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Electronics Production | October 28, 2011

Spansion to close Kuala Lumpur facility

Spansion is consolidating two test and assembly manufacturing operations which will result in the closing of its Kuala Lumpur facility, the company stated in their Q3 fiscal report.
On a U.S. GAAP basis, Spansion reported net sales of $258.2 million, operating income of $23.2 million, and net income of $7.3 million for its Q3 (ended September 25, 2011). On a non-GAAP basis, net sales totaled $258.2 million, adjusted operating income was $46.7 million and adjusted net income was $30.3 million.

"Spansion continues to execute on our business strategy and drive new design wins in the embedded market amid global economic challenges," said John Kispert, president and CEO of Spansion. "With macroeconomic weakness expected to continue in the near-term, we are taking proactive measures to reduce operating expenses while strengthening customer relationships and accelerating adoption of new products to position Spansion for long-term market leadership."

As part of the cost reduction plans, Spansion is consolidating its two test and assembly manufacturing operations, which will result in the closing of its Kuala Lumpur facility and anticipated cost savings of approximately $30 million annually.

Upon emergence from bankruptcy on May 10, 2010, Spansion adopted fresh start accounting in accordance with U.S. GAAP. The adoption of fresh start accounting resulted in Spansion becoming a new entity for financial reporting purposes, whereby the U.S. GAAP financial statements on or after May 10, 2010 are not comparable to the financial statements prior to that date.

Fresh start accounting required resetting the historical net book values of Spansion's assets and liabilities to the related fair values. References to "Successor" refer to Spansion and its consolidated subsidiaries after May 10, 2010, after giving effect to the cancellation of old common stock issued prior to May 10, 2010, the issuance of new common stock and settlement of existing debt and other adjustments in accordance with the reorganization plan, and the application of fresh start accounting. References to "Predecessor" refer to Spansion and its consolidated subsidiaries prior to May 10, 2010.

Business Outlook

For the fourth quarter of 2011, Spansion estimates U.S. GAAP net sales in the range of $205 million to $225 million, GAAP net loss per share of ($1.12) to ($0.53).

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