Cypress Reports Third Quarter 2019 Results and Provides Update

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

1. Includes a $29.5 million impairment charge recorded for the investment in Deca Technologies, Inc.

Table E: GAAP to non-GAAP reconciling items: Nine Months Ended Q3 2018
	*Cost of revenues*			Research and development			Selling, general and administrative			Interest and other expense, net
GAAP [i]	$	1,173,121		$	281,617		$	262,940		$	(58,229	)
[1] Stock-based compensation	12,689			28,720			35,152			—
[2] Changes in value of deferred compensation plan	299			1,406			1,690			(2,497		)
[3] Equity in gain/loss, net of equity method investee	—			—			—			10,873
[4] Imputed interest on convertible debt, equity component amortization on convertible debt and others	—			—			—			14,628
[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 others	150,441			—			13,815			—
[8] Gain on sale of cost method investment	—			—			(1,521		)	—
[9] Acquisition costs	—			—			119			—
[10] Restructuring charges and other	3,136			841			11,347			—
[11] Litigation settlement and other	—			—			(605		)	(1,270		)
Non - GAAP [ii]	$	1,006,556		$	250,650		$	202,943		$	(32,164	)
Impact of reconciling items [ii - i]	$	(166,565	)	$	(30,967	)	$	(59,997	)	$	26,065

Table F: Non-GAAP gross profit	Three Months Ended									Nine Months Ended
	Q3'19			Q2'19			Q3'18			Q3'19			Q3'18
GAAP gross profit	$	216,441		$	198,758		$	259,715		$	617,608		$	706,245
Impact of reconciling items on cost of revenues (see Table A, B, C, D and E)	52,917			51,258			56,481			157,514			166,565
Non-GAAP gross profit	$	269,358		$	250,016		$	316,196		$	775,122		$	872,810
GAAP gross margin (GAAP gross profit/revenue)	37.7		%	37.3		%	38.6		%	37.5		%	37.6		%
Non-GAAP gross margin (Non-GAAP gross profit/revenue)	46.9		%	47.0		%	47.0		%	47.1		%	46.4		%

Table G: Non-GAAP operating income	Three Months Ended									Nine Months Ended
	Q3'19			Q2'19			Q3'18			Q3'19			Q3'18
GAAP operating income [i]	$	45,225		$	13,486		$	75,081		$	90,527		$	161,688
Impact of reconciling items on cost of revenues (see Table A, B, C, D and E)	52,917			51,258			56,481			157,514			166,565
Impact of reconciling items on R&D (see Table A, B, C, D and E)	8,241			14,298			9,389			31,481			30,967
Impact of reconciling items on SG&A (see Table A, B, C, D and E)	19,142			29,372			25,276			68,175			59,997
Non-GAAP operating income [ii]	$	125,525		$	108,414		$	166,227		$	347,697		$	419,217
Impact of reconciling items on operating income [ii - i]	$	80,300		$	94,928		$	91,146		$	257,170		$	257,529
GAAP operating margin (GAAP operating income / revenue)	7.9		%	2.5		%	11.2		%	5.5		%	8.6		%
Non-GAAP operating margin (Non-GAAP operating income / revenue)	21.8		%	20.4		%	24.7		%	21.1		%	22.3		%

Table H: Non-GAAP pre-tax profit	Three Months Ended									Nine Months Ended
	Q3'19			Q2'19			Q3'18			Q3'19			Q3'18
GAAP income before income taxes and non-controlling interest ("Pre-tax income")	$	30,303		$	1,483		$	60,022		$	54,359		$	114,332
Share in gain/loss, net and impairment of equity method investees ¹	(1,383		)	(32,405		)	(3,657		)	(37,378		)	(10,873		)
Impact of reconciling items on operating income (see Table G)	80,300			94,928			91,146			257,170			257,529
Impact of reconciling items on interest and other expense, net (see Table A, B, C, D and E)	9,231			35,362			8,045			48,448			26,065
Non-GAAP pre-tax profit	$	118,451		$	99,368		$	155,556		$	322,599		$	387,053
GAAP pre-tax profit margin (GAAP pre-tax income/revenue)	5.3		%	0.3		%	8.9		%	3.3		%	6.1		%
Non-GAAP pre-tax profit margin (Non-GAAP pre-tax profit/revenue)	20.6		%	18.7		%	23.1		%	19.6		%	20.6		%

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