SPANSION INC. 
By SUNNYVALE, Calif., Jan. 29, 2013 /PRNewswire/ -- Spansion Inc. (NYSE: CODE), a leading innovator of Flash memory solutions, today announced operating results for its fourth fiscal quarter ended December 30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20060118/SFW077LOGO)
On a U.S. GAAP basis, Spansion reported fourth quarter net sales of $224.0 million, gross margin of 32.1%, operating income of $15.0 million and net income of $6.9 million.
On a non?GAAP basis, net sales totaled $224.0 million, adjusted gross margin was 36.1%, adjusted operating income was $32.0 million and adjusted net income was $21.8 million.
For reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Adjusted Financial Measures" below.
Fourth Quarter 2012 Financial Highlights:
-- Revenue of $224.0 million
-- Non-GAAP adjusted gross margin of 36.1%
-- Non-GAAP adjusted operating income of $32.0 million or 14.3% of revenue
-- Adjusted EBITDA of $46.0 million
-- Cash, cash equivalents and short term investments of $313.9 million
-- Non-GAAP Diluted EPS $0.34
Fourth Quarter 2012 Business Highlights:
-- Continued market leadership and focused execution
-- Began to recognize incremental revenue from Embedded SLC NAND
-- Introduced industry's first 8Gb 45nm Parallel NOR product
"As a result of continued execution on our strategic objectives, we delivered another profitable quarter amid challenging market conditions," said John Kispert, president and CEO of Spansion. "For the full fiscal year, we made substantial progress in new product introductions with NAND and the Acoustic Coprocessor (ACP), as well as expanded into new markets with the growth of connected and intelligent devices in a range of industrial applications such as smart displays, security surveillance and home energy systems."
Kispert continued," With our strong product positioning, design win momentum and innovation in our embedded markets, we remain encouraged about future growth. Assuming business confidence improves, we expect to resume revenue growth throughout 2013, following a seasonally soft first quarter."
Quarterly Conference Call and Accompanying Slide Presentation
Spansion will host a conference call Tuesday, January 29, 2013 at 1:30 pm PDT / 4:30 pm EDT to discuss its fourth quarter 2012 results. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, may be accessed through the investor relations section of Spansion's website at http://investor.spansion.com/.
Dial-in: 1- 800-573-4752 (toll free) or 1- 617-224-4324 (international); passcode: 51780179
An audio replay will be available two hours after the call and may be accessed via dial-in at 1-888-286-8010 (US), 1-617-801-6888 (International), with the passcode 13827671 or by webcast on the investor relations section of Spansion's website at http://investor.spansion.com/.
Fourth Quarter 2012 Results
U.S. GAAP results, in $millions except per share data and
percentages
Q4 2012 Q3 2012 Q4 2011
------- ------- -------
Net Sales $224.0 $239.7 $220.0
--------- ------ ------ ------
Gross Margin 32.1% 32.7% 1.0%
------------ ---- ---- ---
Operating Income (Loss) $15.0 $14.0 $(63.9)
---------------------- ----- ----- ------
Operating Margin 6.7% 5.8% (29.0%)
---------------- --- --- ------
Net income (loss)
attributable to Spansion
Inc. common stockholders $6.9 $5.1 $(74.4)
------------------------ ---- ---- ------
Diluted Net Income (loss)
Per Share $0.11 $0.08 $(1.25)
------------------------- ----- ----- ------
Non-GAAP Results, in $millions except per share data and
percentages
Q4 2012 Q3 2012 Q4 2011 Inventory Adjusted Q4 2011 excluding
reserves inventory reserves
relating to
restructuring
------- ------- ------- -------------- ---------------------------
Net Sales $224.0 $239.7 $220.0 - $220.0
--------- ------ ------ ------ --- ------
Adjusted Gross
Profit $80.8 $87.0 $19.9 $33.4 $53.3
-------------- ----- ----- ----- ----- -----
Adjusted Gross
Margin 36.1% 36.3% 9.0% - 24.2%
-------------- ---- ---- --- --- ----
Adjusted
Operating
Income (Loss) $32.0 $31.5 $(30.1) $33.4 $3.3
------------- ----- ----- ------ ----- ----
Adjusted Net
Income (Loss) $21.8 $22.6 $(40.7) $33.4 $(7.3)
------------- ----- ----- ------ ----- -----
Adjusted EBITDA $46.0 $46.8 $(8.6) $33.4 $24.8
--------------- ----- ----- ----- ----- -----
Adjusted
diluted EPS $0.34 $0.36 $(0.68) - $(0.12)
----------- ----- ----- ------ --- ------
Business Outlook
For the first quarter of 2013, Spansion estimates U.S. GAAP net sales in the range of $180 million to $205 million and GAAP net loss per share of ($0.33) to ($0.22).
The following charges are included in the guidance above:
($ in millions) COGS Net Income
Favorable/(Unfavorable)
-----------------------
Intangible Amortization (7) (7)
Stock Based Compensation (1) (9)
Total (8) (16)
----- --- ---
Excluding the above items, first quarter 2013 gross margin is expected to be 26.5% to 28.5%, and EPS is expected to be between ($0.05) and $0.06.
Use of Non-GAAP Financial Information
The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for or superior to, the company's financial results presented in accordance with U.S. GAAP. The non-GAAP financial measures presented by the company may be different than non-GAAP financial measures presented by other companies.
The non-GAAP and supplemental information is provided to enhance the user's overall understanding of the company's operating performance. Specifically, the company believes the non-GAAP information provides useful measures to investors regarding the company's financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with U.S. GAAP. A reconciliation of each non-GAAP financial measure to the most direct, comparable GAAP financial measure is included below.
About Spansion
Spansion's (NYSE: CODE) technology is at the heart of electronics systems, powering everything from the internet of today to the smart grid of tomorrow, positively impacting people's daily lives at work and play. Spansion's broad Flash memory product portfolio, smart innovation and industry leading service and support are enabling customers to achieve greater efficiency and success in their target markets. For more information, visit http://www.spansion.com.
Spansion®, the Spansion logo, MirrorBit®, MirrorBit® Eclipse(TM) and combinations thereof, are trademarks and registered trademarks of Spansion LLC in the United States and other countries. Other names used are for informational purposes only and may be trademarks of their respective owners.
Cautionary Statement
This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements. The risks and uncertainties include the company's ability to: execute its business strategy; drive new design wins; reduce operating expenses; strengthen customer relations; accelerate the adoption of new products and obtain the anticipated cost savings. Additional risks related to the company's emergence from bankruptcy include: any negative impact on the company's business, results of operations, financial position or cash management arrangements; and the negative impact on relationships with employees, customers, suppliers, contract manufacturers and other stakeholders. In addition, the instability of the global economy and tight credit markets could continue to adversely impact the company's business in several respects, including adversely impacting: the credit quality and insolvency risk of the company and its customers and business partners, including suppliers and distributors; bookings; and demand for Spansion products. The company urges investors to review in detail the risks and uncertainties discussed in the company's Securities and Exchange Commission filings, including but not limited to the company's most recent Annual Report on Form 10-K for fiscal 2011 and Quarterly Reports on Form 10-Q. Unless otherwise required by applicable laws, the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Spansion Inc.
-------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------------
(In thousands, except per share amounts)
---------------------------------------
Three Months Three Months Three Months
Ended Ended Ended
Dec 30, 2012 Sep 30, 2012 Dec 25, 2011
------------ ------------ ------------
Net sales $223,987 $239,747 $220,015
Cost of sales 152,047 161,281 217,810
------------- ------- ------- -------
Gross Profit 71,940 78,466 2,205
Research and
development 24,771 27,407 24,525
Sales, general and
administrative 32,121 35,228 29,273
Restructuring
charges - 1,862 12,295
------------- --- ----- ------
Operating income
(loss) 15,048 13,969 (63,888)
Interest & other
income 2,472 1,267 2,721
Interest expense (7,224) (7,339) (7,687)
---------------- ------ ------ ------
Income (loss) before
income taxes 10,296 7,897 (68,854)
Provision for income
taxes (3,428) (2,757) ( 5,649)
-------------------- ------ ------ -------
Net income (loss) $6,868 $5,140 $(74,503)
---------------- ------ ------ --------
Less: Net loss
attributable to
non-controlling
interest - - (134)
Net income (loss)
attributable to
Spansion Inc. $6,868 $5,140 $(74,369)
====== ====== ========
Net income (loss) per common share attributable
to Spansion Inc. common stockholders
Basic $0.11 $0.09 $(1.25)
Diluted $0.11 $0.08 $(1.25)
------- ----- ----- ------
Shares used in per share calculation
Basic 60,144 60,139 59,574
Diluted 61,487 60,820 59,574
------- ------ ------ ------
Spansion Inc.
-------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
------------------------------------------------
(In thousands)
-------------
Assets Dec 30, 2012 Sep 30, 2012 Dec 25, 2011
------ ------------ ------------ ------------
Current assets:
Cash and cash
equivalents $262,177 $279,460 $194,850
Short-term
investments 51,720 48,606 67,855
Accounts receivable,
net 106,864 117,446 110,343
Inventories 182,192 172,503 174,089
Deferred income
taxes 8,699 9,782 6,275
Prepaid expenses and
other current
assets 28,531 36,700 29,494
-------------------- ------ ------ ------
Total current assets 640,183 664,497 582,906
-------------------- ------- ------- -------
Property, plant and equipment, net 176,728 175,456 209,227
Intangible assets 149,153 156,802 177,721
Goodwill 166,931 167,216 167,219
Other assets 39,171 41,643 54,072
Total assets $1,172,166 $1,205,614 $1,191,145
============ ========== ========== ==========
Liabilities and Equity
-----------------------
Current liabilities:
Accounts payable 85,542 78,902 79,560
Accrued compensation
and benefits 26,080 33,878 30,676
Other accrued
liabilities 29,913 46,738 52,598
Deferred income 9,135 15,065 18,223
Current portion of
long-term debt and 5,382 11,468 4,222
obligations under
capital leases
Income taxes payable 2,618 4,810 1,702
Deferred income
taxes, short-term - - 360
------------------ --- --- ---
Total current liabilities 158,670 190,861 187,341
------------------------- ------- ------- -------
Deferred income taxes 9,393 9,314 6,135
Long-term debt, less current portion 410,913 405,832 445,177
Other long-term liabilities 31,416 31,436 29,951
--------------------------- ------ ------ ------
Total liabilities 610,392 637,443 668,604
----------------- ------- ------- -------
Class A Common stock, $0.001 par value, 150,000,000 shares
authorized, 57,267,409 shares issued and outstanding 58 61 60
Class B common stock, $0.001 par value, 1 share
authorized, 1 share issued and outstanding - - -
Additional paid in capital 690,891 704,922 675,309
Accumulated deficit (127,691) (134,559) (152,578)
Accumulated other comprehensive loss (1,484) (2,253) (1,628)
------------------------------------ ------ ------ ------
Total Spansion Inc.
stockholders'
equity 561,774 568,171 521,163
Non-controlling interest - - 1,378
------------------------ --- --- -----
Total equity 561,774 568,171 522,541
------------ ------- ------- -------
Total liabilities and stockholders' equity $1,172,166 $1,205,614 $1,191,145
========================================== ========== ========== ==========
Spansion Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Three Months Ended Three Months Ended Three Months Ended
Dec 30, 2012 Sep 30, 2012 Dec 25, 2011
Cash Flows from Operating
Activities:
Net income (loss) $6,868 $5,140 $(74,503)
Adjustments to reconcile net
income (loss) to net cash
provided by (used for)
operating activities:
Depreciation
and
amortization 21,041 22,611 27,906
Provision
(benefit) for
deferred
income taxes 4,063 (87) 7,249
Net gain on
sale and
disposal of
property, (760) (1,117) (438)
plant and
equipment
Asset
impairment
charges - - 11,945
Compensation
recognized
under
employee
stock plans 10,187 8,761 4,977
Changes in
operating
assets and
liabilities (16,197) 27,010 11,607
----------- ------- ------ ------
Net cash provided by (used
for) operating activities 25,202 62,318 (11,257)
-------------------------- ------ ------ -------
Cash Flows from Investing
Activities:
Proceeds from
sale of
property,
plant and
equipment 1,278 1,713 840
Purchase of
property,
plant and
equipment (11,533) (12,166) (26,835)
Purchase of
marketable
securities (16,199) (28,686) (20,305)
Proceeds from
maturities of
marketable
securities 13,086 44,336 17,714
-------------- ------ ------ ------
Net cash provided by (used
for) investing activities (13,368) 5,197 (28,586)
-------------------------- ------- ----- -------
Cash Flows from Financing
Activities:
Proceeds from issuance of
common stock 230 27 -
due to options exercised
Refinancing costs on Term loan
and Revolver (2,597) - -
Payments on debt and capital
lease obligations - (15,560) (696)
Acquisition of non-
controlling interest - (720) -
Cash settlement on hedging
activities (274) (268) (268)
Purchase of bankruptcy claims (24,450) - -
----------------------------- ------- --- ---
Net cash used for financing
activities (27,091) (16,521) (964)
--------------------------- ------- ------- ----
Effect of exchange rate
changes (2,026) 339 137
on cash and cash equivalents
----------------------------
Net increase (decrease) in
cash and cash equivalents (17,283) 51,333 (40,670)
Cash and cash equivalents at
the beginning of period 279,460 228,127 235,520
---------------------------- ------- ------- -------
Cash and cash equivalents at
end of period $262,177 $279,460 $194,850
============================ ======== ======== ========
Use of Non-GAAP Financial Information
To provide investors and others with additional information regarding Spansion's operating results, we have disclosed in this press release certain non-GAAP financial measures, including adjusted gross profit, adjusted operating income, adjusted net income, and adjusted EBITDA. These non-GAAP financial measures are a supplement to, and not a substitute for or superior to, the company's results presented in accordance with U.S. GAAP. The non-GAAP financial measures presented by the company may be different than non-GAAP financial measures presented by other companies.
The non-GAAP financial measures are provided to enhance the user's overall understanding of the company's operating performance. Specifically, the company believes the non-GAAP information provides useful measures to investors regarding the company's financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results. The presentation of these non-GAAP financial measures are not meant to be considered in isolation or as a substitute for results or guidance prepared and presented in accordance with U.S. GAAP.
Spansion has provided a reconciliation of the non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures:
-- Non-GAAP adjusted gross profit differs from GAAP gross profit in that it
excludes the impact of non-recurring items, amortization of intangibles,
asset impairment charges, stock compensation expense and inventory
reserves related to restructuring.
-- Non-GAAP adjusted operating income differs from GAAP operating income in
that it excludes the impact of non-recurring items, amortization of
intangibles, litigation credit related to Samsung, one-time
restructuring charges, asset impairment charges, stock compensation
expense and inventory reserves related to restructuring.
-- Non-GAAP adjusted net income (loss) differs from GAAP net income in that
it excludes the impact of non-recurring items, amortization of
intangibles, litigation credit related to Samsung, one-time
restructuring charges, asset impairment charges, stock compensation
expense, net income attributable to non-controlling interest, Tessera
claim reserve reversal, refinancing costs for Term Loan and Revolver and
inventory reserves related to restructuring.
-- Adjusted EBITDA is a non-GAAP financial measure, and it is EBITDA
adjusted for the impact of one-time restructuring charges, asset
impairment charges, litigation credit related to Samsung, stock-based
compensation and inventory reserves related to restructuring.
Management believes these non-GAAP financial measures:
-- Reflect Spansion's ongoing business in a manner that allows for
meaningful period-to-period comparison and analysis of trends in
Spansion's business, as they exclude expenses that are not reflective of
ongoing operating results;
-- Provide useful information to investors and others in understanding and
evaluating Spansion's operating results and future prospects in the same
manner as management and in comparing financial results across
accounting periods;
-- Provide an additional view of the performance of the company by adding
interest expenses, taxes, depreciation and amortization to the net
income. Further adjustments due to stock compensation expense attempt to
exclude items that are either non-cash or non-recurring in nature.
Reconciliation of U.S. GAAP to Non-GAAP Adjusted Financial Measures
Gross Profit to Non-GAAP Adjusted Gross Profit
($ in millions) Q4 2012 Q3 2012 Q4 2011
GAAP gross profit $71.9 $78.5 $2.2
Add: Intangibles
amortization 6.8 6.8 6.4
Add: Asset
impairment
charges - - 10.4
Add: Stock
compensation
expense 2.1 1.7 0.9
------------- --- --- ---
Non-GAAP Gross
Profit $80.8 $87.0 $19.9
Add: Inventory
reserves related
to restructuring - - 33.4
----------------- --- --- ----
Non-GAAP
Adjusted Gross
Profit excluding
inventory
reserves $80.8 $87.0 $53.3
===== ===== =====
Operating Income (Loss) to Non-GAAP Adjusted Operating Income
-------------------------------------------------------------
($ in millions) Q4 2012 Q3 2012 Q4 2011
-------------- ------- ------- -------
GAAP operating
income (loss) $15.0 $14.0 $(63.9)
Add: Intangibles
amortization 6.8 6.8 6.4
Less: Litigation
credit related
to Samsung - - (1.0)
Add:
Restructuring
charges - 1.9 12.3
Add: Asset
impairment
charges - - 11.1
Add: Stock
compensation
expense 10.2 8.8 5.0
------------- ---- --- ---
Non-GAAP
Operating Income
(Loss) $32.0 $31.5 $(30.1)
Add: Inventory
reserves related
to restructuring - - 33.4
----------------- --- --- ----
Non-GAAP
Adjusted
Operating Income
excluding
inventory
reserves $32.0 $31.5 $3.3
----------------- ===== ===== ====
Net Income (Loss) to Non-GAAP Adjusted Net Income (Loss)
-------------------------------------------------------
($ in millions) Q4 2012 Q3 2012 Q4 2011
-------------- ------- ------- -------
GAAP net income
(loss) $6.9 $5.1 $(74.4)
Add: Intangibles
amortization 6.8 6.8 6.4
Less: Litigation
credit related
to Samsung - - (1.0)
Add:
Restructuring
charges - 1.9 12.3
Add: Asset
impairment
charges - - 11.1
Add: Stock
compensation
expense 10.2 8.8 5.0
Less: Net income
attributable to
non-controlling
interest - - (0.1)
Less: Tessera
claim reserve
reversal (4.0) - -
Add: Refinancing
costs for Term
Loan and
Revolver 1.9 - -
---------------- --- --- ---
Non-GAAP Net
Income (Loss) $21.8 $22.6 $(40.7)
Add: Inventory
reserves related
to restructuring - - 33.4
----------------- --- --- ----
Non-GAAP
Adjusted Net
Income (Loss)
excluding
inventory
reserves $21.8 $22.6 $(7.3)
===== ===== =====
Net Income (Loss) to Adjusted
EBITDA
-----------------------------
($ in millions) Q4 2012 Q3 2012 Q4 2011
-------------- ------- ------- -------
GAAP net income (loss) $6.9 $5.1 $(74.4)
Add: Interest and other expense
(income) 4.8 6.1 5.0
Add: Taxes 3.4 2.8 5.6
Add: Depreciation and amortization 20.7 22.1 27.9
Add: Restructuring charges - 1.9 12.3
Add: Asset impairment charges - - 11.1
Less: Litigation credit related to
Samsung - - (1.0)
Add: Stock compensation expense 10.2 8.8 5.0
Less: Net income attributable to
non-controlling interest - - (0.1)
Non-GAAP Adjusted EBITDA $46.0 $46.8 $(8.6)
Add: Inventory reserves related to
restructuring - - 33.4
---------------------------------- --- --- ----
Non-GAAP Adjusted EBITDA excluding
inventory reserves $46.0 $46.8 $24.8
---------------------------------- ===== ===== =====
SOURCE Spansion Inc.
