Exhibit 99.1
Press Contact:
Courtney Brigham
Spansion Inc.
+1.408.616.5056
courtney.brigham@spansion.com
Investor Relations:
Randy Furr
Spansion Inc.
+1.408.616.3682
Spansion Inc. Reports First Quarter 2010 Results
Four Consecutive Quarters of Operating Income
SUNNYVALE, Calif., April 28, 2010 — Spansion Inc. today announced operating results for its first quarter of fiscal 2010. Spansion reported first quarter of 2010 net sales of $277.3 million, which reflects the company’s refined focus and decision to concentrate primarily on embedded and targeted wireless applications. The company generated net income on a U.S. GAAP basis of $3.7 million, or diluted net income per share of $0.02. U.S. GAAP operating income for the quarter was $17.6 million and gross and operating margins were 31.8% and 6.4%, respectively.
U.S. GAAP Comparison
| | | | | | | | | | | | |
| | | Q1 2010 | | | Q4 2009 | | | Q1 2009 | |
Net sales | | $ | 277.3 million | | | $ | 307.1 million | | | $ | 399.6 million | |
Net income (loss) | | $ | 3.7 million | | | $ | 4.3 million | | | | ($512.6 million | ) |
Diluted net income (loss) per share | | $ | 0.02 | | | $ | 0.02 | | | | ($3.18 | ) |
Operating income (loss) | | $ | 17.6 million | | | $ | 20.7 million | | | | ($156.1 million | ) |
Gross margin | | | 31.8 | % | | | 33.1 | % | | | 4.2 | % |
Operating margin | | | 6.4 | % | | | 6.7 | % | | | (39.0 | %) |
“Our strategy to focus on embedded and targeted wireless applications has delivered four consecutive quarters of operating income,” said John Kispert, Spansion president and CEO. “Spansion has executed well during the Chapter 11 restructuring process. With our plan of reorganization now confirmed, Spansion has cleared the way for emergence from Chapter 11.”
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Non-GAAP net income for the first quarter of 2010, excluding restructuring, reorganization, financing related, and other special charges and credits, was $14.5 million, or net income per share of $0.08. Reconciliation between U.S. GAAP operating results and non-GAAP operating results is provided following the financial statements in this release.
Non-GAAP Comparison
| | | | | | | | | |
| | | Q1 2010 | | Q4 2009 | | Q1 2009 | |
Net income (loss) | | $ | 14.5 million | | $ | 29.8 million | | ($156.3 million | ) |
Diluted net income (loss) per share | | $ | 0.08 | | $ | 0.17 | | ($0.97 | ) |
Spansion plans to provide earnings guidance for the second quarter of 2010 in early June.
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 the 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.
About Spansion
Spansion is a leading Flash memory solutions provider dedicated to enabling, storing and protecting digital content in automotive, consumer electronics, networking and wireless applications. Spansion is focused exclusively on designing, developing, manufacturing, marketing, and selling and Flash memory solutions. For more information, visithttp://www.spansion.com.
Spansion®, the Spansion logo, MirrorBit®, MirrorBit® Eclipse™, ORNAND™, EcoRAM™ 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.
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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 complete the chapter 11 reorganization process in the near future and execute on its new strategic focus on certain markets. The risks and uncertainties related to the chapter 11 cases include: any actions or orders taken by the U.S. Bankruptcy Court that may impact the company’s operations; any negative impacts on the company’s business, results of operations, financial position or cash management arrangements; the inability to freely deploy cash resources throughout the company’s various geographical locations as all or part of the total worldwide cash may not be available in either the United States or for working capital as a result of limitations inherent in the chapter 11 cases in the United States or Spansion Japan’s corporate reorganization proceeding or as a result of various restrictions in certain geographies; the negative impact on relationships with employees, customers, suppliers and contract manufacturers and other stakeholders; the failure of the company to obtain the U.S. Bankruptcy Court orders substantially on the terms applied for; the failure of the company to obtain the requisite approvals of affected creditors or the courts for the proposed plan or reorganization, or to successfully implement such a plan or obtain sufficient exit financing, if required, within the time granted by the U.S. Bankruptcy Court, leading to the likely liquidation of the company’s assets; and that following the approval of the proposed plan of reorganization, the company’s outstanding common stock will be cancelled. 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 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 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 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.
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Spansion Inc.
Debtor-in-Possession
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
| | | | | | | | |
| | | Quarter Ended
March 28,
2010 | | | Quarter Ended
March 29,
2009 | |
Net sales | | $ | 277,337 | | | $ | 399,628 | |
Cost of sales | | | 189,120 | | | | 383,035 | |
| | | | | | | | |
Gross margin | | | 88,217 | | | | 16,593 | |
Research and development | | | 22,953 | | | | 44,746 | |
Sales, general and administrative | | | 47,608 | | | | 104,029 | |
Restructuring charges | | | 13 | | | | 23,942 | |
| | | | | | | | |
Operating income (loss) | | | 17,643 | | | | (156,124 | ) |
Interest and other income (expense), net | | | 286 | | | | 480 | |
Interest expense | | | (19,336 | ) | | | (24,466 | ) |
Gain on deconsolidation of subsidiary | | | — | | | | 30,100 | |
| | | | | | | | |
Loss before reorganization items and income taxes | | | (1,407 | ) | | | (150,010 | ) |
Reorganization items | | | 5,464 | | | | (362,457 | ) |
| | | | | | | | |
Income (loss) before income taxes | | | 4,057 | | | | (512,467 | ) |
Provision for income taxes | | | (405 | ) | | | (168 | ) |
| | | | | | | | |
Net income (loss) | | $ | 3,652 | | | $ | (512,635 | ) |
| | | | | | | | |
Net income (loss) per common share | | | | | | | | |
Basic | | $ | 0.02 | | | $ | (3.18 | ) |
Diluted | | $ | 0.02 | | | $ | (3.18 | ) |
| | | | | | | | |
Shares used in per share calculation | | | | | | | | |
- Basic | | | 162,403 | | | | 161,283 | |
- Diluted | | | 174,471 | | | | 161,283 | |
| | | | | | | | |
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Spansion Inc.
Debtor-in-Possession
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
| | | | | | | | |
| | | March 28,
2010 | | | December 27,
2009 | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 321,156 | | | $ | 324,903 | |
Auction rate securities | | | 75,155 | | | | 100,335 | |
Accounts receivable | | | 125,885 | | | | 129,174 | |
Accounts receivable from related party | | | 361,983 | | | | 366,602 | |
Allowance for doubtful accounts | | | (60,833 | ) | | | (56,408 | ) |
| | | | | | | | |
Accounts receivable, net | | | 427,035 | | | | 439,368 | |
Inventories | | | 145,531 | | | | 141,723 | |
Deferred income taxes | | | 12,197 | | | | 13,332 | |
Restricted cash | | | 531,516 | | | | — | |
Prepaid expenses and other current assets | | | 25,139 | | | | 49,533 | |
| | | | | | | | |
Total current assets | | | 1,537,729 | | | | 1,069,194 | |
Property, plant and equipment, net | | | 297,473 | | | | 322,710 | |
Other assets | | | 40,784 | | | | 46,073 | |
| | | | | | | | |
Total assets | | $ | 1,875,986 | | | $ | 1,437,977 | |
| | | | | | | | |
Liabilities and Stockholders’ Deficit | | | | | | | | |
Current liabilities: | | | | | | | | |
Short term note | | $ | 36,604 | | | $ | 64,149 | |
Senior secured term loan | | | 450,000 | | | | — | |
Accounts payable and accrued liabilities | | | 149,470 | | | | 146,223 | |
Accounts payable to related party | | | 198,069 | | | | 221,211 | |
Rights offering deposits | | | 75,783 | | | | — | |
Accrued compensation and benefits | | | 24,882 | | | | 21,630 | |
Deferred income | | | 54,779 | | | | 62,958 | |
| | | | | | | | |
Total current liabilities | | | 989,587 | | | | 516,171 | |
Deferred income taxes | | | 12,270 | | | | 13,405 | |
Other long-term liabilities | | | 9,523 | | | | 9,825 | |
Liabilities subject to compromise | | | 1,717,352 | | | | 1,756,269 | |
Stockholders’ deficit | | | (852,746 | ) | | | (857,693 | ) |
| | | | | | | | |
Total liabilities and stockholders’ deficit | | $ | 1,875,986 | | | $ | 1,437,977 | |
| | | | | | | | |
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Spansion Inc.
Debtor-in-Possession
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
| | | | | | | | |
| | | Quarter Ended
March 28,
2010 | | | Quarter Ended
March 29,
2009 | |
Cash Flows from Operating Activities: | | | | | | | | |
Net income (loss) | | $ | 3,652 | | | $ | (512,635 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 27,780 | | | | 59,660 | |
Asset impairment charges | | | 629 | | | | — | |
Provision for doubtful accounts | | | 5,591 | | | | 17,708 | |
Net loss on sale and disposal of property, plant and equipment | | | 1,112 | | | | (1,902 | ) |
Compensation recognized under employee stock plans | | | 1,295 | | | | 5,430 | |
Gain on deconsolidation of subsidiary | | | — | | | | (30,100 | ) |
Gain on sale of Suzhou plant | | | (3,676 | ) | | | — | |
Gain from approved settlement of rejected capital leases and various licenses | | | (22,517 | ) | | | — | |
Amortization of financing cost and debt premium and discount | | | 897 | | | | 1,540 | |
Changes in operating assets and liabilities, net of effects of deconsolidation of subsidiary: | | | | | | | | |
Decrease (increase) in accounts receivable | | | 13,908 | | | | (54,018 | ) |
(Increase) decrease in inventories | | | (3,808 | ) | | | 142,499 | |
Decrease (increase) in prepaid expenses and other current assets | | | 6,041 | | | | (25,191 | ) |
Decrease (increase) in other assets | | | 1,192 | | | | (8,936 | ) |
(Decrease) increase in accounts payable, accrued liabilities and accrued compensation and benefits | | | (22,430 | ) | | | 382,942 | |
(Decrease) increase in deferred income | | | (8,179 | ) | | | 3,226 | |
| | | | | | | | |
Net cash provided (used) by operating activities | | | 1,487 | | | | (19,777 | ) |
| | | | | | | | |
Cash Flows from Investing Activities: | | | | | | | | |
Proceeds from sale of property, plant and equipment | | | 4,917 | | | | 45 | |
Purchases of property, plant and equipment | | | (8,493 | ) | | | (3,921 | ) |
Loan made to an investee | | | — | | | | (5,263 | ) |
Cash proceeds from sale of Suzhou plant | | | 18,687 | | | | — | |
Proceeds from redemption of auction rate securities | | | 27,325 | | | | — | |
Increase in restricted cash | | | (531,516 | ) | | | | |
Cash decrease due to deconsolidation of subsidiary | | | — | | | | (52,092 | ) |
| | | | | | | | |
Net cash used by investing activities | | | (489,080 | ) | | | (61,231 | ) |
| | | | | | | | |
Cash Flows from Financing Activities: | | | | | | | | |
Proceeds from borrowings, net of issuance costs | | | 438,082 | | | | 117,758 | |
Payments on debt and capital lease obligations | | | (30,019 | ) | | | (54,715 | ) |
Proceeds from rights offering | | | 75,783 | | | | — | |
| | | | | | | | |
Net cash provided by financing activities | | | 483,846 | | | | 63,043 | |
| | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | — | | | | (3,095 | ) |
| | | | | | | | |
Net increase in cash and cash equivalents | | | (3,747 | ) | | | (21,060 | ) |
Cash and cash equivalents at the beginning of period | | | 324,903 | | | | 116,387 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 321,156 | | | $ | 95,327 | |
| | | | | | | | |
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Spansion Inc.
Debtor-in-Possession
CONDENSED CONSOLIDATED SUPPLEMENTAL INFORMATION (UNAUDITED)
(In thousands, except per share amounts)
Reconciliation of GAAP Net Income (Loss) to NON-GAAP Net Income (Loss)
| | | | | | | | | | | | |
| | | Quarter Ended
March 28,
2010 | | | Quarter Ended
December 27,
2009 | | | Quarter Ended
March 29,
2009 | |
GAAP net income (loss) | | $ | 3,652 | | | $ | 4,329 | | | $ | (512,635 | ) |
Amortization of Saifun intangible assets | | | 79 | | | | 79 | | | | 79 | |
Restructuring charges | | | 3,689 | | | | 5,091 | | | | 23,942 | |
Reorganization charges (gain) | | | (5,464 | ) | | | 9,736 | | | | 362,457 | |
Impairment charges | | | 629 | | | | 14,431 | | | | — | |
Interest expense for the senior secured term loan | | | 5,182 | | | | — | | | | — | |
Amortization of financing cost for the senior secured term loan | | | 7,855 | | | | — | | | | — | |
Customer administrative claim | | | 2,569 | | | | — | | | | — | |
Gain on deconsolidation of subsidiary | | | — | | | | — | | | | (30,100 | ) |
Gain on the sale of Suzhou plant | | | (3,676 | ) | | | (3,885 | ) | | | — | |
Non-GAAP net income (loss) | | $ | 14,515 | | | $ | 29,781 | | | $ | (156,257 | ) |
Non-GAAP net income (loss) per diluted share | | $ | 0.08 | | | $ | 0.17 | | | $ | (0.97 | ) |
Shares used in diluted shares calculation | | | 174,471 | | | | 174,139 | | | | 161,283 | |
Spansion Inc.
Debtor-in-Possession
SELECT ITEMS IN THE FINANCIALS (UNAUDITED)
(In thousands)
| | | | | | | | | | | |
| | | Quarter Ended
March 28,
2010 | | | Quarter Ended
December 27,
2009 | | | Quarter Ended
March 29,
2009 |
Interest expense, net | | $ | 19,050 | | | $ | 6,988 | | | $ | 23,986 |
Benefit (provision) for income taxes | | | (405 | ) | | | (350 | ) | | | 168 |
Depreciation in cost of sales, R&D and SG&A | | | 26,142 | | | | 27,853 | | | | 58,042 |
Depreciation in restructuring charges | | | 1,559 | | | | 1,689 | | | | — |
Impairment charges | | | 629 | | | | 14,431 | | | | 211 |
Amortization | | | 79 | | | | 79 | | | | 79 |
SOURCE Spansion Inc.
http://www.spansion.com
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