UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013
OR
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☐ |
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 001-34747
SPANSION INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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20-3898239 |
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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915 DeGuigne Drive Sunnyvale, California |
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94085 |
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(Address of principal executive offices) |
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(Zip Code) |
(408) 962-2500
(Registrant’s telephone number, including area code)
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 the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer ☒ |
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Accelerated filer ☐ |
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Non-accelerated filer ☐ |
Smaller reporting company ☐ |
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the close of business on July 31, 2013:
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Class |
Number of Shares | |
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Class A Common Stock, $0.001 par value Class B Common Stock, $0.001 par value |
58,729,476 1 |
Table of Contents
INDEX
| Page No. | ||||||||||||
|
Part I. |
Financial Information |
|||||||||||
|
Item 1. |
Financial Statements |
3 | ||||||||||
|
|
|
Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2013 and July 1, 2012 (Unaudited) |
3 | |||||||||
|
|
|
|||||||||||
|
|
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Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and Six Months Ended June 30, 2013 and July 1, 2012 (Unaudited) |
4 | |||||||||
|
|
|
|||||||||||
|
|
|
Condensed Consolidated Balance Sheets – June 30, 2013 (Unaudited) and December 30, 2012 |
5 | |||||||||
|
|
|
|||||||||||
|
|
|
Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2013 and July 1, 2012 (Unaudited) |
6 | |||||||||
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|
|
|||||||||||
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Notes to Condensed Consolidated Financial Statements |
7 | |||||||||||
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 | |||||||||
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|
|
|||||||||||
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
30 | |||||||||
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Item 4. |
Controls and Procedures |
32 | ||||||||||
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Part II. |
Other Information |
|||||||||||
| Item 1. |
Legal Proceedings |
33 | ||||||||||
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Item 1A. |
Risk Factors |
33 | ||||||||||
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Item 6. |
Exhibits |
39 | ||||||||||
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Signature |
40 | |||||||||||
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Spansion Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended June 30, 2013 July 1, 2012 June 30, 2013 July 1, 2012 Net sales Cost of sales Gross Profit Research and development Sales, general and administrative Net gain on sale of Kuala Lumpur land and building Restructuring charges (credits) Operating income (loss) Interest and other income (expense) Interest expense Income (loss) before income taxes Provision (benefit) for income taxes Net income (loss) Less: Net loss attributable to the noncontrolling interest Net income (loss) attributable to Spansion Inc. common stockholders Net income (loss) per share Basic Diluted Shares used in per share calculation Basic Diluted
$
195,070
$
233,440
$
384,642
$
452,198
137,714
159,529
281,431
319,089
57,356
73,911
103,211
133,109
23,548
29,631
46,325
55,671
34,414
35,617
62,897
68,257
-
(28,434
)
-
(28,434
)
-
(729
)
-
3,788
(606
)
37,826
(6,011
)
33,827
3,118
(556
)
4,080
949
(7,378
)
(7,903
)
(14,982
)
(15,585
)
(4,866
)
29,367
(16,913
)
19,191
(1,635
)
3,370
753
6,815
(3,231
)
25,997
(17,666
)
12,376
-
-
-
(503
)
$
(3,231
)
$
25,997
$
(17,666
)
$
12,879
$
(0.06
)
$
0.43
$
(0.30
)
$
0.22
$
(0.06
)
$
0.43
$
(0.30
)
$
0.21
58,646
59,975
58,366
59,832
58,646
60,475
58,366
60,590
See accompanying notes.
Spansion Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(Unaudited)
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
Net income (loss) |
$ | (3,231 | ) | $ | 25,997 | $ | (17,666 | ) | $ | 12,376 | ||||||
|
Other comprehensive income (loss), net of tax: |
||||||||||||||||
|
Gain on auction rate securities reclassified into earnings |
- | - | (1,200 | ) | - | |||||||||||
|
Net foreign currency translation gain (loss) |
(482 | ) | 134 | (1,537 | ) | (46 | ) | |||||||||
|
Net unrealized gain on cash flow hedges: |
||||||||||||||||
|
Net unrealized hedge gain arising during the period |
6,317 | 217 | 14,060 | 217 | ||||||||||||
|
Net gain reclassified into earnings for cash flow hedges (ineffective portion) |
(2,415 | ) | - | (2,415 | ) | - | ||||||||||
|
Net gain reclassified into earnings for cash flow hedges (effective portion) |
(2,835 | ) | - | (4,588 | ) | - | ||||||||||
|
Net unrealized gain on cash flow hedges |
1,067 | 217 | 7,057 | 217 | ||||||||||||
|
Other comprehensive income, net of tax |
585 | 351 | 4,320 | 171 | ||||||||||||
|
Total comprehensive income (loss), net of tax |
(2,646 | ) | 26,348 | (13,346 | ) | 12,547 | ||||||||||
|
Less: Comprehensive loss attributable to noncontrolling interest |
- | - | - | (503 | ) | |||||||||||
|
Comprehensive income (loss) attributable to Spansion Inc. common stockholders |
$ | (2,646 | ) | $ | 26,348 | $ | (13,346 | ) | $ | 13,050 | ||||||
See accompanying notes.
Spansion Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value and share amounts)
(Unaudited)
June 30, 2013 December 30, 2012 Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Deferred income taxes Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Intangible assets, net Goodwill Other assets Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued compensation and benefits Other accrued liabilities Income taxes payable Deferred income Current portion of long-term debt Total current liabilities Deferred income taxes Long-term debt, less current portion Other long-term liabilities Total liabilities Commitments and contingencies (Note 14) Stockholders’ equity: Capital stock: Class A common stock, $0.001 par value, 150,000,000 shares authorized, 58,698,273 shares issued and outstanding (57,267,409 shares as of December 30, 2012) Class B common stock, $0.001 par value, 1 share authorized, 1 share issued and outstanding Preferred stock, $0.001 par value, 50,000,000 shares authorized, 0 shares issued and outstanding Additional paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) (Note 5) Total stockholders' equity Total liabilities and stockholders' equity
$
205,535
$
262,177
99,751
51,720
112,865
106,864
197,082
182,192
8,644
8,699
36,609
28,531
660,486
640,183
174,369
176,728
134,528
149,153
166,558
166,931
33,627
39,171
$
1,169,568
$
1,172,166
$
83,607
$
85,542
18,597
26,080
32,989
29,913
2,066
2,618
15,140
9,135
4,887
5,382
157,286
158,670
9,234
9,393
409,602
410,913
27,263
31,416
603,385
610,392
-
-
59
58
-
-
-
-
708,645
690,891
(145,357
)
(127,691
)
2,836
(1,484
)
566,183
561,774
$
1,169,568
$
1,172,166
See accompanying notes.
Spansion Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
Six Months Ended |
||||||||
|
June 30, 2013 |
July 1, 2012 |
|||||||
|
Cash Flows from Operating Activities: |
||||||||
|
Net income (loss) |
$ | (17,666 | ) | $ | 12,376 | |||
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
|
Depreciation and amortization |
39,269 | 51,779 | ||||||
|
Gain on liquidation of auction rate securities |
(1,200 | ) | (1,059 | ) | ||||
|
Provision for deferred income taxes |
9 | 1,913 | ||||||
|
Net gain on sale of Kuala Lumpur land and building |
- | (28,434 | ) | |||||
|
Net gain on sale and disposal of property, plant and equipment |
(957 | ) | (4,209 | ) | ||||
|
Asset impairment charges |
- | 2,070 | ||||||
|
Compensation recognized under employee stock plans |
16,296 | 15,415 | ||||||
|
Changes in assets and liabilities |
(20,770 | ) | (27,970 | ) | ||||
|
Net cash provided by operating activities |
14,981 | 21,881 | ||||||
|
Cash Flows from Investing Activities: |
||||||||
|
Proceeds from liquidation of auction rate securities |
1,530 | 1,059 | ||||||
|
Proceeds from sale of property, plant and equipment |
934 | 42,643 | ||||||
|
Purchases of property, plant and equipment |
(24,712 | ) | (18,587 | ) | ||||
|
Proceeds from maturities of marketable securities |
43,073 | 55,045 | ||||||
|
Purchases of marketable securities |
(91,104 | ) | (51,449 | ) | ||||
|
Net cash provided by (used for) investing activities |
(70,279 | ) | 28,711 | |||||
|
Cash Flows from Financing Activities: |
||||||||
|
Proceeds from issuance of common stock due to options exercised |
1,459 | 1,331 | ||||||
|
Refinancing cost on Revolver |
(198 | ) | - | |||||
|
Payments on debt |
(2,105 | ) | (14,830 | ) | ||||
|
Acquisition of noncontrolling interest |
- | (3,304 | ) | |||||
|
Cash settlement on hedging activies |
(268 | ) | (531 | ) | ||||
|
Net cash used for financing activities |
(1,112 | ) | (17,334 | ) | ||||
|
Effect of exchange rate changes on cash and cash equivalents |
(232 | ) | 19 | |||||
|
Net increase (decrease) in cash and cash equivalents |
(56,642 | ) | 33,277 | |||||
|
Cash and cash equivalents, beginning of period |
262,177 | 194,850 | ||||||
|
Cash and cash equivalents, end of period |
$ | 205,535 | $ | 228,127 | ||||
|
Non-cash investing and financing activities: |
||||||||
|
Liabilities recorded for purchases of property, plant and equipment |
$ | 11,210 | $ | 8,339 | ||||
See accompanying notes.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)
(Unaudited)
1. Basis of Presentation
The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited interim financial statements reflect all normal and recurring adjustments considered necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The December 30, 2012 condensed consolidated balance sheet data were derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2012, but does not include all disclosures required by U.S. GAAP for annual periods.
These condensed consolidated financial statements and related notes are unaudited and should be read in conjunction with the Company’s audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2012 as filed with the SEC on February 25, 2013. The results of operations for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any other interim period or for the full fiscal year.
The Company operates on a 52- to 53-week fiscal year ending on the last Sunday in December. The additional week in a 53-week fiscal year is added to the second quarter to realign the Company’s fiscal quarters more closely to calendar quarters. Fiscal 2013 and fiscal 2012 are comprised of 52-week and 53-week periods, respectively. Accordingly the quarters ended June 30, 2013 and July 1, 2012 are comprised of 13-week and 14-week periods, respectively.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries, and all intercompany accounts and transactions have been eliminated. The fiscal 2012 financial statements also include a variable interest entity (VIE) for which the Company was the primary beneficiary through March 31, 2012. The VIE’s financial statements were not significant to the Company’s condensed consolidated financial statements for the periods presented. On April 1, 2012, the Company acquired substantially all assets and assumed certain liabilities of the VIE under an asset purchase agreement and the entity ceased to be a VIE as of the acquisition date.
Use of Estimates
The preparation of the Company’s consolidated financial statements and disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of commitments and contingencies and the reported amounts of revenues and expenses during the reporting periods. Estimates are used to account for the fair value of certain marketable securities, revenue adjustments, the allowance for doubtful accounts, inventory reserves, valuation of intangible assets, impairment of long-lived assets, legal contingencies, income taxes, stock-based compensation expenses, the fair value of long-term debt, and product warranties. Actual results may differ from those estimates, and such differences may be material to the Company’s condensed consolidated financial statements.
2. Recent Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board (FASB) issued guidance to provide enhanced disclosures related to reclassifications out of accumulated other comprehensive income (AOCI). An entity will be required to disclose the effect of significant reclassifications out of AOCI on the respective line items in net income if an amount in AOCI is reclassified in its entirety. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The adoption of this guidance beginning in the first quarter of fiscal 2013 did not have an impact on the Company’s financial position, results of operations or cash flows.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
In December 2011, the FASB issued an accounting standard update requiring enhanced disclosure related to certain financial instruments and derivative instruments that are offset in the balance sheet or subject to enforceable master netting arrangement or similar arrangement. In January 2013, the FASB clarified the scope of this guidance as being applicable to derivatives, repurchase agreements and securities borrowing and lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirement becomes effective for the Company beginning the first quarter of fiscal year ending December 28, 2014. The adoption of this guidance is not expected to have an impact on the Company’s financial position, results of operations or cash flows.
3. Acquisition
On August 1, 2013, the Company completed the acquisition of the Microcontroller and Analog business of Fujitsu Semiconductor Limited (FSL). The Company paid approximately $148.0 million for the stock and assets relating to this business, subject to adjustments.
The results of the acquired Microcontroller and Analog business will be included in the consolidated financial statements following the acquisition date. The Company is currently evaluating the purchase price allocation following the consummation of the transaction. It is not possible to disclose the preliminary purchase price allocation or unaudited pro forma combined financial information given the short period of time between the acquisition date and the filing of this report.
4. Balance Sheet Components
The Company’s cash balances are held in numerous locations throughout the world, with the majority in the United States. As of June 30, 2013, the Company had cash, cash equivalents, and short-term investments of $293.5 million held within the United States and $11.8 million held outside of the United States. As of December 30, 2012, the Company had cash, cash equivalents, and short term investments of $303.1 million held within the United States and $10.8 million held outside of the United States.
All securities other than the Federal Deposit Insurance Corporation (FDIC) insured certificates of deposit were designated as available-for-sale. FDIC insured certificates of deposit are held to maturity. Gross unrealized gains and losses on cash equivalents and short term investments were not material as of June 30, 2013 and December 30, 2012. Gross realized gains and losses on cash equivalents and short term investments were not material for the three months and six months ended June 30, 2013 and July 1, 2012.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
|
June 30, 2013 |
December 30, 2012 |
|||||||
|
(in thousands) |
||||||||
|
Cash and cash equivalents |
||||||||
|
Cash |
$ | 199,414 | $ | 258,126 | ||||
|
Cash equivalents: |
||||||||
|
Money market funds |
2,060 | 1,181 | ||||||
|
FDIC insured certificates of deposit |
4,061 | 2,870 | ||||||
|
Cash and cash equivalents |
$ | 205,535 | $ | 262,177 | ||||
|
Short-term investments |
||||||||
|
Commercial paper |
$ | 14,984 | $ | 14,980 | ||||
|
Time Deposit |
50,013 | - | ||||||
|
FDIC insured certificates of deposit |
34,754 | 36,740 | ||||||
|
Short-term investments |
$ | 99,751 | $ | 51,720 | ||||
|
Account receivable, net |
||||||||
|
Accounts receivable, gross |
$ | 113,164 | $ | 107,127 | ||||
|
Allowance for doubtful accounts |
(299 | ) | (263 | ) | ||||
|
Account receivable, net |
$ | 112,865 | $ | 106,864 | ||||
|
Inventories |
||||||||
|
Raw materials |
$ | 9,430 | $ | 8,647 | ||||
|
Work-in-process |
156,335 | 149,722 | ||||||
|
Finished goods |
31,317 | 23,823 | ||||||
|
Inventories |
$ | 197,082 | $ | 182,192 | ||||
|
Property, plant and equipment, net |
||||||||
|
Land |
$ | 45,168 | $ | 45,168 | ||||
|
Buildings and leasehold improvements |
60,974 | 59,807 | ||||||
|
Equipment |
351,099 | 341,129 | ||||||
|
Construction in progress |
19,372 | 11,694 | ||||||
|
Accumulated depreciation and amortization |
(302,244 | ) | (281,069 | ) | ||||
|
Property, plant and equipment, net |
$ | 174,369 | $ | 176,728 | ||||
|
Accrued Compensation and Benefits |
||||||||
|
Accrued Vacation |
$ | 9,258 | $ | 9,404 | ||||
|
Others |
9,339 | 16,676 | ||||||
|
Accrued Compensation and Benefits |
$ | 18,597 | $ | 26,080 | ||||
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
5. Accumulated Other Comprehensive Income
The following table summarizes the activity related to accumulated other comprehensive loss, net of tax:
|
Foreign Currency Translation Adjustment |
Net Gains and Losses on Cash Flow Hedges |
Unrealized Gains and Losses on Available-for-Sale Securities |
Total | |||||||||||
|
(in thousands) | ||||||||||||||
|
Beginning Balance, December 30, 2012 |
$ | (2,685 | ) | $ | 1 | $ | 1,200 | $ | (1,484 | ) | ||||
|
Other comprehensive income before reclassification, net of tax |
(1,537 | ) | 14,060 | - | 12,523 | |||||||||
|
Amounts reclassified to earnings (ineffective portion) |
- | (2,415 | ) | (2) | - | (2,415 | ) | |||||||
|
Amounts reclassified to earnings (effective portion) |
- | (4,588 | ) | (1) | - | (4,588 | ) | |||||||
| Amounts reclassified on sale of Auction Rate Securities | - | - | (1,200 | ) | (2) | (1,200 | ) | |||||||
|
Net other comprehensive income |
$ | (1,537 | ) | $ | 7,057 | $ | (1,200 | ) | $ | 4,320 | ||||
|
Ending Balance, June 30, 2013 |
$ | (4,222 | ) | $ | 7,058 | $ | - | $ | 2,836 | |||||
(1) Reclassified into Net Sales line item of the Condensed Consolidated Statement of Operations (See Note 11 for further details).
(2) Reclassified into Interest and Other Income line item of the Condensed Consolidated Statement of Operations (See Note 11 for further details on the ineffective portion of cash flow hedges).
6. Equity Incentive Plan and Stock-Based Compensation
Equity Incentive Plan
The Company’s 2010 Equity Incentive Award Plan (2010 Plan) provides for the grant of stock options, stock appreciation rights, restricted stock units, restricted stock, performance awards, and deferred stock to its employees, consultants and non-employee members of its Board of Directors.
In the first half of fiscal 2013, the Company granted performance-based restricted stock units (PSUs) to certain senior executives. The PSUs have vesting percentages ranging from 0% to 100%, calculated based on the relative Total Shareholder Return (TSR) of the Company’s common stock as compared to the TSR of its peer companies. These awards are divided into two equal tranches, each with an 18-month performance period. The first performance period is from February 1, 2013 through July 31, 2014 and the second performance period is from August 1, 2014 through January 31, 2016. The grant date fair value for these grants is estimated using the Monte-Carlo option pricing model.
The numbers of shares of common stock available for grant under the 2010 Plan are shown in the following table:
|
Shares Available For Grant |
||||
|
Balance as of December 30, 2012 |
1,103,450 | |||
|
Additional shares issuable under 2010 Plan (annual increase for 2013) |
2,577,033 | |||
|
Stock options granted, net of forfeitures/cancellations |
(308,544 | ) | ||
|
RSU awards granted, net of forfeitures/cancellations |
(756,950 | ) | ||
|
PSU awards granted, net of forfeitures/cancellations |
(340,332 | ) | ||
|
Balance as of June 30, 2013 |
2,274,657 | |||
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
Stock-Based Compensation
The following table presents the total stock-based compensation expense by financial statement caption resulting from the Company’s stock options and RSU awards:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Cost of sales |
$ | 1,379 | $ | 1,738 | $ | 2,851 | $ | 3,034 | ||||||||
|
Research and development |
2,673 | 2,109 | 5,468 | 3,695 | ||||||||||||
|
Sales, general and administrative |
3,619 | 5,121 | 7,976 | 8,686 | ||||||||||||
|
Stock-based compensation expense before income taxes |
7,671 | 8,968 | 16,295 | 15,415 | ||||||||||||
|
Stock-based compensation expense after income taxes(1) |
$ | 7,671 | $ | 8,968 | $ | 16,295 | $ | 15,415 | ||||||||
(1) There was no income tax benefit related to stock-based compensation because all of the Company's U.S. deferred tax assets, net of U.S. deferred tax liabilities, continue to be subject to a full valuation allowance.
The weighted average fair value of the Company’s stock options granted is as follows:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
Weighted average fair value of stock options granted |
$ | 4.48 | $ | 4.96 | $ | 4.88 | $ | 4.17 | ||||||||
The fair value of each stock option was estimated at the date of grant using a Black-Scholes option pricing model, with the following assumptions for grants:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
Expected volatility |
43.79 | % | 51.11 | % | 49.45 | % | 51.23 | % | ||||||||
|
Risk-free interest rate |
1.15 | % | 0.63 | % | 0.85 | % | 0.76 | % | ||||||||
|
Expected term (in years) |
4.35 | 4.35 | 4.35 | 4.35 | ||||||||||||
|
Dividend yield |
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
As of June 30, 2013, the total unrecognized compensation cost related to unvested stock options and RSU awards was approximately $39.4 million after reduction for estimated forfeitures. These stock options and RSU awards will generally vest ratably through 2016.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
The fair value of each PSU award granted in fiscal 2013 was $7.40 using a Monte-Carlo pricing model and was estimated with the following assumptions:
|
Six Months Ended |
||||
|
June 30, 2013 |
||||
|
Stock price on grant date |
$ | 11.50 | ||
|
Expected volatility |
50.90 | % | ||
|
Risk-free interest rate |
0.21 | % | ||
|
Dividend yield |
0.00 | % | ||
Stock Option and Restricted Stock Unit Activity
The following table summarizes stock option activities and related information under the 2010 Plan for the periods presented:
|
Number of Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (in Years) |
Aggregate IntrinsicValue |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Outstanding stock options as of December 30, 2012 |
6,641,892 | $ | 13.06 | 5.34 | $ | 15,228 | ||||||||||
|
Granted |
530,000 | $ | 11.65 | |||||||||||||
|
Cancelled/Forfeited |
(221,456 | ) | $ | 12.77 | ||||||||||||
|
Exercised |
(155,259 | ) | $ | 9.63 | $ | 450 | ||||||||||
|
Outstanding stock options as of June 30, 2013 |
6,795,177 | $ | 13.04 | 4.84 | $ | 10,030 | ||||||||||
|
Total vested and exercisable as of June 30, 2013 |
4,436,879 | $ | 13.48 | 4.84 | $ | 6,221 | ||||||||||
No income tax benefit was realized from stock option exercises for the three and six months ended June 30, 2013.
The following table summarizes RSU award activities and related information for the six months ended June 30, 2013:
|
RSU |
||||||||
|
Number of Shares |
Weighted Average Grant-date Fair Value |
|||||||
|
Outstanding as of December 30, 2012 |
2,518,916 | $ | 13.72 | |||||
|
Granted |
910,543 | $ | 12.46 | |||||
|
Cancelled/Forfeited |
(153,593 | ) | $ | 12.75 | ||||
|
Vested |
(841,144 | ) | $ | 11.66 | ||||
|
Outstanding as of June 30, 2013 |
2,434,722 | $ | 14.02 | |||||
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
The following table summarizes key executive RSU and PSU award activities and related information for the six months ended June 30, 2013.
|
Key Executive RSU |
PSU |
|||||||||||||||
|
Number of Shares |
Weighted Average Grant-date Fair Value |
Number of Shares |
Weighted Average Grant-date Fair Value |
|||||||||||||
|
Outstanding as of December 30, 2012 |
1,792,171 | $ | 12.02 | - | $ | - | ||||||||||
|
Granted |
- | $ | - | 376,000 | $ | 7.40 | ||||||||||
|
Cancelled/Forfeited |
(11,668 | ) | $ | 10.25 | (24,000 | ) | $ | 7.40 | ||||||||
|
Vested |
(781,049 | ) | $ | 11.54 | - | $ | - | |||||||||
|
Outstanding as of June 30, 2013 |
999,454 | $ | 12.41 | 352,000 | $ | 7.40 | ||||||||||
7. Net Income (loss) Per Share
Basic net income (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by using the weighted average number of common shares outstanding during the period, increased to include the number of additional shares of common stock that would have been outstanding if the shares of common stock underlying the Company’s outstanding dilutive stock options, RSUs and other similar equity instruments had been issued. The dilutive effect of outstanding options and RSUs is reflected in diluted net income (loss) per share by application of the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares. The following table presents the computation of basic and diluted net income (loss) per share:
|
Three Months Ended |
Six Months Ended |
||||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
||||||||||||||
| (in thousands except for per-share amounts) | |||||||||||||||||
|
Numerator: |
|||||||||||||||||
|
Net income (loss) |
$ | (3,231 | ) | $ | 25,997 | $ | (17,666 | ) | $ | 12,879 | |||||||
|
Denominator: |
|||||||||||||||||
|
Denominator for basic net income per share, weighted average shares |
58,646 | 59,975 | 58,366 | 59,832 | |||||||||||||
|
Effect of dilutive securities |
- | 500 | - | 758 | |||||||||||||
|
Denominator for diluted net income per share, weighted average shares |
58,646 | 60,475 | 58,366 | 60,590 | |||||||||||||
|
Basic net income (loss) per share |
$ | (0.06 | ) | $ | 0.43 | $ | (0.30 | ) | $ | 0.22 | |||||||
|
Diluted net income (loss) per share |
$ | (0.06 | ) | $ | 0.43 | $ | (0.30 | ) | $ | 0.21 | |||||||
|
Potentially dilutive shares excluded from the diluted income per share computation because their effect would have been anti-dilutive |
5,782 | 7,515 | 4,555 | 7,515 | |||||||||||||
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
8. Intangible Assets and Goodwill
Intangible Assets
The following table presents the balance of intangible assets as of the dates indicated below:
|
June 30, 2013 |
December 30, 2012 |
|||||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||
|
Gross Amount |
Accumulated Amortization |
Net Amount |
Gross Amount |
Accumulated Amortization |
Net Amount |
|||||||||||||||||||
|
Developed Technology |
$ | 111,376 | $ | (43,583 | ) | $ | 67,793 | $ | 111,376 | $ | (35,386 | ) | $ | 75,990 | ||||||||||
|
Customer relationships |
92,265 | (29,992 | ) | 62,273 | 93,264 | (25,191 | ) | 68,073 | ||||||||||||||||
|
Trade Names |
8,374 | (3,912 | ) | 4,462 | 8,374 | (3,284 | ) | 5,090 | ||||||||||||||||
|
Total |
$ | 212,015 | $ | (77,487 | ) | $ | 134,528 | $ | 213,014 | $ | (63,861 | ) | $ | 149,153 | ||||||||||
The actual amortization expense and estimated future amortization expense for intangible assets are summarized below:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Amortization expense |
$ | 6,813 | $ | 7,317 | $ | 13,626 | $ | 13,979 | ||||||||
|
Estimated Future Amortization |
||||
|
(in thousands) |
||||
|
Fiscal 2013 (remaining 6 months) |
$ | 12,976 | ||
|
Fiscal 2014 |
27,251 | |||
|
Fiscal 2015 |
27,251 | |||
|
Fiscal 2016 |
27,419 | |||
|
Fiscal 2017 |
16,270 | |||
|
Fiscal 2018 and beyond |
23,361 | |||
|
Total |
$ | 134,528 | ||
Goodwill
The following table presents the balance of goodwill as of the dates indicated below:
|
June 30, 2013 |
December 30, 2012 |
|||||||
|
(in thousands) |
||||||||
|
Goodwill |
$ | 166,558 | $ | 166,931 | ||||
The changes in the carrying amount of goodwill and gross balance of intangibles assets since December 30, 2012 resulted primarily from foreign currency translation adjustments.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
9. Debt
The following table summarizes the Company’s debt at June 30, 2013 and December 30, 2012:
|
June 30, 2013 |
December 30, 2012 |
|||||||
|
(in thousands) |
||||||||
|
Debt obligations: |
||||||||
|
Term Loan |
$ | 214,489 | $ | 216,295 | ||||
|
Senior Unsecured Notes |
200,000 | 200,000 | ||||||
|
Total debt |
$ | 414,489 | $ | 416,295 | ||||
|
Less: current portion |
4,887 | 5,382 | ||||||
|
Long-term debt |
$ | 409,602 | $ | 410,913 | ||||
Under the Company’s existing debt arrangements, the Company is subject to a number of covenants and the Company was in compliance with these covenants as of June 30, 2013.
10. Fair Value Measurement
The Company measures its cash equivalents, marketable securities, foreign currency forward contracts and interest rate derivative contracts at fair value. Fair value is an exit price, representing the amount that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activities.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Cash equivalents, auction rate securities and marketable securities are classified within Level 1 or Level 2. This is because the Company values them using quoted market prices or alternative pricing sources and models utilizing observable market inputs. The foreign exchange forward contracts and interest rate derivative contracts are classified as Level 2 because the valuation inputs are based on quoted prices and observable market data of similar instruments. The Company principally executes its foreign currency contracts in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants and the Company’s counterparties are large money center banks and regional banks. The valuation inputs for the Company’s foreign currency contracts are based on quoted prices and quoted pricing intervals from public data sources (specifically, spot exchange rates, LIBOR rates and credit default rates) and do not involve management judgment. In determining the fair value of the Company’s interest rate swap, the Company uses the present value of expected cash flows based on observable market interest rate yield curves and interest rate volatility commensurate with the term of each instrument.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
The fair value measurements of the Company’s financial assets and liabilities consisted of the following types of instruments categorized in the table below based upon the fair value hierarchy:
|
June 30, 2013 |
December 30, 2012 |
|||||||||||||||||||||||||||||||
|
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||||||||||
|
Money market funds |
$ | 2,060 | $ | - | $ | - | $ | 2,060 | (1) | $ | 1,181 | $ | - | $ | - | $ | 1,181 | (2) | ||||||||||||||
|
Commercial paper |
- | 14,984 | - | 14,984 | (1) | - | 14,980 | - | 14,980 | (2) | ||||||||||||||||||||||
|
Foreign Exchange Forward Contracts |
- | 10,985 | - | 10,985 | - | 3,032 | - | 3,032 | ||||||||||||||||||||||||
|
Foreign Exchange Options Contracts |
- | 197 | - | 197 | - | - | - | - | ||||||||||||||||||||||||
|
Auction rate securities |
- | - | - | - | - | 1,530 | - | 1,530 | ||||||||||||||||||||||||
|
Total financial assets |
$ | 2,060 | $ | 26,166 | $ | - | $ | 28,226 | $ | 1,181 | $ | 19,542 | $ | - | 20,723 | |||||||||||||||||
|
Interest rate swaps |
$ | - | $ | - | $ | - | $ | - | $ | - | $ | 514 | $ | - | $ | 514 | ||||||||||||||||
|
Foreign Exchange Forward Contracts |
$ | 102 | $ | 102 | $ | - | $ | 296 | $ | - | $ | 296 | ||||||||||||||||||||
|
Total financial liabilities |
$ | - | $ | 102 | $ | - | $ | 102 | $ | - | $ | 810 | $ | - | $ | 810 | ||||||||||||||||
(1) Total cash and cash equivalents, short-term investments of $305.3 million as of June 30, 2013 includes cash of $238.2 million held in operating accounts, $2.1 million in money market funds, $15.0 million in commercial paper, and $50.0 million held in time deposit accounts.
(2) Total cash and cash equivalents, short-term investments of $313.9 million as of December 30, 2012 includes cash of $297.7 million held in operating accounts, $1.2 million in money market funds and $15.0 million in commercial paper.
Fair Value of Other Financial Instruments Not Carried At Fair Value
Substantially all of the Company’s long-term debt is traded in the market and the fair value in the table below is Level 1, based on the quoted market price as of June 30, 2013 and December 30, 2012. The carrying amounts and estimated fair values of the Company’s debt instruments are as follows:
|
June 30, 2013 |
December 30, 2012 |
|||||||||||||||
|
Carrying Amount |
Estimated Fair Value |
Carrying Amount |
Estimated Fair Value |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Debt traded in the market: |
||||||||||||||||
|
Term Loan |
$ | 214,489 | $ | 215,025 | $ | 216,295 | $ | 217,917 | ||||||||
|
Senior Unsecured Notes |
200,000 | 202,000 | 200,000 | 201,000 | ||||||||||||
|
Total Debt Obligations |
$ | 414,489 | $ | 417,025 | $ | 416,295 | $ | 418,917 | ||||||||
The fair value of the Company’s cash equivalents, accounts receivable, accounts payable and other current liabilities approximates their carrying value.
11. Derivative Financial Instruments
Beginning in the second quarter of fiscal 2012, the Company entered into multiple foreign exchange forward contracts to hedge certain operational exposures resulting from movements in Japanese yen (JPY) exchange rates. The Company’s hedging policy is designed to mitigate the impact of foreign currency exchange rate movements on operating results. Some of these foreign currency forward contracts were considered to be economic hedges that were not designated as hedging instruments while others were designated as cash flow hedges. Whether designated or undesignated, these forward contracts protect the Company against the variability of forecasted foreign currency cash flows resulting from revenues and net asset or liability positions designated in currencies other than the U.S. dollar and are not speculative in nature.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
Cash Flow Hedges
The Company’s foreign currency forward contracts that were designated as cash flow hedges are carried at fair value and have maturities between three and eight months. As of June 30, 2013, the Company had outstanding forward contracts to buy USD for $45.6 million. Over the next twelve months, the Company expects to reclassify $7.1 million from accumulated other comprehensive gain to earnings as the related forecasted transactions occur.
The following table summarizes the activity related to derivatives in accumulated other comprehensive loss, net of tax:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Beginning Balance |
$ | 5,991 | $ | - | $ | 1 | $ | - | ||||||||
|
Net gain reclassified into earnings on cash flow hedges (effective portion) |
(2,835 | ) | - | (4,588 | ) | - | ||||||||||
|
Net gain reclassified into earnings on cash flow hedges (ineffective portion) |
(2,415 | ) | - | (2,415 | ) | - | ||||||||||
|
Net unrealized hedge gain arising during the period |
6,317 | 217 | 14,060 | 217 | ||||||||||||
|
Ending Balance |
$ | 7,058 | $ | 217 | $ | 7,058 | $ | 217 | ||||||||
Non-designated hedges
The Company hedges net receivables and payables denominated in Japanese yen and expenses incurred in Thai baht with foreign exchange forward contracts to reduce the risk that its earnings and cash flows will be affected by changes in foreign currency exchange rates. These forward contracts do not subject the Company to additional material financial statement risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the monetary assets and liabilities and underlying transactions being hedged, assuming that the derivative counterparty performs. The notional principal of foreign exchange forward contracts outstanding to buy USD was $91.4 million as of June 30, 2013 and $32.8 million as of December 30, 2012. The Company also incurred a gain of $2.4 million from mark to market on certain JPY hedges which were previously designated as cash flow hedges, as the Company concluded that the related forecasted transactions were probable to not occur during the hedge period or the additional two months thereafter.
On August 1, 2013, the Company completed the acquisition of FSL's Microcontroller and Analog business. As of June 30, 2013, the Company had entered into an economic hedge using foreign exchange forward contracts and options to mitigate the impact of foreign currency fluctuations on the purchase price which was denominated in currencies other than U.S. dollar. On these hedges, the notional principal of foreign currency forward contracts outstanding to sell USD was $35.0 million, foreign currency option contracts to buy USD were $75.1 million and foreign currency option contracts to sell USD were $75.1 million as of June 30, 2013.
These forward contracts and options are not designated hedges and are carried at fair value with changes in the fair value recorded in interest and other income (expense) in the accompanying Condensed Consolidated Statements of Operations.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
Interest Rate Swap
The Company entered into a series of interest rate swaps to manage the interest rate risk on its Senior Secured Term Loan (the Term Loan) in the third quarter of fiscal 2010. The swap agreements expired on May 17, 2013. The mark-to-market of the swap has been reported as a component of interest expense because it does not qualify as a cash flow hedge.
The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and July 1, 2012 was as follows:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
| (in thousands) | ||||||||||||||||
|
Derivatives Designated as Hedging Instruments |
||||||||||||||||
|
Foreign Exchange Forward Contracts |
||||||||||||||||
|
Net unrealized gain recognized in OCI (1) |
$ | 6,317 | $ | 217 | $ | 14,060 | $ | 217 | ||||||||
|
Net gain reclassified from accumulated OCI into income (effective portion)(2) |
$ | (2,835 | ) | $ | - | $ | (4,588 | ) | $ | - | ||||||
|
Net gain reclassified from accumulated OCI into income (ineffective portion) (3) |
$ | (2,415 | ) | $ | - | $ | (2,415 | ) | $ | - | ||||||
|
Derivatives Not Designated as Hedging Instruments |
||||||||||||||||
|
Net gain (loss) recognized in income |
||||||||||||||||
|
Swap interest expense (4) |
$ | (2 | ) | $ | (32 | ) | $ | (8 | ) | $ | (118 | ) | ||||
|
Foreign Exchange Forward Contracts (5) |
$ | (2,349 | ) | $ | (2,173 | ) | $ | 240 | $ | (223 | ) | |||||
|
Foreign Exchange Options Contracts (5) |
$ | 197 | $ | - | $ | 197 | $ | - | ||||||||
|
(1) |
Net change in the fair value of the effective portion classified in other comprehensive income (OCI) | |||||||||
|
(2) |
Effective portion classified as net product revenue | |||||||||
|
(3) |
Classified in interest income and other | |||||||||
|
(4) |
Classified in interest expense | |||||||||
|
(5) |
Classified in interest and other income (expense) | |||||||||
The gross fair values of derivative instruments on the Condensed Consolidated Balance Sheets were as follows:
|
June 30, 2013 |
December 30, 2012 |
|||||||||||||||
|
Balance sheet location |
Derivatives designated as hedging instruments |
Derivatives not designated as hedging instruments |
Derivatives designated as hedging instruments |
Derivatives not designated as hedging instruments |
||||||||||||
|
(in thousands) |
||||||||||||||||
|
Prepaid expenses and other current assets |
||||||||||||||||
|
Foreign Exchange Forward Contracts |
$ | 4,487 | $ | 6,498 | $ | - | $ | 3,032 | ||||||||
|
Foreign Exchange Options Contracts |
$ | - | $ | 197 | $ | - | $ | - | ||||||||
|
Other accrued liabilities |
||||||||||||||||
|
Interest rate Swap |
$ | - | $ | - | $ | - | $ | 514 | ||||||||
|
Foreign Exchange Forward Contracts |
$ | - | $ | 102 | $ | - | $ | 296 | ||||||||
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
12. Income Taxes
The following table presents the Company’s income tax expense (benefit):
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Income tax expense (benefit) |
$ | (1,635 | ) | $ | 3,370 | $ | 753 | $ | 6,815 | |||||||
The Company’s provision (benefit) for income tax was a benefit of $1.6 million and an expense of $3.4 million for the three months ended June 30, 2013 and July 1, 2012, respectively. The Company’s income tax expense was $0.8 million and $6.8 million for the six months ended June 30, 2013 and July 1, 2012, respectively.
The tax (benefit)/expense for the three months and tax expense for the six months ended June 30, 2013 was primarily attributable to pre-tax income in foreign jurisdictions and withholding taxes related to Samsung licensing revenue offset by the release of reserves for uncertain tax positions in foreign locations.
The tax expense for the three and six months ended July 1, 2012 was primarily attributable to pre-tax income in foreign jurisdictions, withholding taxes related to Samsung licensing revenue and the impact from the sale of land and building in Kuala Lumpur offset by the release of reserves for uncertain tax positions in foreign locations.
As of December 30, 2012, the Company had U.S. federal and state net operating loss carry forwards of approximately $992.2 million and $218.8 million, respectively. Approximately $490.6 million of the federal net operating loss carry forwards are subject to an annual limitation of $27.2 million. The federal and state net operating losses, if not utilized, expire from 2016 to 2031. The Company also has U.S. federal credit carryovers of $1.0 million which expire from 2020 to 2021. The Company also has state tax credits of $17.6 million, which includes California state tax credits of $16.8 million that can be carried forward indefinitely.
If the Company were to undergo an “ownership change” for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, its ability to utilize its federal net operating loss carry forwards could be limited under certain provisions of the Internal Revenue Code. As a result, the Company could incur greater tax liabilities than it would in the absence of such a limitation and any incurred liabilities could materially adversely affect the Company’s results of operations and financial condition.
13. Restructuring and Others
Fiscal 2011 Restructuring Plan
Beginning in the fourth quarter of fiscal 2011, the Company initiated a restructuring plan as part of a company-wide cost saving initiative aimed at reducing operating costs in light of global economic challenges and rapid changes in the China wireless and handset market. In the interest of reducing costs and improving efficiencies, the Company announced reduction of headcount in several locations and the closure of its assembly, test, mark and pack facility in Kuala Lumpur, Malaysia (the KL facility), which was completed in the first quarter of fiscal 2012. Total costs incurred under the fiscal 2011 restructuring plan were $22.6 million.
Spansion Inc.
Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)
Fiscal 2009/10 Restructuring Plan
In fiscal 2009 and 2010, the Company implemented certain restructuring measures including workforce reductions and the sale of its plant in Suzhou, China. The Company incurred restructuring expenses related to employee termination benefits and fixed asset relocation, depreciation and disposal. During the first quarter of fiscal 2012, there was a restructuring credit of $0.8 million as a result of the Company having prevailed in a labor-related lawsuit in conjunction with the 2009 restructuring activities in Thailand. Total costs incurred under the 2009/10 Restructuring Plan were $43.2 million.
Summary of Restructuring Plans
The following tables present a summary of restructuring activities related to all of the Company’s restructuring plans described above:
|
2011 Restructuring Plan |
||||||||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, 2013 |
July 1, 2012 |
June 30, 2013 |
July 1, 2012 |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Accrued restructuring balance, beginning of period |
$ | 45 | $ | 5,644 | $ | 538 | $ | 8,087 | ||||||||
|
Provision: |
||||||||||||||||
|
Gain on sale of equipment |
- | (3,798 | ) | - | (3,798 | ) | ||||||||||
|
Asset relocation fees |
- | 1,642 | ||||||||||||||