Cypress Reports Second Quarter 2002 Results

7/19/2002 - Cypress Semiconductor Corporation (NYSE: CY) today announced that revenue for the 2002 second quarter, ended June 30, 2002, was $202.1 million, up 5% from 2002 first quarter revenue of $193.2 million and up 9% from year-ago quarter revenue of $185.5 million. Pro forma net loss for the 2002 second quarter was $6.3 million, resulting in a pro forma loss per share of $0.05, compared with a first quarter 2002 pro forma loss per share of $0.10 and year-ago second quarter pro forma earnings of $0.01 per diluted share. Including acquisition-related costs, restructuring or non-recurring charges, and credits, Cypress posted a net loss of $28.1 million for the second quarter, resulting in a loss per share of $0.23, compared with a first quarter 2002 loss per share of $0.33.

Cypress CEO T.J. Rodgers said, “We are pleased to have achieved our third sequential quarterly growth in revenue and continued improvement in earnings to a five-cent loss, closing in on our goal to break even in the third quarter. Bookings grew 9% to $219.9 million, resulting in a book-to-bill of 1.09, providing a modest increase in backlog, also for the third consecutive quarter. However, we still need bookings in the September quarter to reach our break even target.”

Rodgers continued, “Our gross margin improved nicely from 39% last quarter to 45% in the second quarter, due to a better product mix, slower price erosion, and the initial cost reduction benefit from our 0.15-micron conversion. The company also successfully sold some fully reserved inventory, which contributed approximately 3 percentage points to our gross margin. Operating expenses were relatively flat as a percentage of sales with incremental spending driven largely by technology and product-design-related depreciation.”

MARKET SEGMENTS

Wide Area Network and Storage Area Network (WAN/SAN)
Revenue from the WAN/SAN segments, which accounted for 33% of second quarter revenue, increased 6% quarter-to-quarter. The WAN/SAN segment posted a gross margin of 57% in the second quarter. We expect continued modest recovery in the WAN/SAN segment in the third quarter, aided by incremental new product revenue and market share gain. Segment highlights for the quarter include:

Wireless Terminals and Wireless Infrastructure (WIT/WIN)
Revenue from the WIT/WIN segments, which accounted for 34% of second quarter revenue, increased by 14% from the prior quarter, driven by an increase in cellular handset business and the continued shift toward higher-density memories in cell phones. The WIT/WIN segment posted a gross margin of 38% in the second quarter. We expect WIT/WIN sales to be slightly up in the third quarter of 2002. Segment highlights for the quarter include:

Computation and Other
Revenue from the computation and other segment, which accounted for 33% of second quarter revenue, decreased 5% from the prior quarter with cyclically down PC-related clock sales offset by some strength in the consumer market. Gross margins were 41% in the second quarter. We expect this market segment to have slightly higher revenue in the third quarter of 2002. Segment highlights for the quarter include:

Other Developments

Conclusion
Rodgers concluded, “We have grown in each of the last three quarters. We expect to grow again in the September quarter with continuing increased activity in the wireless and consumer-related markets and a seasonal uptick in the computation market. Our goal is to break even in the September quarter.”

About Cypress
Cypress Semiconductor Corporation (NYSE: CY) is Connecting from Last Mile to First Mile™ with high-performance solutions for personal, network access, enterprise, metro switch, and core communications-system applications. Cypress Connects™ using wireless, wireline, digital, and optical transmission standards, including Bluetooth, USB, Fibre Channel, SONET/SDH, Gigabit Ethernet, and DWDM. Leveraging its process and system-level expertise, Cypress makes industry-leading physical layer devices, framers, and network search engines, along with a broad portfolio of high-bandwidth memories, timing technology solutions, and programmable microcontrollers. More information about Cypress is accessible online at www.cypress.com

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements herein that are not historical facts are “forward-looking statements” involving risks and uncertainties, including but not limited to: the effect of global economic conditions, shifts in supply and demand, market acceptance, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints. Please refer to Cypress's Securities and Exchange Commission filings for a discussion of such risks.

Cypress, the Cypress logo, Warp, and EZ-USB are registered trademarks of Cypress Semiconductor Corporation.

POSIC2GVC, POSIC10G, Ayama, Total Timing Budget, TTB, Quantum38K, Delta39K, RAM7, HOTLink II, Programmable Serial Interface, PSI, Programmable System-on-Chip, PsoC, EZ-USB AT2, Grating Light Valve, GLV, Connecting from Last Mile to First Mile, and Cypress Connects are trademarks of Cypress Semiconductor Corporation.

All other registered trademarks or trademarks are the property of their respective owners.

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