Cypress nets $8M in year; quarter loss

Electronic News, Jan 31, 1994

SAN JOSE, CALIF. --Cypress Semiconductor recorded 4Q net of $7.6 million, or 20 cents a share--before nonrecurring charges relating to two acquisitions completed during the quarter--up 25 percent from $6.1 million, or 16 cents a share, in the immediately preceding quarter and break-even with 4Q92, before that quarter's restructuring and other nonrecurring charges.

Including the pretax charge of $18.3 million from the acquisitions of IC Designs, Inc. and the FCT Logic product line of Performance Semi-conductor Corp., the company reported a net loss of $4.1 million, or 11 cents a share, versus a loss of $23.7 million in the corresponding quarter a year ago and net of $6.1 million, or 16 cents a share, in the immediately preceding quarter.

4Q revenues were $83.0 million, 7.8 percent higher than 3Q's revenues of $77.0 million, and 23.2 percent higher than the $67.4 million reported in 4Q92. Cypress cited SRAM and datacom product lines as the quarter's strongest revenue drivers.

For fiscal 1993 ended Jan. 3, 1994, Cypress posted revenues of $304.5 million, up 12 percent from $272.2 million in 1992. Excluding both years' nonrecurring charges, the company's net was $19.5 million, or 51 cents per share, in 1993, and $4.3 million, or 10 cents per share, in 1992. Including these nonrecurring charges, the company reported net in 1993 of $8.0 million, or 21 cents per share, compared to a net loss of $21 million, or 56 cents per share, in 1992.

"The company's performance this quarter, and our accomplishments in 1993 as a whole, exemplify the commitment we made to our shareholders, employees and customers," said Cypress president and CEO T.J. Rodgers. "Last year, we stated that we expect 1993, the first year of our second decade, to be a year of return for Cypress--in revenue growth, in earnings growth, in continuing productivity improvements, and in a return to the consistent overall performance long associated with Cypress. In 1993, Cypress achieved that goal."

Mr. Rodgers continued: "Sales showed continuous improvement each quarter, with contributions from our top 10 products. Gross margin improved from 38.6 percent at the end of 1992 to 42.6 percent in 4Q93.

"New bookings for the quarter were $93.1 million, a company record, and we enter the new fiscal year with record backlog of $94.4 million, and with 90 percent of planned revenue booked for 1Q94."

In a post-earnings release conference, the company said its 4Q book-to-bill ratio was 1.12 and that October--and especially the December through January time frame--were particularly strong for bookings.

"No large market segment was soft during those times," said Mr. Rodgers. "The PC market was very strong as was telecom and datacom... even military did better. Every product line had a book-to-bill above one except for PLDs, and there has been a recovery there." PLD numbers, which were "very soft" in November, were almost a record in the first weeks of January, according to Dan McCranie, VP, marketing and sales.

Asked about book-to-bill ratios by division, Cypress said "most were above one but that PLDs were below one."

The company cited three 4Q major contract awards, with DEC, Northern Telecom and AT&T, and added that military business as opposed to commercial sales "for the first time in a long time" picked up by two points to 12 percent of 4Q revenues.

Product breakdown as a percent of 4Q sales was: SRAMs, 39 percent; PLDs, 17 percent; datacom, 16 percent; pROMs, 12 percent; multichip modules, 10 percent; IC Designs, Inc., 5 percent; and the FCT Logic line, 0.2 percent.

The company added that it had spent $20 million in the quarter for new capital equipment and that it had shipped $21 million worth of its top 10 products, with the big winner from a volume point of view being the Flash 22V10.

Cypress is sampling 3V SRAMs on the 256K level, and will be shipping in 2Q94; noted were two "worlds" of sales: laptops and workstations.

Asked about an ongoing effort to structure a PC Products Group, Mr. Rodgers said Cypress is still looking for someone to run it and is prepared to "negotiate six months to get the right person." He added: "Once we get the PC Group together, IC Designs will fit nicely into it."

Cypress "inherited a lean, mean team from Performance Semi-conductor," said Jeff Kaszubinski, VP, quality and reliability assurance, and there had been "a slow revenue startup as the team gets production rolling and we get shipments ramped up." He added that in one year, "revenues will be greater than $10 million...and because of the lean structure of the group, we will break even in the first two quarters of operation."

Cypress had a cash balance of $80.6 million at the end of 1993, inclusive of the cash outlays for acquisitions. A cycle time reduction program succeeded in reducing inventory at the end of 1993 to $29.3 million, equivalent to 56 days, from $40.5 million or 89 days at the end of 1992, it was said.

The company said it ended 1993 with 1,262 employees, and realized a 49 percent productivity improvement at $263,000 revenue per employee, in contrast to 1,529 employees and $176,000 per employee at the end of 1992.