Cypress Reports Third-Quarter 2014 Results

SAN JOSE, CA -- (Marketwired) -- Oct 16, 2014 -- Cypress Semiconductor Corp. (NASDAQ: CY) today announced its third-quarter 2014 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included:

  • Revenue ($187.5 million), gross margin (53.5%), pretax margin (15.0%) and earnings per share ($0.16) all met non-GAAP guidance
  • Emerging Technologies Division revenue increased 40% sequentially and 153% year-on-year
  • Dividend yield was 4.4% with favorable tax treatment
  • Industrial and Automotive segments remained strong and combined for 45% of revenue

Fellow shareholders:

Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year:

(In thousands, except per-share data)

                                                                            
                           NON-GAAP                        GAAP             
                 ----------------------------  ---------------------------- 
                  Q3 2014   Q2 2014   Q3 2013   Q3 2014   Q2 2014   Q3 2013 
                 --------  --------  --------  --------  --------  -------- 
Revenue          $187,516  $183,601  $188,723  $187,516  $183,601  $188,723 
                                                                            
Gross margin         53.5%     54.0%     53.8%     51.7%     51.9%     48.6%
                                                                            
Pretax margin        15.0%     14.9%     12.5%      7.4%      5.2%     -5.1%
                                                                            
Net income                                                                  
 (loss)          $ 26,538  $ 26,723  $ 22,015  $ 12,840  $  9,527  $ (8,358)
                                                                            
Diluted EPS                                                                 
 (loss per                                                                  
 share)          $   0.16  $   0.16  $   0.14  $   0.08  $   0.06  $  (0.06)
                                                                            

Third-quarter revenue increased 2.1% sequentially, led by growth in our Memory Products Division (MPD) and Emerging Technologies Division (ETD), which is now contributing significantly to Cypress's growth with 40% sequential growth to $7.5 million. All three of our ETD startup businesses grew sequentially and will contribute significantly to revenue growth in 2015. The revenue growth in MPD and ETD was partially offset by ongoing softness in the handset market.

Our non-GAAP pretax profit increased 18.7% year-on-year, partly driven by a 7.0% reduction in non-GAAP operating expenses.

Our cash, cash equivalents and short-term investments increased 5.8% sequentially, demonstrating the fall-through leverage of our current business model.

BUSINESS REVIEW

+ Our non-GAAP consolidated gross margin for the third quarter was 53.5%, down 0.5 percentage points from the previous quarter, primarily due to product mix. Excluding ETD, our core semiconductor gross margin was 55.3%.

+ Net inventory at the end of the third quarter was $88.8 million, flat from the second quarter.

+ 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 September 25, 2014. This dividend was paid on October 16, 2014.

                                                                            
                             NET SALES SUMMARY                              
                        (In  thousands,  except  percentages)                                          
                                                                (Unaudited)                                                                  
                                                                                                                                                        
                                                THREE  MONTHS  ENDED                                                                    
                                ----------------------------------                                                    
                                                                                                                                                        
                                  Sept.  28,        Jun.  29,      Sept.  29,    Sequential      Year-over-  
Business  Unit            2014                2014                2013              Change        Year  Change  
                                ----------    ----------    ----------    ----------    -----------  
PSD(1)                    $      68,750    $      74,676    $      78,135                    -8%                  -12%
MPD(1)                    $      92,179            85,582            88,743                      8%                      4%
DCD(1)                    $      19,091            17,989            18,884                      6%                      1%
ETD(2)                    $        7,496              5,354              2,961                    40%                  153%
                                ----------    ----------    ----------    ----------    -----------  
Total                      $    187,516    $    183,601    $    188,723                      2%                    -1%
                                ----------    ----------    ----------    ----------    -----------  
                                                                                                                                                        
Geographic                                                                                                                                    
China  and  ROW                      60%                  62%                  64%                  -3%                    -6%
Americas                                17%                  17%                  14%                    0%                    21%
Europe                                    14%                  13%                  12%                    8%                    17%
Japan                                        9%                    8%                  10%                  13%                  -10%
                                ----------    ----------    ----------    ----------    -----------  
Total                                    100%                100%                100%                    0%                      0%
                                ----------    ----------    ----------    ----------    -----------  
                                                                                                                                                        
Channel                                                                                                                                          
Distribution                        68%                  68%                  74%                    0%                    -8%
Direct                                    32%                  32%                  26%                    0%                    23%
                                ----------    ----------    ----------    ----------    -----------  
Total                                    100%                100%                100%                    0%                      0%
                                ----------    ----------    ----------    ----------    -----------  
                                                                                                                                                        
1.  PSD,  Programmable  Systems  Division;  DCD,  Data  Communications  Division;      
      MPD,  Memory  Products  Division.                                                                                      
2.  ETD,  Emerging  Technologies  Division  includes  businesses  outside  our  core  
      semiconductor  businesses  outlined  in  Footnote  1.  Includes  subsidiaries      
      AgigA  Tech  Inc.,  Deca  Technologies  Inc.,  and  our  foundry  business  unit.    
                                                                                                                                                        
 

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