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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 26, 2018


CYPRESS SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)



Delaware
 
1–10079
 
94-2885898
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
198 Champion Court
San Jose, California 95134
(Address of principal executive offices and zip code)
(408) 943-2600
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)





Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.






Item 2.02     Results of Operations and Financial Condition.
 
On April 26, 2018, Cypress Semiconductor Corporation (the “Company”) issued a press release regarding the Company’s financial results for its third fiscal quarter ended April 1, 2018. A copy of the Company’s press release is furnished as Exhibit 99.1 to this report.

The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 
Item 9.01.
        Financial Statements and Exhibits.
 
 
 
(d)
Exhibits.
 
Exhibit No.
 
Description
 
 
99.1
 

 
 

 
 





- 2 -



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:
April 26, 2018
CYPRESS SEMICONDUCTOR CORPORATION
 
 
 
 
 
 
 
By:
 
/s/ Thad Trent
 
 
 
 
Thad Trent
 
 
 
 
Executive Vice President, Finance and Administration
 
 
 
 
and Chief Financial Officer






























- 3 -





EXHIBIT INDEX


 
Exhibit
No.
  
Description
 
 
 
 
99.1
  
Press Release dated April 26, 2018




 


- 4 -
Exhibit
EXHIBIT 99.1
Contacts:
Thad Trent
EVP Finance & Administration and CFO
(408) 943-2925

Ann Minooka
Vice President, Corporate Communications
(408) 456-1962
For Immediate Release
Cypress Reports First Quarter 2018 Results

SAN JOSE, Calif., April 26, 2018—Cypress Semiconductor Corporation (NASDAQ: CY), a leader in embedded solutions, today announced its first quarter 2018 results with the following highlights:
Revenue was $582.2 million, a 9.5% year-over-year increase
GAAP and non-GAAP gross margins were 36.5% and 45.9%, respectively, and represent a 700bps and 660bps increase year over year
GAAP diluted EPS improved by 15 cents to $0.02 and Non-GAAP diluted EPS improved 14 cents to $0.27 year over year
Revenue from the Automotive end market increased 14.8% year over year

“Cypress continued its solid execution this quarter with strong financial results and business performance,” stated Hassane El-Khoury, Cypress’ president and chief executive officer. “Our focus on the Cypress 3.0 strategy resulted in revenue increasing 9.5% and earnings per share more than doubling year over year. During the quarter, we expanded our embedded solutions portfolio with the introduction of several hardware and software innovations. These empowered Cypress, and our partners, to solve problems for consumer, industrial and automotive customers of all sizes, while also enhancing our ability to cross-sell our entire portfolio. The strength of our innovation muscle is clearly illustrated by our track record of winning with market movers, while simultaneously driving a significant increase in our overall customer count supporting our go-broad efforts.”


Revenue and earnings for the quarter are shown below with comparable periods:
(In thousands, except per-share data)




 
 
GAAP1
 
NON-GAAP2
 
 
Q1 2018
 
Q4 2017
 
Q1 2017
 
Q1 2018
 
Q4 2017
 
Q1 2017
Revenue
 
$
582,241

 
$
597,547

 
$
531,874

 
$
582,241

 
$
597,547

 
$
531,874

Gross margin
 
36.5
%
 
37.2
%
 
29.5
 %
 
45.9
%
 
45.4
%
 
39.3
%
Operating margin
 
6.1
%
 
7.0
%
 
(2.6
)%
 
19.5
%
 
20.2
%
 
12.2
%
Net income (loss)
 
$
9,078

 
$
(34,012
)
 
$
(42,999
)
 
$
100,296

 
$
104,686

 
$
45,887

Diluted EPS (loss)
 
$
0.02

 
$
(0.10
)
 
$
(0.13
)
 
$
0.27

 
$
0.28

 
$
0.13


1.    During Q1'18, certain expenses have been reclassified as part of cost of revenue. Historical results have been conformed with Q1'18 presentation.
2. See “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” tables (“Non-GAAP Results” tables) included below.

BUSINESS REVIEW

+ Cypress announced key developments in its Wireless Connectivity solutions during the quarter. The introduction of its ModusToolbox™ software suite empowers developers with an intuitive platform designed to create winning IoT products in record time. The new Raspberry Pi 3 Model B+ developers board debuted featuring Cypress’ 802.11ac combo solution to deliver reliable, interoperable and lightning-fast Wi-Fi® connectivity for developers eager to bring their great Internet of Things (IoT) products to life.

+ In the automotive space, Cypress introduced Excelon™, a family of high-performance nonvolatile memory products to solve mission-critical data logging problems for applications such as Advanced Driver-Assistance Systems (ADAS). Cypress also announced that e.solutions GmbH, a joint venture of Audi and Elektrobit, has integrated Cypress’ wireless connectivity solution into its design for new in-vehicle communication units, including in the 2018 Audi A8. The solution is based on Cypress’ Real Simultaneous Dual Band (RSDB) automotive-grade Wi-Fi and Bluetooth® combo solution, which enables multiple users to connect and stream unique content to their individual devices simultaneously.

+ Cypress also expanded its sensing solutions with the new PSoC® 4700S series of microcontrollers (MCUs) that uses inductive sensing to detect inputs on metal surfaces. The devices allow product developers to achieve aesthetic differentiation by using metallic materials in their designs.

+ Cypress paid a cash dividend of $39.4 million, or $0.11 per share, to holders of record of the Company’s common stock as of the close of business on March 29, 2018 and paid on April 19, 2018. The dividend was equivalent to a 2.6% annualized yield as of March 29, 2018.





REVENUE SUMMARY
(In thousands, except percentages)
(Unaudited)
 
 
Three Months Ended
 
April 1, 2018
 
December 31, 2017

 
April 2, 2017
 
Sequential Change
 
Year-over-year Change
Business Unit
 
 
 
 
 
 
 
 
 
MCD
$
336,710

 
$
357,247

 
317,901

 
(6
)%
 
6
 %
MPD
$
245,531

 
$
240,300

 
213,973

 
2
 %
 
15
 %
Total
$
582,241

 
$
597,547

 
531,874

 
(3
)%
 
9
 %
 
 
 
 
 
 
 
 
 
 
End Market
 
 
 
 
 
 
 
 
 
Industrial
18
%
 
17
%
 
20
%
 
2
 %
 
(1
)%
Automotive
34
%
 
30
%
 
33
%
 
11
 %
 
15
 %
Consumer
31
%
 
35
%
 
34
%
 
(13
)%
 
 %
Enterprise
17
%
 
18
%
 
13
%
 
(10
)%
 
37
 %
Total
100
%
 
100
%
 
100
%
 
 %
 
 %

1.
The Microcontroller and Connectivity Division ("MCD") includes microcontroller, connectivity and USB products and the Memory Products Division ("MPD") includes RAM, Flash and AgigA Tech products.

SECOND QUARTER 2018 FINANCIAL OUTLOOK

For the second quarter of 2018, Cypress estimates financial results as follows:

 
GAAP
Non-GAAP
Revenue
$605 million to $630 million
Gross Margin %
36.0% - 37.0%
45.5% - 46.5%
Diluted EPS
$0.01 to $0.04
$0.27 to $0.31

A reconciliation of GAAP forward-looking estimates to non-GAAP forward-looking estimates may be found in the tables at the end of this earnings report.

The timing and amount of certain material items, including restructuring charges, asset impairments, changes in value of deferred compensation assets and liabilities, impact of stock-based compensation from modification of equity awards, and the tax impact of non-GAAP adjustments, which are needed to estimate GAAP financial measures are either inherently unpredictable or outside the control of the Company, and may have a significant impact on the Company’s financial results. Accordingly, Cypress cannot provide a full quantitative reconciliation for such non-GAAP financial measures included as part of the second quarter 2018 financial outlook to the most directly comparable GAAP measure without unreasonable effort and additional adjustments may be reflected in our non-GAAP results for the second quarter of 2018. Cypress has qualitatively described below,





under the section “Non-GAAP Financial Measures,” the anticipated differences between the non-GAAP financial measures and the most directly comparable GAAP measures.

CONFERENCE CALL AND WEBCAST INFORMATION

Cypress will host its quarterly conference call on April 26, 2018 at 1:30 p.m. Pacific Daylight Time to discuss its first quarter 2018 results and outlook for the second quarter of 2018.

All interested parties may dial 517-308-9119 and provide the passcode “Cypress” to listen to the call. The event will be broadcast over the Internet and may be accessed through Cypress’ website at www.cypress.com/investors. The archived presentation will be available for two weeks immediately following the event.



FOLLOW CYPRESS ONLINE

Join the Cypress Developer Community, read our Core & Code blog, follow us on Twitter, Facebook and LinkedIn, and watch Cypress videos on our Video Library or YouTube.

ABOUT CYPRESS

Cypress is a leader in advanced embedded solutions for the world’s most innovative automotive, industrial, smart home appliances, consumer electronics and medical products. Cypress’ microcontrollers, analog ICs, wireless and USB-based connectivity solutions and reliable, high-performance memories help engineers design differentiated products and get them to market first. Cypress is committed to providing customers with the best support and development resources on the planet enabling them to disrupt markets by creating new product categories. To learn more, go to www.cypress.com.


NON-GAAP FINANCIAL MEASURES
To supplement its condensed consolidated unaudited financial results presented in accordance with GAAP, Cypress uses the non-GAAP financial measures listed below, which are adjusted from the most directly comparable GAAP financial measures to exclude certain items, as described in more detail below.
Gross profit;
Gross margin;





Research and development expenses;
Selling, general and administrative expenses;
Earnings before interest, taxes, depreciation, and amortization ("EBITDA");
Provision (benefit) for income taxes;
Pretax profit margin percent;
Operating income (loss);
Operating margin;
Net income (loss); and
Diluted earnings (loss) per share.

Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of the Company's operations which, when viewed in conjunction with Cypress' GAAP results, provide a more comprehensive understanding of the various factors and trends affecting the Company's business and operations.
The Company presents non-GAAP financial measures because management uses these measures to analyze and assess the Company's financial results and to manage the business.
There are limitations in using non-GAAP financial measures including those discussed below. Moreover, the Company’s non-GAAP measures may be calculated differently than the non-GAAP financial measures used by other companies. 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.






As presented in the "Non-GAAP Results" tables in this press release, each of the non-GAAP financial measures excludes one or more of the following items:

Acquisition-related charges: Acquisition-related charges are not factored into management's evaluation of Cypress' long-term performance after the completion of acquisitions. However, a limitation of non-GAAP measures that exclude acquisition-related charges is that these charges may represent payments that reduce the cash available to the Company for other purposes. Acquisition-related expenses primarily include:
Amortization of purchased intangibles, including purchased technology, patents, customer relationships, trademarks, backlog and non-compete agreements;
Amortization of step-up in value of inventory recorded as part of purchase price accounting; and
One-time charges associated with the completion of an acquisition including items such as contract termination costs, severance and other acquisition-related restructuring costs; costs incurred in connection with integration activities; and legal and accounting costs.

Share-based compensation expense: Share-based compensation expense relates primarily to employee stock options, restricted stock units, performance stock units and the employee stock purchase plan. Share-based compensation expense is a non-cash expense that is affected by changes in market factors including the price of Cypress’ common shares, which are not within the control of management. In addition, the valuation of share-based compensation is subjective, and the expense recognized by Cypress may be significantly different than the expense recognized by other companies for similar equity awards, which makes it difficult to assess Cypress’ results compared to its competitors. Accordingly, management excludes this item from its internal operating forecasts and models. However, a limitation of non-GAAP measures that exclude share-based compensation expense is that they do not reflect the full costs of compensating employees.

EBITDA: Consolidated EBITDA is calculated by adding back depreciation to the Non-GAAP operating income. EBITDA may be useful to management, investors, and other users of our financial information because it, during a given period, is an indicator of the amount of cash generated that is available to repay debt obligations, make investments, and for certain other activities. However, EBITDA should not be considered as a measure of discretionary cash available to invest in the growth of the business. In addition, EBITDA should





not be considered as a substitute for, or superior to net income, operating income, diluted earnings, or net cash provided by operating activities, or other financial measures prepared in accordance with GAAP.

Other adjustments: These items are excluded from non-GAAP financial measures because they are not related to the core operating activities and ongoing operating performance of Cypress. Excluding these items, which can vary significantly from quarter to quarter, allows management to better compare Cypress’ period-over-period performance. However, limitations of non-GAAP measures that exclude these items include that these adjustments are often subjective and may not be comparable to similarly titled non-GAAP financial measures used by other companies. Other adjustments primarily include:
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 share-based compensation expense.


FORWARD-LOOKING STATEMENTS

Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as “may,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “future,” “continue” or other wording indicating future results or expectations to identify such forward-looking statements that include, but are not limited to: statements related to our estimated non-GAAP revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP EPS, net interest expense, tax expense, capital expenditures and depreciation for the second quarter of fiscal





2018 (on a GAAP or non-GAAP basis); sources of revenue for the second quarter; the expected inventory levels, cash flow, pricing and profitability; estimates of certain GAAP to non-GAAP reconciling items for the second quarter; the demand environment for semiconductors; the expected impact of our gross margin improvement plan; the impact of seasonality on revenue; cross-selling opportunities in the automotive business; our ability to meet our targeted range of inventory; the expected or anticipated uses of cash flow, including to pay dividends, repurchase shares of common stock, or pay down our existing indebtedness; and plans to reduce excess inventory. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this press release. Our actual results may differ materially due to a variety of risks and uncertainties, including, but not limited to: global economic and market conditions; business conditions and growth trends in the semiconductor market; our ability to compete effectively; the volatility in supply and demand conditions 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; 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" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

Cypress, the Cypress logo and PSoC are registered trademarks and ModusToolbox and Excelon are trademarks of Cypress Semiconductor Corporation. All other trademarks are property of their owners.











CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
 
April 1, 2018

 
December 31, 2017

 
 
 
 
 
ASSETS
 
 
 
 
Cash, cash equivalents and short-term investments
 
$
106,752

 
$
151,596

Accounts receivable, net
 
393,303

 
295,991

Inventories
 
275,449

 
272,127

Property, plant and equipment, net
 
294,299

 
289,554

Goodwill and other intangible assets, net
 
2,100,281

 
2,154,592

Other assets
 
370,339

 
373,190

Total assets
 
$
3,540,423

 
$
3,537,050

LIABILITIES AND EQUITY
 
 
 
 
Accounts payable
 
$
236,930

 
$
213,101

Income tax liabilities
 
54,083

 
52,006

Revenue reserves, deferred margin and other liabilities
 
499,921

 
497,838

Revolving credit facility and long-term debt
 
920,684

 
956,513

Total liabilities
 
1,711,618

 
1,719,458

Total Cypress stockholders' equity
 
1,827,737

 
1,816,536

Non-controlling interest
 
1,068

 
1,056

Total equity
 
1,828,805

 
1,817,592

Total liabilities and equity
 
$
3,540,423

 
$
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
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
Revenues
$
582,241

 
$
597,547

 
$
531,874

Cost of revenue
369,849

 
375,162

 
374,766

Gross profit1
212,392

 
222,385

 
157,108

Research and development
93,233

 
94,566

 
89,348

Selling, general and administrative
83,397

 
86,125

 
81,333

Total operating expenses
176,630

 
180,691

 
170,681

Operating income (loss)
35,762

 
41,694

 
(13,573
)
Interest and other expense, net
(18,154
)
 
(21,561
)
 
(19,359
)
Income (loss) before income taxes and non-controlling interest
17,608

 
20,133

 
(32,932
)
Income tax provision
(5,057
)
 
2,773

 
(4,927
)
Equity in net loss of equity method investees
(3,461
)
 
(56,930
)
 
(5,076
)
Net income (loss)
9,090

 
(34,024
)
 
(42,935
)
Net gain attributable to non-controlling interests
(12
)
 
12

 
(64
)
Net income (loss) attributable to Cypress
$
9,078

 
$
(34,012
)
 
$
(42,999
)
Net income (loss) per share attributable to Cypress:
 
 
 
 
 
Basic
$
0.03

 
$
(0.10
)
 
$
(0.13
)
Diluted
$
0.02

 
$
(0.10
)
 
$
(0.13
)
Cash dividend declared per share
$
0.11

 
$
0.11

 
$
0.11

Shares used in net income (loss) per share calculation:
 
 
 
 
 
Basic
355,461

 
343,011

 
326,964

Diluted
370,592

 
343,011

 
326,964


1. During Q1'18, certain expenses have been reclassified as part of cost of revenue. Historical results have been conformed with Q1'18 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 Q1 2018
 
 
 
 
 
 
Cost of revenues
 
Research and development
 
Selling, general and administrative
 
Interest and other expense, net
 
Income tax (provision) 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] Share 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 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
 
49,438

 

 
5,150

 

 

[8] Restructuring charges
 
1,887

 
292

 
1,917

 

 

[9] Tax impact
 

 

 

 
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 B: GAAP to Non-GAAP reconciling items: Three Months Ended Q4 2017
 
 
 
 
 
 
Cost of revenues
 
Research and development
 
Selling, general and administrative
 
Interest and other expense, net
 
Income tax (provision) benefit
GAAP [i]
 
$
375,162

 
$
94,566

 
$
86,125

 
$
(78,491
)
 
$
2,773

[1] Stock based compensation
 
3,001

 
8,050

 
12,014

 

 

[2] Changes in value of deferred compensation plan
 
92

 
389

 
617

 
(1,210
)
 

[3] Merger, integration, related costs and adjustments related to assets held for sale
 
1,334

 

 
(135
)
 
11

 

[4] Share in net loss and impairment of equity method investees
 

 

 

 
56,930

 

[5] Imputed interest on convertible debt, equity component amortization on convertible debt and others
 

 

 

 
3,378

 

[6] Loss on extinguishment of Spansion convertible notes
 

 

 
 
 
4,250

 

[7] Amortization of debt issuance costs
 

 

 

 
1,011

 

[8] Amortization of acquisition-related intangible assets
 
44,199

 

 
5,025

 

 

[9] Litigation settlement
 

 

 
(1,000
)
 

 

[10] Restructuring charges
 
317

 
3,205

 
2,097

 

 

[11] Tax impact
 

 

 

 
151

 
(5,027
)
Non - GAAP [ii]
 
$
326,219

 
$
82,922

 
$
67,507

 
$
(13,970
)
 
$
(2,254
)
Impact of reconciling items [ii - i]
 
$
(48,943
)
 
$
(11,644
)
 
$
(18,618
)
 
$
64,521

 
$
(5,027
)






Table C: GAAP to Non-GAAP reconciling items: Three Months Ended Q1 2017
 
 
 
 
 
 
Cost of revenues
 
Research and development
 
Selling, general and administrative
 
Interest and other expense, net
 
Income tax (provision) benefit
GAAP [i]
 
374,766

 
89,348

 
81,333

 
(24,435
)
 
(4,927
)
[1] Stock based compensation
 
3,884

 
10,286

 
8,983

 

 

[2] Changes in value of deferred compensation plan
 
167

 
597

 
1,008

 
(1,558
)
 

[3] Merger, integration, related costs and adjustments related to assets held for sale
 
1,350

 

 
(1,479
)
 

 

[4] Inventory Step-up related to acquisition accounting
 
2,864

 

 

 

 

[5] Share in net loss and impairment of equity method investees
 

 

 

 
5,076

 

[6] Imputed interest on convertible debt, equity component amortization on convertible debt and others
 

 

 

 
3,489

 

[7] Amortization of debt issuance costs
 

 

 

 
858

 

[8] Amortization of acquisition-related intangible assets
 
43,167

 

 
5,083

 

 

[9] Restructuring charges
 
231

 
2,352

 
(12
)
 

 

[10] Tax impact
 

 

 

 
415

 
2,125

Non - GAAP [ii]
 
323,103

 
76,113

 
67,750

 
(16,155
)
 
(2,802
)
Impact of reconciling items [ii - i]
 
(51,663
)
 
(13,235
)
 
(13,583
)
 
8,280

 
2,125









Table D: Gross Margin %
 
 
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
 
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
Revenue [i]
 
$
582,241

 
$
582,241

 
$
597,547

 
$
597,547

 
$
531,874

 
$
531,874

Cost of revenues (See Table A, B, C) [ii]
 
369,849

 
314,879

 
375,162

 
326,219

 
374,766

 
323,103

Gross profit [iii] [ii - i]
 
$
212,392

 
$
267,362

 
$
222,385

 
$
271,328

 
$
157,108

 
$
208,771

Gross Margin % [iii / i]
 
36.5
%
 
45.9
%
 
37.2
%
 
45.4
%
 
29.5
%
 
39.3
%


Table E: Operating income
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
GAAP operating income (loss) [i]
 
$
35,762

 
$
41,694

 
$
(13,573
)
Impact of reconciling items on Cost of revenues (see Table A, B, C)
 
54,970

 
48,943

 
51,663

Impact of reconciling items on R&D (see Table A, B, C)
 
7,277

 
11,644

 
13,235

Impact of reconciling items on SG&A (see Table A, B, C)
 
15,578

 
18,618

 
13,583

Non-GAAP operating income [ii]
 
$
113,587

 
$
120,899

 
$
64,908

Impact of reconciling items [ii - i]
 
$
77,825

 
$
79,205

 
$
78,481

GAAP Operating Margin (GAAP Operating income / Revenue)
 
6.1
%
 
7.0
%
 
(2.6
)%
Non-GAAP Operating Margin (Non-GAAP Operating income / Revenue)
 
19.5
%
 
20.2
%
 
12.2
 %

Table F: Pre-tax profit
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
GAAP Pre-tax income (loss)
 
$
14,147

 
$
(36,797
)
 
$
(38,008
)
Impact of reconciling items on Operating income (see Table E)
 
77,825

 
79,205

 
78,481

Interest and other expense, net (see Table A, B, C)
 
11,350

 
64,521

 
8,280

Non-GAAP Pre-tax income
 
$
103,322

 
$
106,929

 
$
48,753



Table G: Net income (loss)
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
GAAP Net income (loss)
 
$
9,078

 
$
(34,012
)
 
$
(42,999
)
Impact of reconciling items on Operating income (see Table E)
 
77,825

 
79,205

 
78,481

Interest and other expense, net (see Table A, B, C)
 
11,350

 
64,521

 
8,280

Income tax benefit (see Table A, B, C)
 
2,043

 
(5,027
)
 
2,125

Non-GAAP Net income
 
$
100,296

 
$
104,687

 
$
45,887








Table H: Pretax profit margin %
 
 
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
 
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
Revenue [i]
 
$
582,241

 
$
582,241

 
$
597,547

 
$
597,547

 
$
531,874

 
$
531,874

Pre-tax profit (loss) (see Table F) [ii]
 
$
14,147

 
$
103,322

 
$
(36,797
)
 
$
106,929

 
$
(38,008
)
 
$
48,753

Pre-tax profit margin % [ii / i]
 
2.4
%
 
17.7
%
 
(6.2
)%
 
17.9
%
 
(7.1
)%
 
9.2
%


Table I: Weighted-average shares, diluted
 
 
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
 
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
Weighted-average common shares outstanding, basic
 
355,461

 
355,461

 
343,011

 
343,011

 
326,964

 
326,964

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
Stock options, unvested restricted stock and other
 
7,897

 
12,515

 

 
14,003

 

 
14,852

Impact of convertible bond
 
7,234

 
4,750

 

 
12,110

 

 
17,304

Weighted-average common shares outstanding, diluted
 
370,592

 
372,726

 
343,011

 
369,124

 
326,964

 
359,120



Table J: Net income (loss) Per Share
 
 
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
 
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
 
GAAP
 
Non-GAAP
Net income (loss) (see Table G) [i]
 
$
9,078

 
$
100,296

 
$
(34,012
)
 
$
104,687

 
$
(42,999
)
 
$
45,887

Weighted-average common shares outstanding (see Table I) [ii]
 
370,592

 
372,726

 
343,011

 
369,124

 
326,964

 
359,120

Non-GAAP earnings per share - Diluted [i/ii]
 
$
0.02

 
$
0.27

 
$
(0.10
)
 
$
0.28

 
$
(0.13
)
 
$
0.13








Table K: Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")
 
 
 
 
 
 
Q1'18
 
Q4'17
 
Q1'17
GAAP operating income (loss) (See Table E)
 
35,762

 
41,694

 
(13,573
)
Impact of reconciling items on Operating income (see Table E)
 
77,825

 
79,205

 
78,481

Non-GAAP operating income
 
113,587

 
120,899

 
64,908

GAAP Depreciation
 
17,140

 
18,701

 
16,157

Non-GAAP EBITDA
 
130,727

 
139,600

 
81,065







CYPRESS SEMICONDUCTOR CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)


 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
Selected Cash Flow Data (Preliminary):
 
 
 
 
 
 
Net cash provided by operating activities
 
$
31,678

 
$
201,541

 
$
25,721

Net cash (used in) provided by investing activities
 
$
(14,173
)
 
$
(6,036
)
 
$
21,650

Net cash used in financing activities
 
$
(62,348
)
 
$
(175,472
)
 
$
(46,043
)
Other Supplemental Data (Preliminary):
 
 
 
 
 
 
Capital expenditures
 
$
17,267

 
$
7,790

 
$
13,772

Depreciation
 
$
17,140

 
$
18,701

 
$
16,157

Payment of dividend
 
$
38,741

 
$
36,670

 
$
35,537

Dividend paid per share
 
$
0.11

 
$
0.11

 
$
0.11

Total debt (principal amount)
 
$
1,017,588

 
$
1,061,414

 
$
1,286,401

Leverage ratio
 
2.00

 
2.91

 
$
3.83










CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP FORWARDING LOOKING ESTIMATES TO NON-GAAP FORWARD LOOKING ESTIMATES
 
 
 
 
 
 
 
 
 
Forward looking GAAP estimate (A)
 
Adjustments (B)
 
Forward looking Non-GAAP estimate (C)=(A)+(B)
 
 
 
 
Amortization of intangibles
 
Share-based compensation expense
 
Restructuring
 
Other items
 
 
Gross Margin %
 
36.0% - 37.0%
 
8.0
%
 
0.8
%
 
0.20
%
 
0.4
%
 
45.5% - 46.5%
Diluted earnings per share
 
$0.01 to $0.04
 
$
0.15

 
$
0.09

 
$
0.01

 
$
0.03

 
$0.27 to $0.31











 

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