Spansion Inc. Reports Second Quarter 2013 Results

SUNNYVALE, Calif., Aug. 1, 2013 /PRNewswire/ -- Spansion Inc. (NYSE: CODE), a global leader in Flash memory-based embedded systems solutions, today announced operating results for its second quarter ended June 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20060118/SFW077LOGO)

On a U.S. GAAP basis, Spansion reported second quarter net sales of $195.1 million, gross margin of 29.4%, operating loss of $0.6 million and net loss of $3.2 million.

On a non‑GAAP basis, net sales totaled $195.1 million, gross margin was 33.6%, operating income was $18.4 million and net income was $15.7 million.

For a reconciliation of GAAP to non - GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures" below.

Second Quarter 2013 Financial Highlights:

• Revenue of $195.1 million
• Non-GAAP gross margin of 33.6%
• Non-GAAP operating income of $18.4 million or 9.5% of revenue
• Adjusted EBITDA of $30.6 million
• Non-GAAP Diluted EPS $0.26
• Cash, cash equivalents and short term investments of $305.3 million

Note: Percentages may not calculate precisely due to rounding.

Second Quarter 2013 Business Highlights:

• Continued embedded market leadership and focused execution amid challenging market conditions
• Recognized $22 million revenue from Embedded SLC NAND
• Strong design win momentum in NAND

Spansion also announced today the closing of its acquisition of Fujitsu's Microcontroller and Analog business.

"Spansion executed amid challenging market conditions. We remain the embedded market leader for NOR Flash memory, delivered sequential improvements in margins and profit, and saw strong NAND momentum," said John Kispert, president and CEO of Spansion. "We remain confident of our long-term vision and strategy as we enhance our Flash memory product portfolio, protect our IP and add new microcontroller and analog IP and products. We plan to accelerate future growth opportunities and continually increase our operational efficiency, while building even stronger customer relationships to position Spansion for ongoing embedded market leadership."

Quarterly Conference Call and Accompanying Slide Presentations

Spansion will host a conference call Thursday, August 1, 2013, at 1:30 PM PT/ 4:30 PM ET to discuss its second quarter 2013 results. A live webcast of the conference call, with accompanying slide presentations, may be accessed through the investor relations section of Spansion's website at http://investor.spansion.com/.

Dial-in: 1- 877-703-6102 (toll free), 1- 857-244-7301 (International), Passcode: 30909399

An audio replay will be available within two hours of the call through August 8, 2013 and may be accessed via dial-in at 1-888-286-8010 (US), 1-617-801-6888 (International), with the Passcode 99511673 or by webcast on the investor relations section of Spansion's website at http://investor.spansion.com/.

Second Quarter 2013 Results

Business Outlook

For the third quarter of 2013, Spansion estimates U.S. GAAP net sales in the range of $270 million to $300 million and GAAP diluted net loss per share of ($0.39) to ($0.19). Non-GAAP gross margin is expected to be in the range of 32.5% to 34.5%, and non-GAAP diluted EPS is expected to be in the range of $0.23 to $0.30. These estimates exclude amortization of intangibles of approximately $7 million, and stock compensation expense of approximately $1 million in COGS and $7 million in operating expense. These estimates also exclude charges related to the acquisition of the Fujitsu Microcontroller and Analog business including (i) $11 million to $13 million in inventory markup related to fair value accounting, (ii) $4 million to $5 million in integration related costs, and (iii) $1 million to $2 million in financing costs, and exclude one-time items consisting of (a) $9 million to $14 million in charges related to business alignment, and (b) approximately $10 million of gain related to the collection on a previously written off note receivable.

About Spansion
Spansion (NYSE: CODE) is a global leader in Flash memory-based embedded systems solutions. Spansion's Flash memory, microcontrollers, mixed-signal and analog products drive the development of faster, intelligent, secure and energy efficient electronics. Spansion is at the heart of electronics systems, connecting, controlling, storing and powering everything from automotive electronics and industrial systems to the highly interactive and immersive consumer devices that are enriching people's daily lives. For more information, visit http://www.spansion.com.

Spansion®, the Spansion logo, MirrorBit®, MirrorBit® Eclipse™ 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 presentation 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 statements related to the acquisition of the Fujitsu Microcontroller and Analog business including the possibility that anticipated benefits, growth prospects and synergies expected from the acquisition may not be fully realized or may take longer to realize than expected; the accretive nature of the transaction, including incremental margin, EBITDA and EPS estimates for future periods; estimations and variations in market growth and demand for the acquired products and technologies; delays, disruptions, costs and challenges associated with integrating the new business into the Company's existing business, including changing relationships with partners, customers, employees or suppliers; the amount of costs incurred in connection with supporting and integrating the new business and supporting new customers and partners; ongoing personnel and logistical challenges of managing the new combined organization; our ability to retain and motivate key employees from Fujitsu; and general economic and business conditions.   Other risks and uncertainties include: the success of the Company's plan to focus primarily on the embedded solutions market; the ability to improve our gross margins and to continue to successfully implement our cost reduction efforts; the ability to grow revenue; the ability to maintain a competitive cost and expense structure; the ability to maintain a strong product portfolio; the ability to control operating expenses, particularly our sales, general and administrative costs; the ability to retain and expand our customer base in focus markets, and retain and grow our share of business within our customer base; the ability to penetrate further the embedded solutions market with our high density products and expand the number of customers in emerging markets; and the ability to successfully develop and transition to the latest technologies. In addition, the instability of the global economy and tight credit markets could continue to adversely impact  our business in several respects, including adversely impacting credit quality and insolvency risk of the Company and its customers and business partners, including suppliers and distributors; bookings; and reductions and deferrals of demand for our products. We urge investors to review in detail the risks and uncertainties discussed in the company's Securities and Exchange Commission filings, including but not limited to our Annual Report on Form 10-K for the fiscal year ended December 30, 2012 and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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 gross profit, operating income, 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 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 expenses that the company believes are not indicative of its core operating results. For more information on non-GAAP financial measures, please see the reconciliations of such measures in the tables of this release.

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 and provide useful information to investors and others in understanding and evaluating Spansion's operating results and future prospects in the same manner as management.  During the quarter ended June 30, 2013 the presentation of non-GAAP financial information included the addition of interest expense, taxes, depreciation and amortization to the net income. Further adjustments due to acquisition related expense and 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 Financial Measures

SOURCE Spansion Inc.