, automotive, industrial, and solar power. Leveraging a strong commitment to customer service and performance-based process and manufacturing expertise, Cypress's product portfolio includes a broad selection of wired and wireless USB The wireless version of the universal serial bus (USB). Using ultra-wideband (UWB) technology, wireless USB is designed to provide the same 480 Mbits/sec data rate as USB 2.0 within two meters (6.6 ft.) or 110 Mbps within 10 meters (33 ft.). devices, CMOS image sensors, timing solutions, network search engines, specialty memories, high-bandwidth synchronous and micropower memory products, optical solutions, and reconfigurable mixed-signal arrays. Cypress stock is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker symbol CY. More information about the company is available online at www.cypress.com. Statements herein that are not historical facts and that refer to Cypress and its subsidiaries' plans and expectations for the first quarter of 2006 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. made pursuant to 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. Such statements are based on our current expectations as of the date of the release. Our actual results may differ materially due a variety of uncertainties and risk factors, including but not limited to the business and economic conditions and growth trends in the semiconductor and solar power industries, the state of the global economy, our ability to roll-out new products, the rate of customer acceptance of Cypress and it's subsidiaries' products, our ability to increase factory utilization, our ability to manage the consequences of natural events such as storms, hurricanes or other extreme weather events, the financial and operational performance of our subsidiaries and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements. We use words such as "anticipates," "believes," "expects," "future," "look forward," "planning," "intends" and similar expressions to identify forward-looking statements that include, but are not limited to, statements related to prices, growth, supply, shipments, new products, profit and revenue. To supplement the consolidated financial results prepared under GAAP, Cypress uses adjusted-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude items related to acquisitions, including amortization of intangibles, in-process research and development and stock-based compensation, employee loan reserves, off-balance sheet lease guarantee impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , restructuring, impairment on investments, gains or losses on investments and other non-recurring costs. Management does not consider these charges part of the day-to-day business or reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the core operational activities of the Company as they result from corporate transactions outside the ordinary course of business. Management uses these adjusted-GAAP measures internally to make strategic decisions, forecast future results and evaluate the Company's current performance. Most analysts covering Cypress use the adjusted-GAAP measures as well. Given management's use of these adjusted-GAAP measures, Cypress believes these measures are important to investors in understanding the Company's current and future operating results as seen through the eyes of management. In addition, management believes these adjusted-GAAP measures are useful to investors in enabling them to better assess changes in Cypress' core business across different time periods. These adjusted-GAAP measures are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with, or an alternative for, GAAP and may be different from adjusted-GAAP measures used by other companies. Cypress, PSoC, MoBL and the Cypress logo are registered trademarks of Cypress Semiconductor Corporation. Programmable System-on-Chip, WirelessUSB, EZ-USB FX2LP, enCoRe, More Battery Life, PRoC, and Programmable Radio-on-Chip are trademarks of Cypress Semiconductor Corporation. SunPower is a registered trademark of SunPower Corporation. Cyon is a trademark of LG Electronics Mobile Communications Company. SunTile is a trademark of PowerLight Corp. Game Boy is a registered trademark of Nintendo Co. Ltd. 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)
Jan 1, Jan 2,
2006 2005
----------- -----------
ASSETS
Cash, cash equivalents, and
investments (a) $393,788 $307,640
Accounts receivable, net 151,213 107,288
Inventories 73,573 99,709
Property and equipment, net 464,656 444,651
Goodwill and other intangible assets 459,496 447,003
Other assets 152,795 166,703
----------- -----------
Total assets $1,695,521 $1,572,994
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $161,713 $179,282
Deferred income 29,404 33,426
Convertible subordinated notes 599,997 599,998
Income tax liabilities 59,590 71,992
Other liabilities 49,378 27,938
----------- -----------
Total liabilities 900,082 912,636
Minority interest 38,304 -
Stockholders' equity (b) 757,135 660,358
----------- -----------
Total liabilities and stockholders'
equity $1,695,521 $1,572,994
=========== ===========
(a) Cash, cash equivalents, and investments includes restricted
amounts totaling $63.5 million and $62.7 million as of January 1,
2006 and January 2, 2005, respectively.
(b) Common stock, $.01 par value, 650,000 and 650,000 shares
authorized; 137,036 and 128,493 shares outstanding as of January
1, 2006 and January 2, 2005, 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
----------------------------- -------------------
Jan 1, Jan 2, Oct 2, Jan 1, Jan 2,
2006 2005 2005 2006 2005
--------- --------- --------- --------- ---------
Revenues $238,473 $210,181 $227,112 $886,396 $948,438
Costs of revenues 140,779 131,442 131,673 528,657 492,058
--------- --------- --------- --------- ---------
Gross margin 97,694 78,739 95,439 357,739 456,380
Operating expenses:
Research and
development 55,609 66,910 56,068 226,760 261,629
Selling, general and
administrative 40,796 37,041 40,045 156,041 141,799
Amortization of
intangibles 5,692 9,361 6,504 27,709 38,898
In-process research
and development
charge - - - 12,300 15,600
Restructuring costs
(credits) (982) 243 713 27,426 (164)
--------- --------- --------- --------- ---------
Total operating
costs 101,115 113,555 103,330 450,236 457,762
--------- --------- --------- --------- ---------
Operating loss (3,421) (34,816) (7,891) (92,497) (1,382)
Net interest income
(expense) and other 501 3,402 1,853 (720) (495)
--------- --------- --------- --------- ---------
Loss before income
tax and minority
interest (2,920) (31,414) (6,038) (93,217) (1,877)
Income tax benefit 1,037 3,316 92 1,339 26,575
Minority interest,
net of tax (275) - - (275) -
--------- --------- --------- --------- ---------
Net income (loss) $(2,158) $(28,098) $(5,946) $(92,153) $24,698
========= ========= ========= ========= =========
Basic net income
(loss) per share $(0.02) $(0.22) $(0.04) $(0.69) $0.20
Diluted net income
(loss) per share $(0.02) $(0.22) $(0.04) $(0.69) $0.17
Shares used in
calculation:
Basic 135,990 127,362 134,175 133,188 124,580
Diluted 136,200 127,362 134,175 133,188 134,130
Reconciliation of GAAP net income (loss) to
adjusted-GAAP net income (loss):
GAAP net income
(loss) $(2,158) $(28,098) $(5,946) $(92,153) $24,698
Reconciling items:
Cost of revenues
(acquisition and
stock compensation
expenses) 301 68 101 659 148
Restructuring costs
(credits) (982) 243 713 27,426 (164)
Amortization of
intangibles 5,692 9,361 6,504 27,709 38,898
In-process research
and development
charge - - - 12,300 15,600
Acquisition and
stock compensation
expenses 2,403 1,253 2,612 5,941 9,084
Synthetic lease -
guarantee accrual 305 1,825 304 1,217 1,825
Employee loan
reserve - - - - (7,752)
Damages claim
settlement - - - - 2,000
Impairments and
other 830 (920) - 1,527 (237)
Tax effects on
adjusted-GAAP
adjustments (480) (1,758) (440) (1,820) (768)
Minority interest
effects on
adjusted-GAAP
adjustments (142) - - (142) -
--------- --------- --------- --------- ---------
Adjusted-GAAP net
income (loss) $5,769 $(18,026) $3,848 $(17,336) $83,332
========= ========= ========= ========= =========
Adjusted-GAAP basic
net income (loss)
per share $0.04 $(0.14) $0.03 $(0.13) $0.67
Adjusted-GAAP
diluted net income
(loss) per share $0.04 $(0.14) $0.03 $(0.13) $0.55
Shares used in
calculation:
Basic 135,990 127,362 134,175 133,188 124,580
Diluted 143,155 127,362 142,403 133,188 167,234
CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP NET INCOME (LOSS) PER SHARE TO ADJUSTED-GAAP
NET INCOME (LOSS) PER SHARE
(In thousands, except per share data)
(Unaudited)
THREE MONTHS TWELVE MONTHS
ENDED ENDED
----------------------- --------------
Jan 1, Jan 2, Oct 2, Jan 1, Jan 2,
2006 2005 2005 2006 2005
------- ------- ------- ------- ------
Basic:
------
GAAP net income (loss) per
share $(0.02) $(0.22) $(0.04) $(0.69) $0.20
Reconciling items:
Cost of revenues (acquisition
and stock compensation
expenses) - - - - -
Restructuring costs (credits) (0.01) - 0.01 0.21 -
Amortization of intangibles 0.04 0.07 0.05 0.21 0.31
In-process research and
development charge - - - 0.09 0.13
Acquisition and stock
compensation expenses 0.02 0.01 0.02 0.04 0.07
Synthetic lease - guarantee
accrual - 0.01 - 0.01 0.01
Employee loan reserve - - - - (0.06)
Damages claim settlement - - - - 0.02
Impairments and other 0.01 - - 0.01 -
Tax effects on adjusted-GAAP
adjustments - (0.01) (0.01) (0.01) (0.01)
Minority interest effects on
adjusted-GAAP adjustments - - - - -
------- ------- ------- ------- ------
Adjusted-GAAP net income (loss)
per share $0.04 $(0.14) $0.03 $(0.13) $0.67
======= ======= ======= ======= ======
Diluted:
--------
GAAP net income (loss) per
share $(0.02) $(0.22) $(0.04) $(0.69) $0.17
Reconciling items:
Cost of revenues (acquisition
and stock compensation
expenses) - - - - -
Restructuring costs (credits) (0.01) - 0.01 0.21 -
Amortization of intangibles 0.04 0.07 0.05 0.21 0.29
In-process research and
development charge - - - 0.09 0.12
Acquisition and stock
compensation expenses 0.02 0.01 0.02 0.04 0.07
Synthetic lease - guarantee
accrual - 0.01 - 0.01 0.01
Employee loan reserve - - - - (0.06)
Damages claim settlement - - - - 0.01
Impairments and other 0.01 - - 0.01 -
Tax effects on adjusted-GAAP
adjustments - (0.01) (0.01) (0.01) (0.01)
Minority interest effects on
adjusted-GAAP adjustments - - - - -
Difference in share count
between diluted GAAP and
diluted adjusted-GAAP - - - - (0.05)
------- ------- ------- ------- ------
Adjusted-GAAP net income (loss)
per share $0.04 $(0.14) $0.03 $(0.13) $0.55
======= ======= ======= ======= ======
CYPRESS SEMICONDUCTOR CORPORATION
SUPPLEMENTAL SEGMENT INFORMATION
(In thousands, except per share and percentage data)
(Unaudited)
THREE MONTHS ENDED
January 1, 2006
------------------------------------------------------
CCD DCD MID SunPower Other Total
-------- -------- -------- --------- ------- ---------
Revenues $89,990 $33,805 $75,559 $29,341 $9,778 $238,473
Gross margin % 45.4% 63.7% 30.2% 19.8% 70.2% 41.1%
Adjusted-GAAP
net income
(loss) - BASIC $9,810 $2,345 $(6,631) $1,045 $(800) $5,769
Adjusted-GAAP
net income
(loss) -
DILUTED $9,810 $2,345 $(6,631) $835 $(800) $5,559
Adjusted-GAAP
basic EPS
Contribution
(1) $0.07 $0.02 $(0.05) $0.01 $(0.01) $0.04
Adjusted-GAAP
diluted EPS
Contribution
(1) $0.07 $0.02 $(0.05) $0.01 $(0.01) $0.04
Reconciliation
of adjusted-
GAAP EPS to
GAAP EPS:
Basic:
------
Adjusted-GAAP
net income per
share $0.04
Reconciling
items: (2)
Restructuring
credits 0.01
Amortization of
intangibles (0.04)
Acquisition and
stock
compensation
expenses (0.03)
Tax effects on
adjusted-GAAP
adjustments -
---------
GAAP net loss
per share $(0.02)
=========
Diluted:
--------
Adjusted-GAAP
net income per
share $0.04
Reconciling
items: (2)
Restructuring
credits 0.01
Amortization of
intangibles (0.04)
Acquisition and
stock
compensation
expenses (0.03)
Tax effects on
adjusted-GAAP
adjustments -
---------
GAAP net loss
per share $(0.02)
=========
(1) Adjusted-GAAP EPS by segment is calculated using the diluted
weighted average share count utilized for the consolidated
reported results. Management evaluates the company utilizing the
same weighted average share count as utilized for consolidated
reporting purposes.
(2) The Company does not allocate GAAP reconciling items to the
segments. Management uses the adjusted-GAAP measures internally
for strategic decision making, forecasting future results and
evaluating the Company's current performance. These adjusted-GAAP
measures exclude the GAAP items listed within the reconciling
section and are not allocated to the segments as management does
not evaluate the company including these GAAP measures. In
addition, the adjusted-GAAP EPS by segment is calculated utilizing
the consolidated weighted average share count used for
consolidated adjusted-GAAP EPS - see (1) above. As such there is
not a directly comparable GAAP measure for the segment
adjusted-GAAP EPS and one is not presented. The most directly
comparable GAAP measure is at the consolidated results level which
is presented above.
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