[ Back ]   [ More News ]   [ Home ]
Update: Cypress Reports First-Quarter 2014 Results

SAN JOSE, CA -- (Marketwired) -- Apr 17, 2014 -- Cypress Semiconductor Corp. (NASDAQ: CY) today announced its first-quarter 2014 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included:

Fellow shareholders:

Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year:

(In thousands, except per-share data)

                                                                            
                           NON-GAAP                        GAAP             
                 ----------------------------  ---------------------------- 
                  Q1 2014   Q4 2013   Q1 2013   Q1 2014   Q4 2013   Q1 2013 
                 --------  --------  --------  --------  --------  -------- 
Revenue          $170,283  $167,776  $172,728  $170,283  $167,776  $172,728 
                                                                            
Gross margin         50.3%     51.0%     50.7%     45.6%     45.6%     45.8%
                                                                            
Pretax margin         7.3%      9.4%      2.5%     -7.5%     -7.0%    -16.6%
Net income                                                                  
 (loss)          $ 11,974  $ 14,992  $  4,579  $ (7,934) $(13,577) $(28,195)
                                                                            
Diluted EPS                                                                 
 (loss per                                                                  
 share)          $   0.07  $   0.09  $   0.03  $  (0.05) $  (0.09) $  (0.19)
                                                                            

Cypress's first-quarter revenue increased 1.5% sequentially, outpacing normal seasonality and exceeding the upper range of our initial guidance with broad revenue increases. Our continued focus on operating expense management showed up in a comparison of the first quarter of 2013 ($173 million in revenue, $0.03 EPS) to the first quarter of 2014 ($170 million in revenue, $0.07 EPS).

We exited the first quarter with a book-to-bill ratio of 1.08 and expect solid sequential revenue growth in the second quarter. Our Q2 earnings will grow much faster than revenue, reflecting the inherent leverage created by our efficiency improvements.

The design win pipeline for our TrueTouch® touchscreen products was evident at both the Consumer Electronics Show in Las Vegas and the Mobile World Congress show in Barcelona, Spain last quarter; we saw multiple new products with Cypress touchscreen solutions, such as the YotaPhone 2 and the ZTE nubia Z5S, cited in this release, and the Huawei MediaPad X1. The Yota Devices and Huawei products use our latest Gen5 touchscreen product, the TMA568, which has begun to generate revenue just six months after we brought it to market.

BUSINESS REVIEW

+ Our non-GAAP consolidated gross margin for the first quarter was 50.3%, down 0.7 percentage points from the previous quarter, primarily due to product mix. Excluding our Emerging Technologies Division (ETD), our core semiconductor gross margin was 51.8%. ETD revenue is growing rapidly (see Net Sales Summary table) and will contribute significantly to revenue growth in 2014.

+ Net inventory at the end of the first quarter was $89.2 million, down 11% from the fourth quarter.

                                                                            
                             NET SALES SUMMARY                              
                     (In thousands, except percentages)                     
                                (Unaudited)                                 
                                                                            
                                                                            
                        THREE MONTHS ENDED                                  
                                                                            
                  Mar. 30,   Dec. 29,   Mar. 31,   Sequential   Year-over-  
Business Unit       2014       2013       2013       Change     Year Change 
                 ---------  ---------  ---------  -----------  ------------ 
PSD(1)           $  69,347  $  67,746  $  65,505            2%            6%
MPD(1)           $  81,323  $  79,890     82,229            2%           -1%
DCD(1)           $  15,590  $  16,482     22,747           -5%          -31%
ETD(1, 2)        $   4,023  $   3,658      2,247           10%           79%
                 ---------  ---------  ---------  -----------  ------------ 
Total            $ 170,283  $ 167,776  $ 172,728            1%           -1%
                 ---------  ---------  ---------  -----------  ------------ 
                                                                            
Geographic                                                                  
China and ROW           62%        64%        64%          -3%           -3%
Americas                15%        14%        17%           7%          -12%
Europe                  14%        12%        11%          17%           27%
Japan                    9%        10%         8%         -10%           13%
                 ---------  ---------  ---------  -----------  ------------ 
Total                  100%       100%       100%           0%            0%
                 ---------  ---------  ---------  -----------  ------------ 
                                                                            
Channel                                                                     
Distribution            68%        69%        74%          -1%           -8%
Direct                  32%        31%        26%           3%           23%
                 ---------  ---------  ---------  -----------  ------------ 
Total                  100%       100%       100%           0%            0%
                 ---------  ---------  ---------  -----------  ------------ 
                                                                            
                                                                            
1.  PSD, Programmable Systems Division; DCD, Data Communications Division;  
    MPD, Memory Products Division: ETD, Emerging Technologies Division.     
2.  "Emerging Technologies" includes businesses outside our core            
    semiconductor businesses outlined in Footnote 1. Includes subsidiaries  
    AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit. 
                                                                            

FIRST-QUARTER 2014 HIGHLIGHTS

+ Cypress broadly introduced a new family of CapSense® controllers that enables engineers of all levels to quickly implement sleek and robust capacitive buttons, sliders and proximity sensors without the need for coding or firmware development. The new CY8CMBR3x controllers provide industry-leading features, such as liquid tolerance, a high signal-to-noise ratio and proximity sensing, making them ideal replacements for mechanical buttons in industrial, medical, consumer and wearable electronics applications at a cost of $0.03 per button.

+ Cypress introduced a TrueTouch Gen4X capacitive touchscreen controller family that supports touchscreens with advanced features and larger screen sizes up to 8.3 inches. The Gen4X TMA448 controller delivers best-in-class gloved-finger tracking and noise immunity, enabling high-performance touchscreens for superphones, smartphones, tablets and e-readers in cost-sensitive markets such as China.

+ In a teardown of the Qualcomm Toq smartwatch, the electronics industry analysis firm TechInsights reported that a Cypress TrueTouch TMA140 controller drives the device's fast and accurate touchscreen navigation. This wearables design win follows Cypress's win in the Sony Smartwatch 2. Cypress touch controllers now can operate on just milliwatts of power, a necessity in the world of wearables.

+ ZTE selected Cypress's TrueTouch Gen4 touchscreen controller for its new, top-of-the-line nubia Z5S and nubia Z5S Mini smartphones. Gen4 enables the family's "easy-wake" functionality, which allows users to activate the phones from sleep mode with a convenient, customized gesture, such as tracing the letter "X."

+ Yota Devices selected Cypress's TrueTouch Gen5 touchscreen controllers to drive both of the displays in its next-generation YotaPhone. This premium Android phone uses the TMA568 controller for advanced multi-touch functionality in the standard display on the front of the phone and the TMA545 chip to control the "always-on" electronic paper display on the back of the phone.

+ Cypress continues to work with multiple touch-sensor suppliers to enable more accurate and responsive user interfaces for smartphones, tablets, wearables and other touchscreen applications. In Q1, Cypress announced that its TrueTouch touchscreen controllers can now drive the silver nanowire sensors from Carestream Advanced Materials and the SANTE® silver nanoparticle touch sensors from Cima NanoTech.

+ Cypress announced that it is offering its powerful, 32-bit ARM® Cortex™-M0-based PSoC® 4 programmable system-on-chip for just $1 and a new PSoC 4 prototyping board for only $4. The silicon and kit enable design engineers to upgrade their 8- and 16-bit designs to 32 bits for less than the cost of a pack of AA batteries.

+ Cypress introduced a USB 3.0 hub controller for the 5-Gbps SuperSpeed USB 3.0 standard. The EZ-USB® HX3 controller, which has been certified by the USB Implementers Forum (USB-IF), has been tested with hundreds of USB legacy devices to guarantee robust interoperability. HX3 has a unique feature called Shared Link™, which spits four of the hub's USB 3.0 ports into four SuperSpeed ports and four standard USB 2.0 ports, enabling eight ports in total. It also provides charging support for all important standards and full configurability, addressing applications such as docking stations, monitors, Ultrabook™ computers, digital TVs, set-top boxes, printers and servers.

+ Cypress announced production availability of the industry's first fourth-generation Quad Data Rate SRAM. Cypress's QDR®-IV SRAM, the market's highest-performance standard networking memory solution, offers a Random Transaction Rate (RTR) up to 2,132 million transactions per second (MT/s), which meets the demanding bandwidth requirements of 100-Gb to 400-Gb line cards in next-generation switches and routers. Cypress offers QDR-IV SRAMs in 72Mb and 144Mb densities.

+ Cypress subsidiary Deca Technologies, a provider of electronic interconnect solutions for the semiconductor industry, shipped its 100-millionth component. The company attributes its rapid growth to strong and sustained demand for wafer-level chip scale packages (WLCSP) -- which are three to six times smaller than conventional chip packages. Deca manufactures WLCSPs using its unique, integrated Autoline production platform, which automates chip packaging to achieve faster time-to-market at a lower cost.

+ An employee relations services and software company, Achievers, named Cypress to its annual list of the 50 Most Engaged Workplaces™ in the U.S. The award recognizes companies that display leadership and innovation in engaging their employees.

+ Cypress announced that its Board of Directors approved a quarterly cash dividend of $0.11 per share, payable to holders of record of the company's common stock as of the close of business on March 27, 2014. This dividend was paid on April 17, 2014.

FOLLOW CYPRESS ONLINE

ABOUT CYPRESS

Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC 1, PSoC 3, PSoC 4 and PSoC 5LP programmable system-on-chip families. Cypress is the world leader in capacitive user interface solutions including CapSense touch sensing, TrueTouch touchscreens, and trackpad solutions for notebook PCs and peripherals. Cypress is a world leader in USB controllers, which enhance connectivity and performance in a wide range of consumer and industrial products. Cypress is also the world leader in SRAM and nonvolatile RAM memories. Cypress serves numerous major markets, including consumer, mobile handsets, computation, data communications, automotive, industrial and military. Cypress trades on the NASDAQ Global Select Market under the ticker symbol CY. Visit Cypress online at www.cypress.com.

FORWARD-LOOKING STATEMENTS

Statements herein that are not historical facts and that refer to Cypress or its subsidiaries' plans and expectations for Q2 2014 and the remainder of fiscal year 2014 and beyond are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as "believe," "expect," "future," "plan," "intend" and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to the semiconductor market; the strength and growth of our proprietary and programmable products; our expectations regarding our revenue growth and earnings leverage; our expectation that our ETD division will significantly contribute to our 2014 revenue growth; our expectations regarding the demand for our products and how our products are expected to perform, as well as American Semiconductor's transfer of a specialized wafer process to our manufacturing facility. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including, but not limited to, the state of and future of the global economy, business conditions and growth trends in the semiconductor market, whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, our ability to manage our business to have strong earnings and significant revenue growth, reduce operating expenses, our ability to effectively implement third party wafer processes, the strength or softness of the markets we serve, our ability to maintain and improve our gross margins and realize our bookings, the seasonality of the markets we serve, the financial performance of our subsidiaries and Emerging Technology Division, and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

Cypress, the Cypress logo, PSoC, TrueTouch, EZ-USB and CapSense are registered trademarks and Shared Link is a trademark of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners.

                                                                            
                                                                            
                                                                            
                     CYPRESS SEMICONDUCTOR CORPORATION                      
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                                March 30,      December 29, 
                                                   2014            2013     
                                             ---------------  ------------- 
                                                                            
ASSETS                                                                      
                                                                            
  Cash, cash equivalents and short-term                                     
   investments                               $       111,525  $     104,462 
  Accounts receivable, net                           118,215         81,084 
  Inventories, net (a)                                89,193        100,612 
  Property, plant and equipment, net                 253,234        258,585 
  Goodwill and other intangible assets, net          104,678        106,524 
  Other assets                                       103,498        114,569 
                                             ---------------  ------------- 
    Total assets                             $       780,343  $     765,836 
                                             ===============  ============= 
                                                                            
LIABILITIES AND EQUITY                                                      
                                                                            
  Accounts payable                           $        49,940  $      47,893 
  Deferred margin on sales to distributors           141,669        122,578 
  Income tax liabilities                              24,051         29,865 
  Other liabilities                                  161,901        159,865 
  Long-term revolving credit facility                227,000        227,000 
                                             ---------------  ------------- 
    Total liabilities                                604,561        587,201 
                                             ---------------  ------------- 
  Total Cypress stockholders' equity                 180,591        183,109 
  Noncontrolling interest                             (4,809)        (4,474)
                                             ---------------  ------------- 
    Total equity                                     175,782        178,635 
                                             ---------------  ------------- 
      Total liabilities and equity           $       780,343  $     765,836 
                                             ===============  ============= 
                                                                            
(a) Net inventories include $6.1 million and $5.3 million of capitalized    
 inventories related to stock compensation expense, as of March 30, 2014 and
 December 29, 2013, respectively.                                           
                                                                            
                                                                            
                                                                            
                     CYPRESS SEMICONDUCTOR CORPORATION                      
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                              ON A GAAP BASIS                               
                   (In thousands, except per-share data)                    
                                (Unaudited)                                 
                                                                            
                                          Three Months Ended                
                          ------------------------------------------------- 
                             March 30,       December 29,      March 31,    
                                2014             2013             2013      
                          ---------------  ---------------  --------------- 
                                                                            
Revenues                  $       170,283  $       167,776  $       172,728 
Cost of revenues                   92,561           91,328           93,682 
                          ---------------  ---------------  --------------- 
Gross margin                       77,722           76,448           79,046 
Operating expenses:                                                         
Research and development           45,330           42,343           49,330 
Selling, general and                                                        
 administrative                    42,609           43,623           45,442 
Amortization of                                                             
 acquisition-related                                                        
 intangibles                        1,833            1,850            2,009 
Restructuring charges              (1,014)            (469)          11,440 
                          ---------------  ---------------  --------------- 
Total operating expenses,                                                   
 net                               88,758           87,347          108,221 
                          ---------------  ---------------  --------------- 
Operating loss                    (11,036)         (10,899)         (29,175)
Interest and other income                                                   
 (loss), net                       (1,750)            (805)             483 
Loss before income taxes          (12,786)         (11,704)         (28,692)
Income tax provision                                                        
 (benefit)                         (4,517)           2,210              146 
                          ---------------  ---------------  --------------- 
Loss, net of taxes                 (8,269)         (13,914)         (28,838)
Adjust for net loss                                                         
 attributable to                                                            
 noncontrolling interest              335              337              643 
                          ---------------  ---------------  --------------- 
Net loss attributable to                                                    
 Cypress                  $        (7,934) $       (13,577) $       (28,195)
                          ===============  ===============  =============== 
Net loss per share                                                          
 attributable to Cypress:                                                   
Basic                     $         (0.05) $         (0.09) $         (0.19)
Diluted                   $         (0.05) $         (0.09) $         (0.19)
Shares used in net loss                                                     
 per share calculation:                                                     
Basic                             154,572          151,580          145,689 
Diluted                           154,572          151,580          145,689 
                          ---------------  ---------------  --------------- 

                                                                            
                                                                            
                                                                            
              CYPRESS SEMICONDUCTOR CORPORATION                             
    RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP                   
                    FINANCIAL MEASURES (a)                                  
            (In thousands, except per-share data)                           
                         (Unaudited)                                        
                                                                            
                                             Three Months Ended             
                                ------------------------------------------- 
                                  March 30,     December 29,    March 31,   
                                     2014           2013           2013     
                                -------------  -------------  ------------- 
                                                                            
GAAP gross margin               $      77,722  $      76,448  $      79,046 
  Stock-based compensation                                                  
   expense                              2,251          3,088          3,618 
  Acquisition-related expense           2,967          5,562            422 
  Changes in value of deferred                                              
   compensation plan                      218            136            122 
  Impairment of assets and                                                  
   other                                2,564            269          4,307 
                                -------------  -------------  ------------- 
Non-GAAP gross margin           $      85,722  $      85,503  $      87,515 
                                =============  =============  ============= 
                                                                            
GAAP research and development                                               
 expenses                       $      45,330  $      42,343  $      49,330 
  Stock-based compensation                                                  
   expense                             (7,183)        (7,356)        (4,967)
  Acquisition-related expense               -              -           (815)
  Changes in value of deferred                                              
   compensation plan                     (424)          (282)          (207)
  Impairment of assets and                                                  
   other                                    -          1,368         (1,394)
                                -------------  -------------  ------------- 
Non-GAAP research and                                                       
 development expenses           $      37,723  $      36,073  $      41,947 
                                =============  =============  ============= 
                                                                            
GAAP selling, general and                                                   
 administrative expenses        $      42,609  $      43,623  $      45,442 
  Stock-based compensation                                                  
   expense                             (7,388)       (10,432)        (3,852)
  Acquisition-related expense            (473)          (148)          (556)
  Changes in value of deferred                                              
   compensation plan                     (964)          (607)        (1,861)
  Impairment of assets and                                                  
   other                                    -           (244)          (177)
                                -------------  -------------  ------------- 
Non-GAAP selling, general and                                               
 administrative expenses        $      33,784  $      32,192  $      38,996 
                                =============  =============  ============= 
                                                                            
GAAP operating loss             $     (11,036) $     (10,899) $     (29,175)
  Stock-based compensation                                                  
   expense                             16,822         20,877         12,437 
  Acquisition-related expense           5,274          7,558          2,894 
  Changes in value of deferred                                              
   compensation plan                    1,606          1,026          3,098 
  Impairment of assets and                                                  
   other                                2,564           (854)         5,878 
  Restructuring charges                (1,014)          (470)        11,440 
                                -------------  -------------  ------------- 
Non-GAAP operating income       $      14,216  $      17,238  $       6,572 
                                =============  =============  ============= 
                                                                            
GAAP net loss attributable to                                               
 Cypress                        $      (7,934) $     (13,577) $     (28,195)
  Stock-based compensation                                                  
   expense                             16,822         20,877         12,437 
  Acquisition-related expense           5,274          7,558          2,894 
  Changes in value of deferred                                              
   compensation plan                      747           (535)           674 
  Impairment of assets and                                                  
   other                                2,564           (854)         5,525 
  Restructuring charges                (1,014)          (470)        11,440 
  Tax and tax-related items            (5,367)         1,065           (196)
  Investment-related                                                        
   gains/losses                           883            930              - 
                                -------------  -------------  ------------- 
Non-GAAP net income                                                         
 attributable to Cypress        $      11,975  $      14,994  $       4,579 
                                =============  =============  ============= 
                                                                            
GAAP net loss per share                                                     
 attributable to Cypress -                                                  
 diluted                        $       (0.05) $       (0.09) $       (0.19)
  Stock-based compensation                                                  
   expense                               0.10           0.13           0.08 
  Acquisition-related expense            0.03           0.05           0.02 
  Changes in value of deferred                                              
   compensation plan                        -              -           0.01 
  Impairment of assets and                                                  
   other                                 0.02          (0.01)          0.04 
  Restructuring charges                 (0.01)             -           0.07 
  Tax and tax-related items             (0.03)          0.01              - 
  Investment-related                                                        
   gains/losses                          0.01           0.01              - 
  Non-GAAP share count                                                      
   adjustment                               -          (0.01)             - 
                                -------------  -------------  ------------- 
Non-GAAP net income per share                                               
 attributable to Cypress -                                                  
 diluted                        $        0.07  $        0.09  $        0.03 
                                -------------  -------------  ------------- 
                                                                            
                                                                            
(a) Refer to the accompanying "Notes to Non-GAAP Financial Measures" for a  
 detailed discussion of management's use of non-GAAP financial measures.    
                                                                            
                                                                            
                                                                            
                     CYPRESS SEMICONDUCTOR CORPORATION                      
                        SUPPLEMENTAL FINANCIAL DATA                         
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                          Three Months Ended                
                          ------------------------------------------------- 
                             March 30,       December 29,      March 31,    
                                2014             2013             2013      
                          ---------------  ---------------  --------------- 
Selected Cash Flow Data                                                     
 (Preliminary):                                                             
Net cash provided by                                                        
 operating activities     $        25,198  $        21,029  $         8,265 
Net cash provided (used)                                                    
 by investing activities  $         2,063  $           309  $          (895)
Net cash used in                                                            
 financing activities     $        (9,619) $        (2,276) $       (13,354)
                                                                            
Other Supplemental Data                                                     
 (Preliminary):                                                             
Capital expenditures      $         5,559  $         8,750  $         9,298 
Depreciation              $         9,485  $         9,436  $        10,355 
Payment of dividend       $        16,850  $        16,578  $        15,845 
Dividend paid per share   $          0.11  $          0.11  $          0.11 
Dividend yield per share                                                    
 (a)                                  4.4%             4.3%             4.0%
                          ---------------  ---------------  --------------- 
                                                                            
(a) Dividend yield per share is calculated based on annualized dividend     
 paid per share divided by the common stock share price at the end of the   
 period.                                                                    
                                                                            
                                                                            
                                                                            
                      CYPRESS SEMICONDUCTOR CORPORATION                     
                    CONSOLIDATED DILUTED EPS CALCULATION                    
                    (In thousands, except per-share data)                   
                                 (Unaudited)                                
                                                                            
                                    Three Months Ended                      
              --------------------------------------------------------------
                    March 30,          December 29,           March 31,     
                      2014                 2013                 2013        
              -------------------- -------------------- --------------------
                 GAAP     Non-GAAP    GAAP     Non-GAAP    GAAP     Non-GAAP
              ---------  --------- ---------  --------- ---------  ---------
                                                                            
Net income                                                                  
 (loss)                                                                     
 attributable                                                               
 to Cypress   $  (7,934) $  11,974 $ (13,577) $  14,992 $ (28,195) $   4,579
              ---------  --------- ---------  --------- ---------  ---------
                                                                            
Weighted-                                                                   
 average                                                                    
 common shares                                                              
 outstanding                                                                
 (basic)        154,572    154,572   151,580    151,580   145,689    145,689
Effect of                                                                   
 dilutive                                                                   
 securities:                                                                
Stock options,                                                              
 unvested                                                                   
 restricted                                                                 
 stock and                                                                  
 other                -     11,366         -     14,698         -     12,569
              ---------  --------- ---------  --------- ---------  ---------
Weighted-                                                                   
 average                                                                    
 common shares                                                              
 outstanding                                                                
 for diluted                                                                
 computation    154,572    165,938   151,580    166,278   145,689    158,258
              ---------  --------- ---------  --------- ---------  ---------
                                                                            
Net income                                                                  
 (loss) per                                                                 
 share                                                                      
 attributable                                                               
 to Cypress -                                                               
 basic        $   (0.05) $    0.08 $   (0.09) $    0.10 $   (0.19) $    0.03
Net income                                                                  
 (loss) per                                                                 
 share                                                                      
 attributable                                                               
 to Cypress -                                                               
 diluted      $   (0.05) $    0.07 $   (0.09) $    0.09 $   (0.19) $    0.03
                                                                            
                                                                            
                                                                            
                      March 30,          December 29,         March 31,     
                         2014                2013                2013       
                 ------------------- ------------------- -------------------
                                                                            
Average stock                                                               
 price for the                                                              
 period ended    $             10.13 $              9.45 $             10.50
                                                                            
Common stock                                                                
 outstanding at                                                             
 period end (in                                                             
 thousands)                  156,971             153,214             146,866
                                                                            
                                                                            
                                                                            

Notes to Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, Cypress uses non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude certain items, as described in details below. Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of Cypress's operations that, when viewed in conjunction with Cypress's GAAP results, provide a more comprehensive understanding of the various factors and trends affecting Cypress's business and operations. Non-GAAP financial measures used by Cypress include:

Cypress uses each of these non-GAAP financial measures for internal managerial purposes, when providing its financial results and business outlook to the public, and to facilitate period-to-period comparisons. Management believes that these non-GAAP measures provide meaningful supplemental information regarding Cypress's operational and financial performance of current and historical results. Management uses these non-GAAP measures for strategic and business decision making, internal budgeting, forecasting and resource allocation processes. In addition, these non-GAAP financial measures facilitate management's internal comparisons to Cypress's historical operating results and comparisons to competitors' operating results.

Cypress believes that providing these non-GAAP financial measures, in addition to the GAAP financial results, are useful to investors because they allow investors to see Cypress's results "through the eyes" of management as these non-GAAP financial measures reflect Cypress's internal measurement processes. Management believes that these non-GAAP financial measures enable investors to better assess changes in each key element of Cypress's operating results across different reporting periods on a consistent basis. Thus, management believes that each of these non-GAAP financial measures provides investors with another method for assessing Cypress's operating results in a manner that is focused on the performance of its ongoing operations.

There are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. In addition, non-GAAP financial measures may be limited in value because they exclude certain items that may have a material impact upon Cypress's reported financial results. Management compensates for these limitations by providing investors with reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP financial measures. The non-GAAP financial measures supplement, and should be viewed in conjunction with, GAAP financial measures. Investors should review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the accompanying press release.

As presented in the "Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures" tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items:

Add to Digg Bookmark with del.icio.us Add to Newsvine

Contacts:
Brad W. Buss
EVP Finance & Administration and CFO
(408) 943-2754

Joseph L. McCarthy
Director, Corporate Communications
(408) 943-2902