<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 1, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
------------- to -----------.
Commission file number 1-10079
-------
CYPRESS SEMICONDUCTOR CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2885898
- ------------------------------- ---------------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or identification No.)
organization)
3901 North First Street, San Jose, California 95134-1599
- -------------------------------------------------------------------------------
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 943-2600
- ---------------
NOT APPLICABLE
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
July 1, 1996 (all one class): 80,041,000
--------------------------------------------
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CYPRESS SEMICONDUCTOR CORPORATION
FORM 10-Q
Quarter Ended July 1, 1996
Index
Part I - Financial Information
- --------------------------------
Item 1. Condensed Consolidated Financial Statements Pages 3 - 8
Item 2. Management's Discussion and Analysis Pages 9 - 13
Part II - Other Information
- --------------------------------
Item 1. Legal Proceedings Page 14
Item 4. Submission of Matters to a Vote of Security Holders Page 14
Item 6. Exhibits and Reports on Form 8-K Pages 14 - 16
2
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<TABLE>
CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Jul. 1, Jan. 1,
1996 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,481 $ 9,487
Short-term investments 60,972 152,131
---------- ----------
Total cash, cash equivalents and
short-term investments 65,453 161,618
Accounts receivable, net of allowances of
$2,341 at July 1, 1996 and $2,828 at
January 1, 1996 83,546 108,587
Inventories 45,165 28,978
Other current assets 57,651 52,454
---------- ----------
Total current assets 251,815 351,637
Property, plant and equipment (net) 434,576 336,593
Other assets 84,555 62,498
---------- ----------
Total assets $ 770,946 $ 750,728
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 89,647 $ 82,315
Accrued liabilities 36,308 46,800
Deferred income on sales to distributors 14,103 13,190
Income taxes payable 10,255 18,752
---------- ----------
Total current liabilities 150,313 161,057
Convertible subordinated notes 97,043 95,879
Deferred income taxes 15,653 15,653
Other long-term liabilities 10,222 6,040
---------- ----------
Total liabilities 273,231 278,629
---------- ----------
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CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in thousands)
(Unaudited)
Jul. 1, Jan. 1,
1996 1996
---------- ----------
<S> <C> <C>
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized; none issued and
outstanding -- --
Common stock, $.01 par value, 250,000,000
shares authorized; 90,301,000 and
88,924,000 issued; 80,041,000 and
81,501,000 outstanding 903 889
Additional paid-in capital 300,051 292,713
Retained earnings 313,604 262,462
---------- ----------
614,558 556,064
Less shares of common stock held in
treasury, at cost: 10,260,000 at
July 1, 1996 and 7,423,000 at
January 1, 1996 (116,843) (83,965)
---------- ----------
Total stockholders' equity 497,715 472,099
---------- ----------
Total liabilities and stockholders'
equity $ 770,946 $ 750,728
========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
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<TABLE>
CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
Jul. 1, Jul. 3, Jul. 1, Jul. 3,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 135,464 $ 134,273 $ 305,635 $ 257,638
---------- ---------- ---------- ----------
Costs and expenses:
Cost of revenues 72,015 60,899 148,876 121,733
Research and development 21,989 16,392 43,405 32,063
Marketing, general and
administrative 15,502 17,506 33,642 32,797
Other non-recurring
costs (Note 4) -- -- -- 17,800
---------- ---------- ---------- ----------
Total operating costs
and expenses 109,506 94,797 225,923 204,393
---------- ---------- ---------- ----------
Operating income 25,958 39,476 79,712 53,245
Interest expense (1,482) (1,415) (3,129) (3,148)
Interest and other income 2,075 2,255 3,948 4,558
---------- ---------- ---------- ----------
Income before income taxes 26,551 40,316 80,531 54,655
Provision for income taxes (9,686) (14,714) (29,389) (19,948)
---------- ---------- ---------- ----------
Net income $ 16,865 $ 25,602 $ 51,142 $ 34,707
========== ========== ========== ==========
Net income per share:
Primary $ 0.20 $ 0.29 $ 0.61 $ 0.39
Fully diluted $ 0.20 $ 0.27 $ 0.58 $ 0.38
Weighted average common and
common equivalent shares
outstanding:
Primary 83,285 89,557 83,352 88,390
Fully diluted 91,227 98,244 91,293 96,926
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
----------------------
Jul. 1, Jul. 3,
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 51,142 $ 34,707
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 44,894 26,900
Provision for other non-recurring costs -- 17,800
Non-cash interest and amortization of debt
issuance costs 1,369 1,303
Changes in operating assets and liabilities:
Receivables 21,147 (11,805)
Inventories (16,187) (465)
Other assets (3,965) (13,410)
Accounts payable and accrued liabilities (3,480) 9,709
Deferred income 913 1,285
Income taxes payable and deferred income taxes (8,497) 3,240
---------- ----------
Net cash generated by operations 87,336 69,264
---------- ----------
Cash flows from investing activities:
Decrease (Increase) in short-term investments (net) 91,159 (13,317)
Acquisition of property, plant and equipment (net) (141,212) (94,774)
---------- ----------
Net cash used for investing activities (50,053) (108,091)
---------- ----------
Cash flows from financing activities:
Repurchase of common stock (32,878) --
Issuance of common stock 7,353 22,471
Restricted investments related to building lease
agreements (21,264) (14,695)
Other long-term liability 4,500 --
---------- ----------
Net cash generated (used) by financing activities (42,289) 7,776
---------- ----------
Net decrease in cash and cash equivalents (5,006) (31,051)
Cash and cash equivalents, beginning of year 9,487 33,308
---------- ----------
Cash and cash equivalents, end of quarter $ 4,481 $ 2,257
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
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CYPRESS SEMICONDUCTOR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Interim Statements
In the opinion of management, the accompanying, unaudited condensed
consolidated financial statements contain all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly the financial
information included therein. While the Company believes that the disclosures
are adequate to make the information not misleading, it is suggested that this
financial data be read in conjunction with the audited financial statements and
notes thereto for the year ended January 1, 1996 included in the Company's 1995
Annual Report on Form 10-K.
For interim financial reporting purposes, the Company reports on a 13-week
quarter. The results of operations for the three and six month periods ended
July 1, 1996 are not necessarily indicative of the results to be expected for
the full year.
2. Balance Sheet Components
July 1, January 1,
1996 1996
---------- ----------
Inventories:
Raw materials $ 12,083 $ 9,859
Work in process 18,124 12,682
Finished goods 14,958 6,437
---------- ----------
$ 45,165 $ 28,978
========== ==========
3. Net Income Per Share
Net income per share is computed using the weighted average number of shares of
outstanding common stock and common equivalent shares, when dilutive. Common
equivalent shares include shares issuable under the Company's stock option
plans as determined by the treasury stock method. Fully diluted earnings per
share assumes full conversion of the convertible subordinated notes into common
shares and the elimination of the related interest requirements (net of income
taxes).
4. Impact of Litigation
In the normal course of business, the Company receives and makes inquiries with
regard to possible patent infringement. Where deemed advisable, the Company
may seek or extend licenses or negotiate settlements.
In June 1995, the U.S. District Court of Northern California dismissed by a
summary judgement the class-action lawsuit filed against the Company and
certain of its officers. The suit filed was for alleged violations of the
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<PAGE>8
Securities Exchange Act of 1934 and certain provisions of state law regarding
disclosure of short-term business prospects. The plaintiffs have filed an
appeal, in which the Company will continue to defend itself. The Company will
vigorously defend itself in this matter and, subject to the inherent
uncertainties of litigation and based upon discovery completed to date,
management believes that the resolution of this matter will not have a material
adverse impact on the Company's financial position or results of operations.
However, should the outcome of this action be unfavorable, the Company may be
required to pay damages and other expenses, which could have a material adverse
effect on the Company's financial position and results of operations.
In May 1995, in a case before the U.S. District Court in Dallas, Texas, a jury
delivered a verdict of $17.8 million against the Company in a patent
infringement lawsuit filed by Texas Instruments ("TI"). In August 1995, the
judge reversed the decision stating TI failed to prove that Cypress infringed
on TI's patents covering the plastic encapsulation process used to package
semiconductor devices. In July 1996, the Federal Circuit Court of Appeals
affirmed the decision of the trial court that the Company did not infringe on
either of the patents in suit, and entered judgement to that effect. While TI
has the right to seek reconsideration of that decision and the right to
petition for a writ of certiorari from the United States Supreme Court,
litigation counsel for the Company believes that it is unlikely that any such
motion for reconsideration would be granted or that writ of certiorari would
issue. In March 1995, the Company recorded a one-time, pre-tax charge of $17.8
million with respect to the original decision. The Company will continue to
maintain this reserve pending further resolution of this matter.
In June 1995, Advanced Micro Devices ("AMD") charged the Company with patent
infringement and filed suit in the U.S. District Court in Delaware. The suit
claims that the Company infringed on several of AMD's Programmable Logic
Patents. In November 1995 the Company filed a patent infringement action
against AMD in the U.S. District Court for the District of Minnesota. The
Company alleged infringement by AMD of a number of the Company's patents in
this action. In April 1996, the Company and AMD signed a cross-licensing
agreement terminating the patent litigation between the two companies. The
agreement allows each company to continue to produce its own products with no
threat of future patent lawsuits by the other company.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Actual results could
differ from those projected in the forward-looking statements as a result of
the factors set forth in "Factors Affecting Future Results" and elsewhere in
this report.
RESULTS OF OPERATIONS:
- --------------------------
Revenues for the quarter and six month periods ended July 1, 1996 increased
0.1% and 18.6%, respectively, over the comparable periods a year ago,
increasing to $135.5 million and $305.6 million compared to $134.3 million and
$257.6 million in 1995. The $1.2 million increase in revenues, comparing the
second quarter of 1996 to the same period in 1995, was primarily attributable
to revenue growth in the Programmable Products Division ("PPD") and the
Datacommunications Division ("DCD"). Increased revenues in these product lines
more than offset the decline in revenues experienced in the Memory Products
Division ("MPD"). MPD, the Company's highest revenue producing product line,
recorded an $8.5 million decline in revenues comparing the second quarter of
1996 to the comparable quarter in 1995. Even though MPD's Static Random Access
Memory ("SRAM") line of products increased sales volume by 16% comparing the
second quarter of 1996 to the comparable quarter in 1995, the decline in SRAMs'
average selling price ("ASP") of 18% more than offset the effects of increased
volume. The decline in ASPs is primarily due to over supply of product and
resulting inventory correction by end user customers. The opposite was true in
the DCD product line, where higher ASPs increased revenue by $3.4 million
comparing the second quarter of 1996 to the comparable quarter in 1995.
Although unit sales in the second quarter of 1996 grew slightly in comparison
to the same quarter last year, higher ASPs recorded in DCD's Specialty Memory
and Channel line of products increased revenue. In addition, PPD's revenues
grew $4.0 million comparing the second quarter of 1996 to the comparable
quarter in 1995. Increased volume, particularly in the Programmable Read-Only
Memory line of products, aided the growth of revenues in PPD as the ASP of PPD
products remained relatively constant year to year.
Although revenues increased in the second quarter and in the first half of
1996 compared to the comparable periods in 1995, revenues declined
significantly in comparing the second quarter of 1996 to the first quarter of
1996 as the Company continued to experience reductions in ASPs, particularly in
its SRAM products. The decrease in ASPs is caused by overall market demand
softness, mainly attributable to over supply and the resulting inventory
corrections by end user customers, particularly in the telecommunication and
datacommunication markets. Even though end consumption is growing in these two
markets, the Company believes some customers have built up 15 to 20 weeks of
inventory which they are currently in the process of drawing down. The greater
availability of products due to excess supply has also shortened the ordering
cycle of customers due to their expectation of product availability. The
Company has continued to build certain levels of inventory for select core
products despite the overall market softness because the Company wants to
9
<PAGE>10
position itself to have sufficient levels of inventory of these products for
the anticpated growth when the market improves. The Company's inventory levels
have increased and may continue to increase in the future resulting in
potential exposure to obsolescence, excess quantities, aged inventory and
lower-of-cost-or-market write-down if demand were to not improve as expected by
the Company. The continuation of these factors in the future, which have
impacted the industry and the Company, could have a material adverse effect on
the Company's results of operations.
The Company's cost of revenues as a percentage of revenues for the quarter
and six month periods ended July 1, 1996 increased to 53.2% and 48.7%,
respectively, in comparison with 45.4% and 47.3%, respectively, for the
comparable periods in 1995. Due to lower ASPs, particularly in the SRAM
market, and a change in product mix to products yielding lower margins, cost of
revenues grew 18.3% in the second quarter of 1996 in comparison to the
comparable period in 1995, while revenues increased 0.1% comparing the same
time period. If ASPs in the future continue to erode, this could have a
material adverse effect on the Company's cost of revenues as a percentage of
revenues. The Company continues to explore new methods of reducing
manufacturing costs in order to mitigate the effects of declining ASPs.
Research and development("R & D") expenses were 16.2% and 14.2% of revenues for
the quarter and six month periods ended July 1, 1996, versus 12.2% and 12.4%
in the comparable periods for 1995. Actual R & D spending increased $5.6
million and $11.3 million, respectively, from the comparable quarter and six
month periods in the prior year as the Company continued to increase spending
in R & D to accelerate the development of new products and enhance its design
and process technologies. This trend is expected to continue in the future as
the Company explores new markets and improves its design and process
technologies in an effort to increase revenue and lower costs.
Selling, general and administrative ("SG&A") expenses for the quarter and six
month periods ended July 1, 1996 have decreased to 11.4% and 11.0% of revenues,
respectively, compared to 13.0% and 12.7%, respectively, in the comparable
periods a year ago. Actual spending was $2.0 million less in the second
quarter of 1996 in comparison to the second quarter of 1995. Selling and
marketing expenditures decreased $0.7 million and general and administrative
expenses decreased $1.3 million. In the second quarter of 1995, the Company
incurred legal expenditures in excess of typical levels related to the Texas
Instruments patent infringement lawsuit and the securities class-action
lawsuit, thus increasing general and administrative expenditures. In the
second quarter of 1996, salesmen commissions were significantly less than in
the comparable period in 1995. Last year, the Company incurred higher costs in
sales and marketing in an effort to maintain its growth rate in revenues.
Operating income for the quarter ended July 1, 1996 was $26.0 million, or 19.2%
of revenues. This was a decrease from the comparable period in 1995 which
recorded operating income of $39.5 million, or 29.4% of revenues. As a result
of lower ASPs, the Company's gross margin in the second quarter of 1996
decreased to 46.8% compared to 54.7% in the comparable period a year ago.
Operating income for the six month period ended July 1, 1996 was $79.7 million
or 26.1% of revenues compared to $53.2 million, or 20.7% of revenues in the
comparable period in 1995. During the first quarter of 1995 the Company
recorded a one-time charge of $17.8 million ($11.3 million net of taxes)
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related to the verdict issued against the Company in the patent infringement
lawsuit filed by Texas Instruments. Without the one-time charge, operating
income for the six month period ended July 3, 1995 would have been $71.0
million, or 27.6% of revenues.
Net interest and other income for the quarter and six month periods ended July
1, 1996 were $0.6 million and $0.8 million, respectively, compared to $0.8
million and $1.4 million in the comparable periods for 1995. The decrease in
net interest and other income is directly related to a significantly lower
average cash balance in 1996 compared to 1995, resulting in lower interest
income.
FACTORS AFFECTING FUTURE RESULTS:
- -----------------------------------
The Company believes that its future operating results will continue to be
subject to variations based on a wide variety of factors. Such factors
include, but are not limited to: general economic conditions, the cyclical
nature of the semiconductor industry and the markets addressed by the Company's
products such as networking, computer and telecommunications markets, failure
of expected growth in demand for, or areas of expected new demand for,
semiconductor products to materialize, the availability and extent of
utilization of manufacturing capacity, inventory and valuation exposure,
fluctuations in manufacturing yields, price erosion, competitive factors, the
timing of new product introductions, product obsolescence, obsolescence of
acquired technologies and product designs and the ability to develop and
implement new technologies including the ramp of the Company's RAM3 process to
full commercial production.
The Company is expecting to begin production in its new assembly and test
facilities in the Philippines in the second half of 1996. Should the Company
encounter problems during the ramp up of production, this could have a material
adverse affect on the Company's results of operation.
The Company also depends on subcontractors for a portion of the assembly and
test manufacturing of its products, which presents risks including the lack
of guaranteed production capacity, delay in delivery, susceptibility to
disruption in supply, the reduced control over product cost, adverse weather
conditions, and manufacturing yields. The Company's operating results could
also be impacted by sudden fluctuations in customer requirements, currency
exchange rate fluctuations and other economic conditions affecting customer
demand and the cost of operations in one or more of the global markets in which
the Company does business. Typically, the Company requires new orders, in
addition to its existing backlog, to meet each quarter's revenue plan. Failure
to obtain such new orders could cause the Company to not meet its revenue plan.
As a participant in the semiconductor industry, the Company operates in a
technologically advanced, rapidly changing and highly competitive environment.
While the Company cannot predict what effect these and other factors will have
on the Company, they could result in significant volatility in the Company's
future performance. To the extent the Company's performance may not meet
expectations published by external sources, public reaction could result in a
sudden and significantly adverse impact on the market price of the Company's
securities, particularly on a short-term basis.
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The Company's headquarters and some manufacturing facilities are located near
major earthquake faults. In the event of a major earthquake, the Company could
suffer damages which could materially and adversely affect the operating
results and financial condition of the Company.
Current pending material litigation and claims are described in Note 4 of the
Notes to the Condensed Consolidated Financial Statements. The Company will
vigorously defend itself in these matters and, subject to the inherent
uncertainties of litigation and based upon discovery completed to date,
management believes that the resolution of these matters will not have a
material adverse impact on the Company's financial position or results of
operations. However, should the outcome of any of these actions be
unfavorable, the Company may be required to pay damages and other expenses,
which could have a material adverse effect on the Company's financial position
and results of operations. In addition, the Company could be required to alter
certain of its production processes or products as a result of these matters.
LIQUIDITY AND CAPITAL RESOURCES:
- ---------------------------------
The Company's cash, cash equivalents and short-term investments totaled $65.5
million at July 1, 1996, a decrease of $96.2 million compared to the end of
1995. The decrease in cash, cash equivalents and short-term investments was
primarily due to the purchase of capital equipment and the repurchase of its
own common stock.
During the first six months of 1996, the Company generated $87.3 million in
cash from operations, compared to $69.3 million in the comparable period in
1995. A majority of the increase in cash from operations can be attributed to
higher revenues and earnings recorded in the first six months of 1996 compared
to 1995. During the first six months of 1996, the Company generated $21.1
million in cash from a reduction in accounts receivable. This generation of
cash was partially offset by an increase in inventory of $16.2 million over the
same time period. Both the decrease in accounts receivable and the increase in
inventory are a result of declining revenues experienced throughout 1996 caused
by current market conditions.
Cash used for investing activities was $50.1 million for the first six months
of 1996, compared to a cash use of $108.1 million in the comparable period in
1995. During the first half of 1996, the Company purchased $143.0 million in
capital equipment, primarily to increase capacity and increase capability in
the Company's fabrication facilities in San Jose, Minnesota and Texas. The
Company also increased the level of capital spending during the second quarter
of 1996 in order to prepare its new assembly and test facility in the
Philippines for production in the third quarter of this year. Capital
purchases for the remainder of 1996 are expected to be approximately $80.0
million as the Company continues to buy equipment to expand backend
manufacturing capacity and to increase capability in the domestic wafer
fabrication facilities. Projected capital purchases are less than previous
estimates due to the Company's decision in the second quarter to delay the
construction of Fab V. Offsetting the purchases of capital equipment was the
conversion of short-term investments into cash of $91.2 million. A majority of
the cash was used to purchase capital equipment and to fund the repurchase of
the Company's common stock.
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Cash used for financing activities in the first half of 1996 was $42.3 million,
compared to a generation of cash of $7.8 million during the comparable period
in 1995. During the first quarter of 1996, the Company continued its stock
repurchase program by purchasing 2.8 million shares of its own common stock for
approximately $32.9 million, completing the repurchase program authorized by
the Company's Board of Directors in the fourth quarter of 1995. The Company
also increased its restricted investments by $21.3 million during the first six
months of 1996 bringing the total to $60.5 million at the end of the second
quarter. During the first six months of 1995, the Company increased its
restricted investments by $14.7 million. These restricted investments relate
to certain operating lease agreements entered into by the Company in 1994, 1995
and 1996 with respect to its office and manufacturing facilities in San Jose
and Minnesota. These agreements require quarterly payments which vary based on
the London interbank offering rate (LIBOR) and provide the Company with the
option of either acquiring the properties at their original cost or arranging
for the property to be acquired at the end of the respective lease terms. The
Company must maintain a specific level of restricted cash or investments to
serve as collateral for these leases and maintain compliance with certain
financial covenants. The restricted investments are classified as non-current
assets on the balance sheet.
In July 1996, the Company entered into an agreement with certain banks securing
a three-year, unsecured, $100,000,000 revolving line of credit. The applicable
interest rate for usage under this agreement will be a spread over LIBOR. The
spread is a graduated scale, by usage, ranging from 35 to 60 basis points
(0.35% to 0.60%). Under the agreement, usage of this facility will require the
Company to comply with certain financial and other restrictive covenants.
While the Company plans to fund working capital requirements through existing
capital resources and internally generated cash flow, the Company may, based
upon favorable market conditions, choose to raise additional capital through
the issuance of equity or debt securities of the Company or borrow under its
revolving line of credit. The Company may also from time to time consider
using available funds to acquire complementary technologies and businesses,
although it has no current plans to make such an acquisition.
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PART II - OTHER INFORMATION
ITEM 1. The information required by this item is included in Part I in Note 4
of Notes to the Condensed Consolidated Financial Statements.
ITEM 4. Submission of Matters to a Vote of Security Holders
On May 3, 1996, at the Company's Annual Meeting of Shareholders, the
nominated slate of directors was elected, the amendment to the
Company's 1994 Stock Option Plan was approved and the appointment of
the independent accountants was ratified. The results of the votes
were as follows:
(1) Approval of Directors:
Total Votes
Total Votes For Withheld From
Each Director Each Director
--------------- -------------
T.J. Rodgers 58,004,705 831,852
Pierre R. Lamond 58,446,457 390,100
Fred B. Bialek 56,505,644 2,330,913
Eric A. Benhamou 58,450,366 386,191
John C. Lewis 58,454,028 382,529
(2) Approve the amendment to the Company's 1994 Stock Option Plan:
For 55,986,591 Against 1,654,608 Abstain 74,166
(3) Ratification of the appointment of Independent Accountants:
For 33,934,570 Against 41,750 Abstain 49,701
ITEM 6:
(a) Exhibit - 11.1 "Computation of Net Income Per Share and Dilutive
Common Share Equivalents"
(b) Reports on Form 8-K - None
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<TABLE>
CYPRESS SEMICONDUCTOR CORPORATION
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER COMMON SHARE AND DILUTIVE
COMMON SHARE EQUIVALENTS
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
Jul. 1, Jul. 3, Jul. 1, Jul. 3,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY:
- ----------------------------
Weighted average number of
common shares outstanding 79,773 81,214 79,870 80,040
Common share equivalents:
Dilutive effect of
outstanding stock options 3,512 8,343 3,482 8,350
---------- ---------- ---------- ----------
Weighted average number of
common shares and dilutive
common share equivalents
outstanding 83,285 89,557 83,352 88,390
========== ========== ========== ==========
Net income used in per share
computation $ 16,865 25,602 $ 51,142 $ 34,707
========== ========== ========== ==========
Net income per common and
common equivalent share $ 0.20 $ 0.29 $ 0.61 $ 0.39
========== ========== ========== ==========
FULLY DILUTED:
- ----------------------------
Weighted average number of
common shares outstanding 79,773 81,214 79,870 80,040
Common share equivalents:
Dilutive effect of
outstanding stock options 3,514 9,090 3,483 8,946
Shares issuable upon
conversion of convertible
subordinated notes 7,940 7,940 7,940 7,940
---------- ---------- ---------- ----------
Weighted average number of
common shares and dilutive
common share equivalents
outstanding 91,227 98,244 91,293 96,926
========== ========== ========== ==========
15
<PAGE>16
CYPRESS SEMICONDUCTOR CORPORATION
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER COMMON SHARE AND DILUTIVE
COMMON SHARE EQUIVALENTS (Continued)
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
Jul. 1, Jul. 3, Jul. 1, Jul. 3,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income used in per share
computation $ 17,790 $ 26,505 $ 52,981 $ 36,503
========== ========== ========== ==========
Net income per common and
common equivalent share $ 0.20 $ 0.27 $ 0.58 $ 0.38
========== ========== ========== ==========
</TABLE>
16
<PAGE>17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CYPRESS SEMICONDUCTOR CORPORATION
Date: August 15, 1996 /s/ T.J. Rodgers
----------------------- ---------------------------------
T.J. Rodgers
President and Chief Executive
Officer
/s/ Emmanuel Hernandez
---------------------------------
Emmanuel Hernandez
Vice President, Finance and
Administration and Chief Financial
Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER AND SIX MONTH
PERIODS ENDED JULY 1, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-30-1996 DEC-30-1996
<PERIOD-START> APR-02-1996 JAN-02-1996
<PERIOD-END> JUL-01-1996 JUL-01-1996
<CASH> 4,481 4,481
<SECURITIES> 60,972 60,972
<RECEIVABLES> 85,886 85,886
<ALLOWANCES> 2,341 2,341
<INVENTORY> 45,165 45,165
<CURRENT-ASSETS> 251,815 251,815
<PP&E> 682,545 682,545
<DEPRECIATION> 247,969 247,969
<TOTAL-ASSETS> 770,946 770,946
<CURRENT-LIABILITIES> 150,313 150,313
<BONDS> 97,043 97,043
<COMMON> 903 903
0 0
0 0
<OTHER-SE> 496,812 496,812
<TOTAL-LIABILITY-AND-EQUITY> 770,946 770,946
<SALES> 135,464 305,635
<TOTAL-REVENUES> 135,464 305,635
<CGS> 72,015 148,876
<TOTAL-COSTS> 72,015 148,876
<OTHER-EXPENSES> 21,989 43,405
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,482 3,129
<INCOME-PRETAX> 26,551 80,531
<INCOME-TAX> 9,686 29,389
<INCOME-CONTINUING> 16,865 51,142
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 16,865 51,142
<EPS-PRIMARY> 0.20 0.61
<EPS-DILUTED> 0.20 0.58
</TABLE>
