Spansion Inc. (NYSE: CODE), a global leader in embedded systems solutions, today announced operating results for its fourth quarter ended December 28, 2014.
On December 1, 2014, Cypress Semiconductor Corporation and Spansion entered into a definitive agreement to merge in an all-stock, tax-free transaction. Under the terms of the agreement, Spansion shareholders will receive 2.457 shares of Cypress common stock for each share of Spansion common stock they own. The shareholders of each company are expected to own approximately 50 percent of the post-merger company.
In anticipation of this transaction, which is expected to close in the first half of 2015, subject to customary closing conditions, including termination of the applicable waiting period in Japan and approval by Spansion and Cypress stockholders, Spansion will not conduct a fourth quarter earnings call and is not providing profit estimates for the first quarter of 2015. However, Spansion is providing the business outlook for net sales for the first quarter of 2015.
On a U.S. GAAP basis, Spansion reported fourth quarter net sales of $309.5 million, gross margin of 31.9%, operating loss of $3.0 million, net loss of $9.7 million and diluted net loss of $0.16 per share.
On a non-GAAP basis, gross margin was 35.8%, operating income was $26.6 million, net income was $20.8 million, and diluted net income per share was $0.30.
For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."
Fourth Quarter 2014 Financial Highlights:
Revenue of $309.5 million
Non-GAAP gross margin of 35.8%
Non-GAAP operating income of $26.6 million or 8.6% of revenue
Adjusted EBITDA of $41.8 million or 13.5% of revenue
Non-GAAP Diluted EPS of $0.30 per share
Cash, cash equivalents and short term investments of $300.7 million
Note: Percentages may not calculate precisely due to rounding.
Fourth Quarter 2014 Business Highlights:
Maintained embedded market leadership
Record design win momentum
Strong momentum and demand for newer products
(NAND, HyperFlash™ memory, MCUs and analog)
Expanded licensing revenue with ISSI as licensee of HyperBus™ interface and HyperFlash memory
Continued strength in automotive and industrial
Launched new products including high-density automotive flash products, intelligent single chip LED IC, low-power wearable development platform, e.MMC memory
"We executed well in the fourth quarter, continuing our rapid pace of new product introductions and achieving record design wins, which increased approximately 30% over the fourth quarter a year ago," said John Kispert, CEO of Spansion. "Additionally, we had a transformational 2014, growing our technologies, products, financial and brand position as an innovator in embedded systems solutions for automotive, industrial, IoT, consumer and communications. We expect our product and design win momentum to continue this year."
Fourth quarter net sales were comprised of $163 million from flash memory, $133 million from the microcontroller and analog mixed-signal businesses, and $13 million from licensing. From an end market and regional perspective, revenue distribution was generally in line with expectations. The fourth quarter showed continued growth in NAND, with record revenue of $48 million, and internal fab equipment utilization rate remained flat at roughly 70%.
Business Outlook
For the first quarter of 2015, Spansion estimates net sales in the range of $270 million to $310 million. The company expects momentum in NAND and strength in the transportation and industrial markets to be offset by typical first quarter seasonality and changes in foreign exchange rates in Japan.
