Cypress Reports Third Quarter 2019 Results and Provides Update

Cypress Reports Third Quarter 2019 Results and Provides Update on Regulatory Approvals

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CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

	September 29, 2019		December 30, 2018

ASSETS
Cash and cash equivalents	$	343,027	$	285,720
Accounts receivable, net	389,896		324,274
Inventories	327,392		292,093
Assets held for sale	—		13,510
Property, plant and equipment, net	262,955		282,986
Goodwill and other intangible assets, net	1,708,676		1,864,340
Other assets	628,045		630,292
Total assets	$	3,659,991	$	3,693,215
LIABILITIES AND EQUITY
Accounts payable	$	181,704	$	210,715
Income tax liabilities	55,228		53,469
Revenue reserves, deferred margin and other liabilities	503,801		430,814
Current portion of long-term debt	63,518		6,943
Revolving credit facility and long-term debt	756,853		874,235
Total liabilities	1,561,104		1,576,176
Total Cypress stockholders' equity	2,098,887		2,115,734
Non-controlling interest	—		1,305
Total equity	2,098,887		2,117,039
Total liabilities and equity	$	3,659,991	$	3,693,215

CYPRESS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ON A GAAP BASIS
(In thousands, except per-share data)
(Unaudited)

	Three Months Ended									Nine Months Ended
	September 29, 2019			June 30, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Revenues	$	574,521		$	532,221		$	673,035		$	1,645,746		$	1,879,366
Cost of revenue	358,080			333,463			413,320			1,028,138			1,173,121
Gross profit	216,441			198,758			259,715			617,608			706,245
Research and development	89,253			93,639			91,691			271,498			281,617
Selling, general and administrative	81,963			91,633			92,943			255,583			262,940
Total operating expenses	171,216			185,272			184,634			527,081			544,557
Operating income	45,225			13,486			75,081			90,527			161,688
Interest and other expense, net	(14,922		)	(12,003		)	(15,059		)	(36,168		)	(47,356		)
Income before income taxes, share in gain/loss, net and impairment of equity method investees and non-controlling interest	30,303			1,483			60,022			54,359			114,332
Income tax (provision) benefit	(16,247		)	18,189			(5,618		)	2,672			(15,829		)
Share in gain/loss, net and impairment of equity method investees	(1,383		)	(32,405		)	(3,657		)	(37,378		)	(10,873		)
Net income (loss)	12,673			(12,733		)	50,747			19,653			87,630
Net loss (income) attributable to non-controlling interest	10			4			(52		)	15			(152		)
Net income (loss) attributable to Cypress	$	12,683		$	(12,729	)	$	50,695		$	19,668		$	87,478
Net income (loss) per share attributable to Cypress:
Basic	$	0.03		$	(0.03	)	$	0.14		$	0.05		$	0.24
Diluted	$	0.03		$	(0.03	)	$	0.14		$	0.05		$	0.23
Cash dividend declared per share	$	0.11		$	0.11		$	0.11		$	0.33		$	0.33
Shares used in net income (loss) per share calculation:
Basic	369,241			365,600			361,631			366,444			358,560
Diluted	388,243			365,600			374,266			381,633			373,064

CYPRESS SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(In thousands, except percentages and per-share data)
(Unaudited)

Table A: GAAP to non-GAAP reconciling items: Three Months Ended Q3 2019
	*Cost of revenues*			Research and development			Selling, general and administrative			Interest and other expense, net
GAAP [i]	$	358,080		$	89,253		$	81,963		$	(16,305	)
[1] Stock-based compensation	5,907			7,708			11,276			—
[2] Changes in value of deferred compensation plan	(6		)	(38		)	(37		)	237
[3] Gain on sale of NAND business to joint venture	—			—			—			(1,887		)
[4] Share in gain/loss, net of equity method investees	—			—			—			1,383
[5] Imputed interest on convertible debt, equity component amortization on convertible debt and others	—			—			—			3,101
[6] Amortization of debt issuance costs	—			—			—			626
[7] Loss on extinguishment of debt	—			—			—			6,402
[8] Amortization of acquisition-related intangible assets and other	47,084			—			4,310			—
[9] Restructuring charges	(68		)	291			169			—
[10] Merger-related expenses	—			—			3,043			—
[11] Other income and expenses	—			280			381			(631		)
Non - GAAP [ii]	$	305,163		$	81,012		$	62,821		$	(7,074	)
Impact of reconciling items [ii - i]	$	(52,917	)	$	(8,241	)	$	(19,142	)	$	9,231

Table B: GAAP to non-GAAP reconciling items: Three Months Ended Q2 2019
	*Cost of revenues*			Research and development			Selling, general and administrative			Interest and other expense, net
GAAP [i]	$	333,463		$	93,639		$	91,633		$	(44,408	)
[1] Stock-based compensation	2,817			12,304			15,359			—
[2] Changes in value of deferred compensation plan	130			632			627			(1,145		)
[3] Share in gain/loss, net and impairment of equity method investees ¹	—			—			—			32,405
[4] Imputed interest on convertible debt, equity component amortization on convertible debt and others	—			—			—			3,276
[5] Amortization of debt issuance costs	—			—			—			929
[6] Amortization of acquisition-related intangible assets and other	47,293			—			4,304			—
[7] Restructuring charges	1,018			1,362			641			—
[8] Merger-related expenses	—			—			8,409			—
[9] Other income and expenses	—			—			32			(103		)
Non - GAAP [ii]	$	282,205		$	79,341		$	62,261		$	(9,046	)
Impact of reconciling items [ii - i]	$	(51,258	)	$	(14,298	)	$	(29,372	)	$	35,362

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