• Revenue from an intellectual property license;
• Changes in value of deferred compensation plan assets and liabilities;
• Investment-related gains or losses, including equity method investments;
• Restructuring and related costs;
• Debt issuance costs, including imputed interest related to the equity component of convertible debt;
• Asset impairments;
• Tax effects of non-GAAP adjustments;
• Certain other expenses and benefits; and
• Diluted weighted average shares non-GAAP adjustment - for purposes of calculating non-GAAP diluted earnings per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits related to stock-based compensation expense, and include the impact of the capped call options related to the outstanding convertible notes.

Adjusted EBITDA: Adjusted EBITDA is calculated by adjusting net income (loss) attributable to Cypress to exclude (without duplication): interest expense, income tax provision, depreciation, amortization, equity in net loss of equity method investees, and the non-GAAP adjustments described above (acquisition related charges, stock-based compensation expense, and other adjustments). Commencing in the second quarter of 2018, Cypress reconciles adjusted EBITDA to GAAP net income rather than operating income; prior period reconciliation tables have been revised to conform to the current presentation. Adjusted EBITDA may be useful to management, investors and other users of our financial information because the exclusion of certain gains, losses, and expenses facilitates comparisons of Cypress' operating performance on a period to period basis. Adjusted EBITDA should not be considered as a measure of discretionary cash available to invest in the growth of the business. In addition, adjusted EBITDA should not be considered as a substitute for, or superior to net income attributable to Cypress, operating income, or diluted earnings per share, or other financial measures prepared in accordance with GAAP.

FORWARD-LOOKING STATEMENTS

Statements in this press release that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for the future are forward-looking statements as such term is used in the Private Securities Litigation Reform Act of 1995. We may use words such as “may,” "will," “should,” “plan,” “anticipate,” “believe,” “expect,” “future,” “intend,” “estimate,” “predict,” “potential,” “continue” or similar expressions identify forward-looking statements. This press release includes, among others, forward-looking statements regarding our third quarter financial outlook (as well as the related GAAP to non-GAAP reconciling items). Our forward-looking statements are based on the expectations, beliefs, and intentions of, and the information available to, our executive management on the date of this press release. Forward-looking statements involve risks and uncertainties, and readers are cautioned not to place undue reliance on forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: potential tariffs and other disruptions in the international trade and investment environment; global economic and market conditions; our ability to execute on our Cypress 3.0 strategy and our margin improvement plan; risks related to paying down our indebtedness and meeting the covenants in our debt agreements; our efforts to retain and expand our customer base; business conditions and growth trends in the semiconductor market; competition; volatility in supply and demand for our products, including but not limited to the impact of seasonality on supply and demand; our ability to develop, introduce and sell new products and technologies; potential problems relating to our manufacturing activities; reliance on distributers, resellers, third-party manufacturers, and others; risks related to our “take or pay” agreements with certain vendors; the risk of defects, errors, or security vulnerabilities in our products; the impact of acquisitions; our ability to attract and retain key personnel; the unpredictability and expense of legal proceedings; and other risks and uncertainties described in the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and “Quantitative and Qualitative Disclosures about Market Risk” sections in our most recent Annual Report on Form 10-K and in our subsequent quarterly filings with the Securities and Exchange Commission which are available on our investor relations website at http://investors.cypress.com/financial-information/sec-filings. We assume no responsibility to update our forward-looking statements.

Cypress, the Cypress logo and PSoC are registered trademarks and Semper and EZ-PD are trademarks of Cypress Semiconductor Corporation. All other trademarks are property of their owners.

CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
			July 1, 2018					December 31, 2017
ASSETS
Cash, cash equivalents and short-term investments			$	112,718				$	151,596
Accounts receivable, net			404,524					295,991
Inventories			286,761					272,127
Property, plant and equipment, net			291,026					289,554
Goodwill and other intangible assets, net			2,046,609					2,154,592
Other assets			362,859					373,190
Total assets			$	3,504,497				$	3,537,050
LIABILITIES AND EQUITY
Accounts payable			$	225,619				$	213,101
Income tax liabilities			55,729					52,006
Revenue reserves, deferred margin and other liabilities			480,436					497,838
Revolving credit facility and long-term debt			883,741					956,513
Total liabilities			1,645,525					1,719,458
Total Cypress stockholders' equity			1,857,816					1,816,536
Non-controlling interest			1,156					1,056
Total equity			1,858,972					1,817,592
Total liabilities and equity			$	3,504,497				$	3,537,050

CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ON A GAAP BASIS
(In thousands, except per-share data)
(Unaudited)
			Three Months Ended															Six Months Ended
			July 1, 2018					April 1, 2018					July 2, 2017					July 1, 2018					July 2, 2017
Revenues			$	624,090				$	582,241				$	593,776				$	1,206,331				$	1,125,650
Cost of revenue 1			389,952					369,849					401,031					759,801					775,797
Gross profit			234,138					212,392					192,745					446,530					349,853
Research and development 1			96,693					93,233					88,595					189,926					177,943
Selling, general and administrative 1			86,599					83,397					95,258					169,996					176,591
Total operating expenses			183,292					176,630					183,853					359,922					354,534
Operating income (loss)			50,846					35,762					8,892					86,608					(4,681		)
Interest and other expense, net			(14,143		)			(18,154		)			(16,407		)			(32,297		)			(35,766		)
Income (loss) before income taxes and non-controlling interest			36,703					17,608					(7,515		)			54,311					(40,447		)
Income tax provision			(5,154		)			(5,057		)			(4,504		)			(10,211		)			(9,431		)
Equity in net loss of equity method investees			(3,755		)			(3,461		)			(4,835		)			(7,216		)			(9,911		)
Net income (loss)			27,794					9,090					(16,854		)			36,884					(59,789		)
Net gain attributable to non-controlling interests			(88		)			(12		)			(66		)			(100		)			(130		)
Net income (loss) attributable to Cypress			$	27,706				$	9,078				$	(16,920	)			$	36,784				$	(59,919	)
Net income (loss) per share attributable to Cypress:
Basic			$	0.08				$	0.03				$	(0.05	)			$	0.10				$	(0.18	)
Diluted			$	0.07				$	0.02				$	(0.05	)			$	0.10				$	(0.18	)
Cash dividend declared per share			$	0.11				$	0.11				$	0.11				$	0.22				$	0.22
Shares used in net income (loss) per share calculation:
Basic			358,577					355,461					329,860					356,123					328,320
Diluted			371,967					370,592					329,860					370,402					328,320

1.			In 2018, certain expenses have been reclassified as part of cost of revenue and operating expenses. Historical results have been conformed with the 2018 presentation.

CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per-share data)
(Unaudited)
Table A: GAAP to non-GAAP reconciling items: Three Months Ended Q2 2018
													Selling, general					Interest and					Income tax
			Cost of					Research and					and					other					(provision)
			revenues					development					administrative					expense, net					benefit
GAAP [i]			$	389,952				$	96,693				$	86,599				$	(17,898	)			$	(5,154	)
[1] Stock-based compensation			3,986					13,800					16,121					—					—
[2] Changes in value of deferred compensation plan			102					467					572					(1,123		)			—
[3] Equity in net loss of equity method investees			—					—					—					3,755					—
[4] Imputed interest on convertible debt, equity component amortization on convertible debt and others			—					—					—					4,415					—
[5] Amortization of acquisition-related intangible assets and other			49,438					—					4,355					—					—
[6] Gain on sale of cost method investment			—					—					(1,521		)			—					—
[7] Restructuring charges			1,589					33					(383		)			—					—
[8] Tax impact of non-GAAP adjustments			—					—					—					(377		)			2,029
Non - GAAP [ii]			$	334,837				$	82,393				$	67,455				$	(11,228	)			$	(3,125	)
Impact of reconciling items [ii - i]			$	(55,115	)			$	(14,300	)			$	(19,144	)			$	6,670				$	2,029

Table B: GAAP to non-GAAP reconciling items: Three Months Ended Q1 2018
																		Interest and					Income tax
			Cost of					Research and					Selling, general					other expense,					(provision)
			revenues					development					and administrative					net					benefit
GAAP [i]			$	369,849				$	93,233				$	83,397				$	(21,615	)			$	(5,057	)
[1] Stock-based compensation			3,584					6,713					8,161					—					—
[2] Changes in value of deferred compensation plan			61					272					350					(266		)			—
[3] Equity in net loss and impairment of equity method investees			—					—					—					3,461					—
[4] Imputed interest on convertible debt, equity component amortization on convertible debt and others			—					—					—					3,431					—
[5] Loss on extinguishment of Spansion convertible notes			—					—										3,258					—
[6] Amortization of debt issuance costs			—					—					—					1,073					—
[7] Amortization of acquisition-related intangible assets			49,438					—					5,150					—					—
[8] Restructuring charges			1,887					292					1,917					—					—
[9] Tax impact of non-GAAP adjustments			—					—					—					393					2,043
Non - GAAP [ii]			$	314,879				$	85,956				$	67,819				$	(10,265	)			$	(3,014	)
Impact of reconciling items [ii - i]			$	(54,970	)			$	(7,277	)			$	(15,578	)			$	11,350				$	2,043

Table C: GAAP to Non-GAAP reconciling items: Three Months Ended Q2 2017
								Research					Selling,					Interest and					Income tax
								and					general and					other					(provision)
			Cost of revenues					development					administrative					expense, net					benefit
GAAP [i]			$	401,031				$	88,595				$	95,258				$	(21,242	)			$	(4,504	)
[1] Stock based compensation			4,000					9,776					10,574					—					—
[2] Changes in value of deferred compensation plan			137					563					896					(1,584		)			—
[3] Merger, integration, related costs and adjustments related to assets held for sale			1,336					(96		)			1,193					—					—
[4] Inventory step-up related to acquisition accounting			167					—					—					—					—
[5] Equity in net loss and impairment of equity method investees			—					—					—					4,835					—
[6] Imputed interest on convertible debt, equity component amortization on convertible debt and others			—					—					—					3,507					—
[7] Amortization of debt issuance costs			—					—					—					920					—
[8] Amortization of acquisition-related intangible assets			44,270					—					5,084					—					—
[9] Restructuring charges			—					358					540					—					—
[10] Settlement charges			—					—					3,500					—					—
[11] Tax impact of non-GAAP adjustments			—					—					—					227					1,421
Non - GAAP [ii]			$	351,121				$	77,994				$	73,471				$	(13,337	)			$	(3,083	)
Impact of reconciling items [ii - i]			$	(49,910	)			$	(10,601	)			$	(21,787	)			$	7,905				$	1,421

Table D: GAAP to non-GAAP reconciling items: Six Months Ended Q2 2018
								Research							SG&A and													Income tax
			Cost of					and							Restructuring							Interest and other						(provision)
			revenues					development							costs							expense, net						benefit
GAAP [i]			$	759,801					$	189,926						$	169,996						$	(39,513	)			$	(10,211	)
[1] Stock-based compensation			7,569					20,514							24,283							—						—
[2] Changes in value of deferred compensation plan			163					739							922							(1,389			)			—
[3] Equity in net loss and impairment of equity method investees			—					—							—							7,216						—
[4] Imputed interest on convertible debt, equity component amortization on convertible debt and others			—					—							—							7,846						—
[5] Loss on extinguishment of Spansion convertible notes and debt issuance cost write off due to refinancing			—					—							—							3,258						—
[6] Amortization of debt issuance costs			—					—							—							1,073						—
[7] Amortization of acquisition-related intangible assets and other			98,876					—							9,505							—						—
[8] Gain on sale of cost method investment			—					—							(1,521			)				—						—
[9] Restructuring charges			3,476					325							1,533							—						—
[10] Tax impact of non-GAAP adjustments			—					—							—							16						4,072
Non - GAAP [ii]			$	649,717					$	168,348						$	135,274						$	(21,493	)			$	(6,139	)
Impact of reconciling items [ii - i]			$	(110,084	)				$	(21,578	)					$	(34,722	)					$	18,020				$	4,072

Table E: GAAP to non-GAAP reconciling items: Six Months Ended Q2 2017
								Research					Selling,					Interest and					Income tax
			Cost of					and					general and					other					(provision)
			revenues					development					administrative					expense, net					benefit
GAAP [i]			$	775,797				$	177,943				$	176,591				$	(45,677	)			$	(9,431	)
[1] Stock-based compensation			7,885					20,062					19,557					—					—
[2] Changes in value of deferred compensation plan			304					1,160					1,904					(3,142		)			—
[3] Merger, integration, related costs and adjustments related to assets held for sale			2,686					(96		)			(286		)			—					—
[4] Inventory step-up related to acquisition accounting			3,031					—					—					—					—
[5] Equity in net loss and impairment of equity method investees			—					—					—					9,911					—
[6] Imputed interest on convertible debt, equity component amortization on convertible debt and others			—					—					—					6,996					—
[7] Amortization of debt issuance costs			—					—					—					1,778					—
[8] Amortization of acquisition-related intangible assets			87,437					—					10,167					—					—
[9] Restructuring charges			231					2,710					528					—					—
[10] Settlement charges			—					—					3,500					—					—
[11] Tax impact of non-GAAP adjustments			—					—					—					642					3,546
Non - GAAP [ii]			$	674,223				$	154,107				$	141,221				$	(29,492	)			$	(5,885	)
Impact of reconciling items [ii - i]			$	(101,574	)			$	(23,836	)			$	(35,370	)			$	16,185				$	3,546

Table F: Non-GAAP gross profit			Three Months Ended															Six Months Ended
			Q2'18					Q1'18					Q2'17					Q2'18					Q2'17
GAAP gross profit			$	234,138				$	212,392				$	192,745				$	446,530				$	349,853
Impact of reconciling items on cost of revenues (Table A, B, C, D and E)			(55,115		)			(54,970		)			(49,910		)			(110,084		)			(101,574		)
Non-GAAP gross profit			$	289,253				$	267,362				$	242,655				$	556,614				$	451,427
GAAP gross margin (GAAP gross profit/revenue)			37.5		%			36.5		%			32.5		%			37.0		%			31.1		%
Non-GAAP gross margin (Non-GAAP gross profit/revenue)			46.3		%			45.9		%			40.9		%			46.1		%			40.1		%

Table G: Non-GAAP operating income			Three Months Ended															Six Months Ended
			Q2'18					Q1'18					Q2'17					Q2'18					Q2'17
GAAP operating income (loss) [i]			$	50,846				$	35,762				$	8,892				$	86,608				$	(4,681	)
Impact of reconciling items on cost of revenues (see Table A, B, C, D, E)			55,115					54,970					49,910					110,084					101,574
Impact of reconciling items on R&D (see Table A, B, C, D, E)			14,300					7,277					10,601					21,578					23,836
Impact of reconciling items on SG&A (see Table A, B, C, D, E)			19,144					15,578					21,787					34,722					35,370
Non-GAAP operating income [ii]			$	139,405				$	113,587				$	91,190				$	252,992				$	156,099
Impact of reconciling items on operating income [ii - i]			$	88,559				$	77,825				$	82,298				$	166,384				$	160,780
GAAP operating margin (GAAP operating income / revenue)			8.1		%			6.1		%			1.5		%			7.2		%			(0.4		)%
Non-GAAP operating margin (Non-GAAP operating income / revenue)			22.3		%			19.5		%			15.4		%			21.0		%			13.9		%

Table H: Non-GAAP pre-tax profit			Three Months Ended															Six Months Ended
			Q2'18					Q1'18					Q2'17					Q2'18					Q2'17
GAAP income (loss) before income taxes and non-controlling interest ("Pre-tax income")			$	36,703				$	17,608				$	(7,515	)			$	54,311				$	(40,447	)
Equity in net loss and impairment of equity method investees			(3,755		)			(3,461		)			(4,835		)			(7,216		)			(9,911		)
Impact of reconciling items on operating income (see Table G)			88,559					77,825					82,298					166,384					160,780
Impact of reconciling items on interest and other expense, net (see Table A, B, C, D, E)			6,670					11,350					7,905					18,020					16,185
Non-GAAP pre-tax profit			$	128,177				$	103,322				$	77,853				$	231,499				$	126,607
GAAP pre-tax profit margin (GAAP pre-tax income/revenue)			5.9		%			3.0		%			(1.3		)%			4.5		%			(3.6		)%
Non-GAAP pre-tax profit margin (Non-GAAP pre-tax profit/revenue)			20.5		%			17.7		%			13.1		%			19.2		%			11.2		%

Table I: Non-GAAP net income (loss)
			Three Months Ended															Six Months Ended
			Q2'18					Q1'18					Q2'17					Q2'18					Q2'17
GAAP net income (loss) attributable to Cypress			$	27,706				$	9,078				$	(16,920	)			$	36,784				$	(59,919	)
Impact of reconciling items on operating income (see Table G)			88,559					77,825					82,298					166,384					160,780
Impact of reconciling items on interest and other expense, net (see Table A, B, C, D, E)			6,670					11,350					7,905					18,020					16,185
Impact of reconciling items on income tax (provision) benefit (see Table A, B, C, D, E)			2,029					2,043					1,421					4,072					3,546
Non-GAAP net income			$	124,964				$	100,296				$	74,704				$	225,260				$	120,592

Table J: Weighted-average shares, diluted
			Three Months Ended
			Q2'18								Q1'18								Q2'17
			GAAP				Non-GAAP				GAAP				Non-GAAP				GAAP				Non-GAAP
Weighted-average common shares outstanding, basic			358,577				358,577				355,461				355,461				329,860				329,860
Effect of dilutive securities:
Stock options, unvested restricted stock and other			7,837				14,391				7,897				12,515				—				15,822
Convertible notes			5,553				3,070				7,234				4,750				—				18,208
Weighted-average common shares outstanding, diluted			371,967				376,038				370,592				372,726				329,860				363,890

Table K: Weighted-average shares, diluted
			Six Months Ended
			Q2'18								Q2'17
			GAAP				Non-GAAP				GAAP				Non-GAAP
Weighted-average common shares outstanding, basic			356,123				356,123				328,320				328,320
Effect of dilutive securities:
Stock options, unvested restricted stock and other			7,879				13,071				—				15,466
Convertible notes			6,400				3,916				—				17,791
Weighted-average common shares outstanding, diluted			370,402				373,110				328,320				361,577

Table L: Net income (loss) per share
			Three Months Ended
			Q2'18										Q1'18									Q2'17
			GAAP					Non-GAAP					GAAP				Non-GAAP					GAAP					Non-GAAP
Net income (loss) (see Table I) [i]			$	27,706				$	124,964				$	9,078			$	100,296				$	(16,920	)			$	74,704
Weighted-average common shares outstanding, diluted (see Table J) [ii]			371,967					376,038					370,592				372,726					329,860					363,890
Earnings per share - diluted [i/ii]			$	0.07				$	0.33				$	0.02			$	0.27				$	(0.05	)			$	0.21

Table M: Net income (loss) per share
			Six Months Ended
			Q2'18										Q2'17
			GAAP					Non-GAAP					GAAP					Non-GAAP
Net income (loss) (see Table I) [i]			$	36,784				$	225,260				$	(59,919	)			$	120,592
Weighted-average common shares outstanding (see Table K) [ii]			370,402					373,110					328,320					361,577
Earnings per share - diluted [i/ii]			$	0.10				$	0.60				$	(0.18	)			$	0.33

Table N: Adjusted EBITDA
			Three Months Ended															Six Months Ended
			Q2'18					Q1'18					Q2'17					Q2'18					Q2'17
GAAP net income (loss) attributable to Cypress			$	27,706				$	9,078				$	(16,920	)			$	36,784				$	(59,919	)
Interest and other expense, net			(14,143		)			(18,154		)			(16,407		)			(32,297		)			(35,766		)
Income tax provision			(5,154		)			(5,057		)			(4,504		)			(10,211		)			(9,431		)
Equity in net loss of and impairment of equity method investees			(3,755		)			(3,461		)			(4,835		)			(7,216		)			(9,911		)
Net gain (loss) attributable to non-controlling interests			(88		)			(12		)			(66		)			(100		)			(130		)
GAAP operating income			$	50,846				$	35,762				$	8,892				$	86,608				$	(4,681	)
Impact of reconciling items on operating income (see Table G)			88,559					77,825					82,298					166,384					160,780
Non-GAAP operating income			$	139,405				$	113,587				$	91,190				$	252,992				$	156,099
Depreciation			16,239					17,140					16,045					33,379					32,202
Adjusted EBITDA			$	155,644				$	130,727				$	107,235				$	286,371				$	188,301

CYPRESS SEMICONDUCTOR CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
			Three Months Ended															Six Months Ended
			July 1, 2018					April 1, 2018					July 2, 2017					July 1, 2018					July 2, 2017
Selected Cash Flow Data (Preliminary):
Net cash provided by operating activities			$	110,734				$	31,678				$	32,447				$	142,412				$	58,168
Net cash (used in) provided by investing activities			$	(7,213	)			$	(14,173	)			$	(14,992	)			$	(21,386	)			$	6,658
Net cash used in financing activities			$	(97,556	)			$	(62,348	)			$	(30,184	)			$	(159,904	)			$	(76,227	)
Other Supplemental Data (Preliminary):
Capital expenditures			$	25,593				$	17,267				$	15,577				$	42,860				$	29,349
Depreciation			$	16,239				$	17,140				$	16,045				$	33,379				$	32,202
Payment of dividend			$	39,404				$	38,741				$	36,217				$	78,145				$	71,754
Dividend paid per share			$	0.11				$	0.11				$	0.11				$	0.22				$	0.22
Total debt (principal amount)			$	955,553				$	1,017,588				$	1,280,390				$	955,553				$	1,280,390
Leverage ratio			1.71					2.00					3.42					1.71					3.42

CYPRESS SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP FORWARDING-LOOKING ESTIMATES TO NON-GAAP FORWARD-

LOOKING ESTIMATES

Forward-looking

Forward-looking

Non-GAAP

GAAP estimate

estimate

(A)

Adjustments (B)

(C)=(A)+(B)

Stock-based

Amortization of

compensation

Other

intangibles

expense

items

Gross margin

38.0% - 39.0%

7.4

%

0.7

%

0.4

%

46.5% - 47.5%

Diluted earnings per share

$0.11 to $0.15

$

0.14

$

0.07

$

0.04

$0.36 to $0.40

« Previous Page 1 | 2 | 3 | 4 | 5 | 6 | 7  Next Page »