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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
94-2885898
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Title of each class:
|
Trading symbol:
|
Name of each exchange on which registered:
|
Common Stock, $0.01 par value
|
CY
|
The Nasdaq Global Select Market
|
Large accelerated filer
|
|
☒
|
|
Accelerated filer
|
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☐
|
|
|
|
|
|
|
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Non-accelerated filer
|
|
☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
||
Item 1.
|
||
Item 1A.
|
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Item 2.
|
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Item 3.
|
||
Item 4.
|
||
Item 5.
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||
Item 6.
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June 30, 2019
|
|
December 30, 2018
|
||||
ASSETS
|
(In thousands, except
per-share amounts) |
||||||
Current assets:
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
372,180
|
|
|
$
|
285,720
|
|
Accounts receivable, net
|
267,763
|
|
|
324,274
|
|
||
Inventories
|
335,251
|
|
|
292,093
|
|
||
Assets held for sale
|
—
|
|
|
13,510
|
|
||
Other current assets
|
86,786
|
|
|
101,163
|
|
||
Total current assets
|
1,061,980
|
|
|
1,016,760
|
|
||
Property, plant and equipment, net
|
268,723
|
|
|
282,986
|
|
||
Operating lease right-of-use assets
|
47,612
|
|
|
—
|
|
||
Equity method investments
|
31,550
|
|
|
65,145
|
|
||
Intangible assets, net
|
386,814
|
|
|
490,590
|
|
||
Goodwill
|
1,373,750
|
|
|
1,373,750
|
|
||
Deferred tax assets
|
360,763
|
|
|
339,679
|
|
||
Other long-term assets
|
117,284
|
|
|
124,305
|
|
||
Total assets
|
$
|
3,648,476
|
|
|
$
|
3,693,215
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
182,826
|
|
|
$
|
210,715
|
|
Accrued compensation and employee benefits
|
48,843
|
|
|
61,994
|
|
||
Price adjustment and other revenue reserves
|
141,516
|
|
|
163,088
|
|
||
Dividend payable
|
40,289
|
|
|
39,748
|
|
||
Current portion of long-term debt
|
8,134
|
|
|
6,943
|
|
||
Other current liabilities
|
134,226
|
|
|
138,064
|
|
||
Total current liabilities
|
555,834
|
|
|
620,552
|
|
||
Deferred income taxes and other tax liabilities
|
50,385
|
|
|
53,469
|
|
||
Revolving credit facility and long-term portion of debt
|
854,304
|
|
|
874,235
|
|
||
Other long-term liabilities
|
78,947
|
|
|
27,920
|
|
||
Total liabilities
|
$
|
1,539,470
|
|
|
$
|
1,576,176
|
|
Commitments and contingencies (Note 13)
|
—
|
|
|
—
|
|
||
Equity:
|
|
|
|
|
|
||
Preferred stock, $0.01 par value, 5,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 650,000 and 650,000 shares authorized; 543,812 and 537,327 shares issued; 367,538 and 361,452 shares outstanding at June 30, 2019 and December 30, 2018, respectively
|
5,438
|
|
|
5,373
|
|
||
Additional paid-in-capital
|
5,641,422
|
|
|
5,636,099
|
|
||
Accumulated other comprehensive income (loss)
|
(12,671
|
)
|
|
1,829
|
|
||
Accumulated deficit
|
(1,149,883
|
)
|
|
(1,157,115
|
)
|
||
Stockholders’ equity before treasury stock
|
4,484,306
|
|
|
4,486,186
|
|
||
Less: Shares of common stock held in treasury, at cost; 176,274 and 175,875 shares at June 30, 2019 and December 30, 2018, respectively
|
(2,376,600
|
)
|
|
(2,370,452
|
)
|
||
Total Cypress stockholders’ equity
|
2,107,706
|
|
|
2,115,734
|
|
||
Non-controlling interest
|
1,300
|
|
|
1,305
|
|
||
Total equity
|
2,109,006
|
|
|
2,117,039
|
|
||
Total liabilities and equity
|
$
|
3,648,476
|
|
|
$
|
3,693,215
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands, except per-share amounts)
|
||||||||||||||
Revenues
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
Cost of revenues
|
333,463
|
|
|
389,952
|
|
|
670,058
|
|
|
759,801
|
|
||||
Gross profit
|
198,758
|
|
|
234,138
|
|
|
401,167
|
|
|
446,530
|
|
||||
Research and development
|
93,639
|
|
|
96,693
|
|
|
182,245
|
|
|
189,926
|
|
||||
Selling, general and administrative
|
91,633
|
|
|
86,599
|
|
|
173,620
|
|
|
169,996
|
|
||||
Total operating expenses
|
185,272
|
|
|
183,292
|
|
|
355,865
|
|
|
359,922
|
|
||||
Operating income
|
13,486
|
|
|
50,846
|
|
|
45,302
|
|
|
86,608
|
|
||||
Interest expense
|
(12,311
|
)
|
|
(15,577
|
)
|
|
(25,889
|
)
|
|
(34,436
|
)
|
||||
Other income, net
|
308
|
|
|
1,434
|
|
|
4,643
|
|
|
2,139
|
|
||||
Income before income taxes, share in net loss and impairment of equity method investee and non-controlling interest
|
1,483
|
|
|
36,703
|
|
|
24,056
|
|
|
54,311
|
|
||||
Income tax benefit (provision)
|
18,189
|
|
|
(5,154
|
)
|
|
18,919
|
|
|
(10,211
|
)
|
||||
Share in net loss and impairment of equity method investees
|
(32,405
|
)
|
|
(3,755
|
)
|
|
(35,995
|
)
|
|
(7,216
|
)
|
||||
Net (loss) income
|
(12,733
|
)
|
|
27,794
|
|
|
6,980
|
|
|
36,884
|
|
||||
Net loss (income) attributable to non-controlling interest
|
4
|
|
|
(88
|
)
|
|
5
|
|
|
(100
|
)
|
||||
Net (loss) income attributable to Cypress
|
$
|
(12,729
|
)
|
|
$
|
27,706
|
|
|
$
|
6,985
|
|
|
$
|
36,784
|
|
Net (loss) income per share attributable to Cypress:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
0.02
|
|
|
$
|
0.10
|
|
Diluted
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.10
|
|
Shares used in net (loss) income per share calculation:
|
|
|
|
|
|
|
|
||||||||
Basic
|
365,600
|
|
|
358,577
|
|
|
364,842
|
|
|
356,123
|
|
||||
Diluted
|
365,600
|
|
|
371,967
|
|
|
377,195
|
|
|
370,402
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In Thousands)
|
||||||||||||||
Net (loss) income
|
$
|
(12,733
|
)
|
|
$
|
27,794
|
|
|
$
|
6,980
|
|
|
$
|
36,884
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net unrecognized gain (loss) on defined benefit plan
|
(928
|
)
|
|
—
|
|
|
(941
|
)
|
|
—
|
|
||||
Net unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net unrealized (loss) gain arising during the period
|
(6,963
|
)
|
|
772
|
|
|
(12,901
|
)
|
|
5,236
|
|
||||
Net (gain) loss reclassified into earnings for revenue hedges (effective portion)
|
(395
|
)
|
|
621
|
|
|
(568
|
)
|
|
1,228
|
|
||||
Net loss (gain) reclassified into earnings for expense hedges (effective portion)
|
554
|
|
|
(1,148
|
)
|
|
639
|
|
|
(2,285
|
)
|
||||
Net (gain) loss reclassified into earnings for interest rate hedges (effective portion)
|
(315
|
)
|
|
—
|
|
|
(729
|
)
|
|
—
|
|
||||
Total net unrealized (loss) gain on cash flow hedges
|
(7,119
|
)
|
|
245
|
|
|
(13,559
|
)
|
|
4,179
|
|
||||
Total other comprehensive (loss) income
|
(8,047
|
)
|
|
245
|
|
|
(14,500
|
)
|
|
4,179
|
|
||||
Comprehensive (loss) income
|
(20,780
|
)
|
|
28,039
|
|
|
(7,520
|
)
|
|
41,063
|
|
||||
Comprehensive loss (income) attributable to non-controlling interest
|
4
|
|
|
(112
|
)
|
|
5
|
|
|
(100
|
)
|
||||
Comprehensive (loss) income attributable to Cypress
|
$
|
(20,776
|
)
|
|
$
|
27,927
|
|
|
$
|
(7,515
|
)
|
|
$
|
40,963
|
|
|
Common Stock
|
Additional Paid-In Capital
|
Accumulated Other Comprehensive Income (Loss)
|
Accumulated Deficit
|
Treasury Stock
|
Non-controlling Interest
|
Total Equity
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances at March 31, 2019
|
541,180
|
|
|
$
|
5,412
|
|
$
|
5,630,673
|
|
$
|
(4,624
|
)
|
$
|
(1,137,154
|
)
|
176,229
|
|
|
$
|
(2,375,838
|
)
|
$
|
1,304
|
|
$
|
2,119,773
|
|
Net (loss) income attributable to Cypress
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(12,729
|
)
|
—
|
|
|
—
|
|
—
|
|
(12,729
|
)
|
|||||||
Unrealized loss on defined benefit pension plan
|
—
|
|
|
—
|
|
—
|
|
(928
|
)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(928
|
)
|
|||||||
Net unrealized gain on cash flow hedges and interest rate swaps
|
—
|
|
|
—
|
|
—
|
|
(7,119
|
)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(7,119
|
)
|
|||||||
Issuance of common shares under employee stock plans, net
|
2,632
|
|
|
26
|
|
17,534
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
17,560
|
|
|||||||
Dividend ($0.11 per share)
|
—
|
|
|
—
|
|
(40,289
|
)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(40,289
|
)
|
|||||||
Net settlement in stock
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
45
|
|
|
(762
|
)
|
—
|
|
(762
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
33,504
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
33,504
|
|
|||||||
Non-controlling interest
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(4
|
)
|
(4
|
)
|
|||||||
Balances at June 30, 2019
|
543,812
|
|
|
$
|
5,438
|
|
$
|
5,641,422
|
|
$
|
(12,671
|
)
|
$
|
(1,149,883
|
)
|
176,274
|
|
|
$
|
(2,376,600
|
)
|
$
|
1,300
|
|
$
|
2,109,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances at April 1, 2018
|
531,765
|
|
|
$
|
4,969
|
|
$
|
5,657,767
|
|
$
|
2,572
|
|
$
|
(1,502,628
|
)
|
173,503
|
|
|
$
|
(2,334,944
|
)
|
$
|
1,068
|
|
$
|
1,828,804
|
|
Net income attributable to Cypress
|
—
|
|
|
—
|
|
—
|
|
—
|
|
27,706
|
|
—
|
|
|
—
|
|
—
|
|
27,706
|
|
|||||||
Net unrealized gain on cash flow hedges and interest rate swaps
|
—
|
|
|
—
|
|
—
|
|
245
|
|
(2
|
)
|
—
|
|
|
—
|
|
—
|
|
243
|
|
|||||||
Issuance of common shares under employee stock plans, net
|
2,272
|
|
|
128
|
|
15,974
|
|
—
|
|
—
|
|
5
|
|
|
—
|
|
—
|
|
16,102
|
|
|||||||
Dividend ($0.11 per share)
|
—
|
|
|
—
|
|
(39,449
|
)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(39,449
|
)
|
|||||||
Repurchase of common shares
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
610
|
|
|
(9,996
|
)
|
—
|
|
(9,996
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
35,468
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
35,468
|
|
|||||||
Non-controlling interest
|
—
|
|
|
6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
88
|
|
94
|
|
|||||||
Balances at July 1, 2018
|
534,037
|
|
|
$
|
5,103
|
|
$
|
5,669,760
|
|
$
|
2,817
|
|
$
|
(1,474,924
|
)
|
174,118
|
|
|
$
|
(2,344,940
|
)
|
$
|
1,156
|
|
$
|
1,858,972
|
|
|
Common Stock
|
Additional Paid-In Capital
|
Accumulated Other Comprehensive Income (Loss)
|
Accumulated Deficit
|
Treasury Stock
|
Non-controlling Interest
|
Total Equity
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances at December 30, 2018
|
537,327
|
|
|
$
|
5,373
|
|
$
|
5,636,099
|
|
$
|
1,829
|
|
$
|
(1,157,115
|
)
|
175,875
|
|
|
$
|
(2,370,452
|
)
|
$
|
1,305
|
|
$
|
2,117,039
|
|
Net income attributable to Cypress
|
—
|
|
|
—
|
|
—
|
|
—
|
|
6,985
|
|
—
|
|
|
—
|
|
—
|
|
6,985
|
|
|||||||
Unrealized loss on defined benefit pension plan
|
—
|
|
|
—
|
|
—
|
|
(941
|
)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(941
|
)
|
|||||||
Net unrealized gain on cash flow hedges and interest rate swaps
|
—
|
|
|
—
|
|
—
|
|
(13,559
|
)
|
247
|
|
—
|
|
|
—
|
|
—
|
|
(13,312
|
)
|
|||||||
Issuance of common shares under employee stock plans, net
|
6,485
|
|
|
65
|
|
31,774
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
31,839
|
|
|||||||
Dividend ($0.11 per share)
|
—
|
|
|
—
|
|
(80,423
|
)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(80,423
|
)
|
|||||||
Net settlement in stock
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
399
|
|
|
(6,148
|
)
|
—
|
|
(6,148
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
53,972
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
53,972
|
|
|||||||
Non-controlling interest
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(5
|
)
|
(5
|
)
|
|||||||
Balances at June 30, 2019
|
543,812
|
|
|
$
|
5,438
|
|
$
|
5,641,422
|
|
$
|
(12,671
|
)
|
$
|
(1,149,883
|
)
|
176,274
|
|
|
$
|
(2,376,600
|
)
|
$
|
1,300
|
|
$
|
2,109,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances at December 31, 2017
|
525,719
|
|
|
$
|
4,936
|
|
$
|
5,659,612
|
|
$
|
(1,362
|
)
|
$
|
(1,511,706
|
)
|
173,499
|
|
|
$
|
(2,334,944
|
)
|
$
|
1,056
|
|
$
|
1,817,592
|
|
Net income attributable to Cypress
|
—
|
|
|
—
|
|
—
|
|
—
|
|
36,784
|
|
—
|
|
|
—
|
|
—
|
|
36,784
|
|
|||||||
Net unrealized gain on cash flow hedges and interest rate swaps
|
—
|
|
|
—
|
|
—
|
|
4,179
|
|
(2
|
)
|
—
|
|
|
—
|
|
—
|
|
4,177
|
|
|||||||
Issuance of common shares under employee stock plans, net
|
6,916
|
|
|
147
|
|
36,497
|
|
—
|
|
—
|
|
9
|
|
|
—
|
|
—
|
|
36,644
|
|
|||||||
Extinguishment of 2% Exchangeable Senior Notes due 2020
|
—
|
|
|
—
|
|
(25,696
|
)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(25,696
|
)
|
|||||||
Issuance of common shares upon conversion of 2% Exchangeable Senior Notes due 2020
|
1,402
|
|
|
14
|
|
25,152
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
25,166
|
|
|||||||
Dividend ($0.11 per share)
|
—
|
|
|
—
|
|
(78,850
|
)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(78,850
|
)
|
|||||||
Repurchase of common shares
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
610
|
|
|
(9,996
|
)
|
—
|
|
(9,996
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
53,045
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
53,045
|
|
|||||||
Non-controlling interest
|
—
|
|
|
6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
100
|
|
106
|
|
|||||||
Balances at July 1, 2018
|
534,037
|
|
|
$
|
5,103
|
|
$
|
5,669,760
|
|
$
|
2,817
|
|
$
|
(1,474,924
|
)
|
174,118
|
|
|
$
|
(2,344,940
|
)
|
$
|
1,156
|
|
$
|
1,858,972
|
|
|
Six Months Ended
|
||||||
|
June 30, 2019
|
|
July 1, 2018
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
6,980
|
|
|
$
|
36,884
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Stock-based compensation expense
|
50,875
|
|
|
52,366
|
|
||
Depreciation and amortization
|
142,682
|
|
|
141,361
|
|
||
Loss on assets held for sale
|
3,541
|
|
|
—
|
|
||
Loss / (Gain) on disposal or impairment of property and equipment
|
(365
|
)
|
|
7,179
|
|
||
Share in net loss and impairment of equity method investee
|
35,995
|
|
|
7,216
|
|
||
Accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt
|
9,436
|
|
|
13,272
|
|
||
Restructuring and other adjustments
|
3,961
|
|
|
3,643
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
56,510
|
|
|
(104,087
|
)
|
||
Operating lease right-of-use assets
|
(53,816
|
)
|
|
—
|
|
||
Inventories
|
(38,388
|
)
|
|
(13,956
|
)
|
||
Other current and long-term assets
|
772
|
|
|
(17,681
|
)
|
||
Price adjustment and other revenue reserves
|
(21,571
|
)
|
|
23,556
|
|
||
Accounts payable and other liabilities
|
(16,441
|
)
|
|
(7,341
|
)
|
||
Net cash provided by operating activities
|
180,171
|
|
|
142,412
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Cash received on sale of inventories to joint venture
|
2,905
|
|
|
—
|
|
||
Distributions, net of contributions from deferred compensation plan
|
6,262
|
|
|
4,583
|
|
||
Acquisition of property, plant and equipment, net
|
(18,024
|
)
|
|
(42,860
|
)
|
||
Cash paid for equity method investments
|
(2,400
|
)
|
|
—
|
|
||
Cash received on sale of cost method investment
|
—
|
|
|
18,538
|
|
||
Other investing
|
60
|
|
|
(1,647
|
)
|
||
Net cash used in investing activities
|
(11,197
|
)
|
|
(21,386
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Borrowings under senior secured revolving credit facility
|
—
|
|
|
94,000
|
|
||
Repayment of revolving credit facility
|
—
|
|
|
(184,000
|
)
|
||
Repayment of term loans
|
(27,525
|
)
|
|
(8,088
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(9,999
|
)
|
||
Tax withholdings related to net share settlements of restricted stock units
|
(6,148
|
)
|
|
—
|
|
||
Finance lease payment for principal portion
|
(831
|
)
|
|
—
|
|
||
Payment of cash dividends
|
(79,882
|
)
|
|
(78,145
|
)
|
||
Proceeds from employee stock-based awards
|
31,872
|
|
|
36,653
|
|
||
Payment for extinguishment of 2% Exchangeable Senior Notes due 2020
|
—
|
|
|
(10,000
|
)
|
||
Financing costs related to debt
|
—
|
|
|
(325
|
)
|
||
Net cash used in financing activities
|
(82,514
|
)
|
|
(159,904
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
86,460
|
|
|
(38,878
|
)
|
||
Cash and cash equivalents, beginning of period
|
285,720
|
|
|
151,596
|
|
||
Cash and cash equivalents, end of period
|
$
|
372,180
|
|
|
$
|
112,718
|
|
|
|
|
|
||||
Supplemental Cash Flows Disclosures:
|
|
|
|
|
|
||
Unpaid purchases of property, plant and equipment
|
$
|
4,281
|
|
|
$
|
8,556
|
|
•
|
whether any expired or existing contracts are or contain leases
|
•
|
the lease classification for any expired or existing leases
|
•
|
treatment of initial direct costs relating to any existing leases
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Microcontroller and Connectivity Division ("MCD")
|
$
|
354,225
|
|
|
$
|
368,526
|
|
|
$
|
664,615
|
|
|
$
|
705,236
|
|
Memory Products Division ("MPD")
|
177,996
|
|
|
255,564
|
|
|
406,610
|
|
|
501,095
|
|
||||
Total revenues
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
IoT
|
$
|
199,796
|
|
|
$
|
212,627
|
|
|
$
|
353,520
|
|
|
$
|
398,245
|
|
Automotive
|
202,297
|
|
|
192,594
|
|
|
400,111
|
|
|
392,594
|
|
||||
Legacy
|
130,128
|
|
|
218,869
|
|
|
317,594
|
|
|
415,492
|
|
||||
Total revenues
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Product revenue
|
$
|
518,465
|
|
|
$
|
609,089
|
|
|
$
|
1,047,023
|
|
|
$
|
1,180,519
|
|
Non-product revenue (1)
|
13,756
|
|
|
15,001
|
|
|
24,202
|
|
|
25,812
|
|
||||
Total revenue
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Products/Services transferred at a point in time
|
$
|
525,963
|
|
|
$
|
619,748
|
|
|
$
|
1,063,128
|
|
|
$
|
1,198,058
|
|
Products/Services transferred over time
|
6,258
|
|
|
4,342
|
|
|
8,097
|
|
|
8,273
|
|
||||
Total revenue
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
United States
|
$
|
53,751
|
|
|
$
|
53,795
|
|
|
$
|
118,071
|
|
|
$
|
127,457
|
|
China, Taiwan, and Hong Kong
|
199,445
|
|
|
251,107
|
|
|
399,352
|
|
|
466,929
|
|
||||
Japan
|
133,131
|
|
|
149,254
|
|
|
250,593
|
|
|
284,608
|
|
||||
Europe
|
77,153
|
|
|
85,113
|
|
|
162,481
|
|
|
172,437
|
|
||||
Rest of the World
|
68,741
|
|
|
84,821
|
|
|
140,728
|
|
|
154,900
|
|
||||
Total revenue
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Accounts receivable, gross
|
$
|
268,665
|
|
|
$
|
325,178
|
|
Allowance for doubtful accounts receivable
|
(902
|
)
|
|
(904
|
)
|
||
Total accounts receivable, net
|
$
|
267,763
|
|
|
$
|
324,274
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
12,736
|
|
|
$
|
10,004
|
|
Work-in-process
|
269,913
|
|
|
215,820
|
|
||
Finished goods
|
52,602
|
|
|
66,269
|
|
||
Total inventories
|
$
|
335,251
|
|
|
$
|
292,093
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Prepaid tooling
|
$
|
24,911
|
|
|
$
|
25,891
|
|
Advances to suppliers
|
5,946
|
|
|
12,058
|
|
||
Prepaid royalty and licenses
|
8,068
|
|
|
14,863
|
|
||
Derivative assets
|
1,618
|
|
|
3,492
|
|
||
Value added tax receivable
|
6,587
|
|
|
7,652
|
|
||
Prepaid expenses
|
19,984
|
|
|
17,814
|
|
||
Withholding tax receivable and tax advance
|
1,544
|
|
|
4,236
|
|
||
Other current assets
|
18,128
|
|
|
15,157
|
|
||
Total other current assets
|
$
|
86,786
|
|
|
$
|
101,163
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Employee deferred compensation plan assets
|
$
|
45,011
|
|
|
$
|
44,397
|
|
Long-term licenses
|
6,068
|
|
|
4,495
|
|
||
Advances to suppliers
|
11,965
|
|
|
11,471
|
|
||
Deposits
|
9,600
|
|
|
9,441
|
|
||
Pension plan assets
|
1,890
|
|
|
1,765
|
|
||
Derivative assets
|
—
|
|
|
1,419
|
|
||
Prepaid tooling and other non-current assets
|
42,750
|
|
|
51,317
|
|
||
Total other long-term assets
|
$
|
117,284
|
|
|
$
|
124,305
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Employee deferred compensation plan liability
|
$
|
44,981
|
|
|
$
|
44,834
|
|
Restructuring accrual (See Note 9)
|
1,980
|
|
|
14,536
|
|
||
Derivative liability
|
1,754
|
|
|
1,621
|
|
||
Accrued expenses
|
47,710
|
|
|
46,592
|
|
||
Accrued interest
|
7,816
|
|
|
9,440
|
|
||
Customer advances
|
97
|
|
|
5,296
|
|
||
Operating lease liability
|
12,735
|
|
|
—
|
|
||
Other current liabilities
|
17,153
|
|
|
15,745
|
|
||
Total other current liabilities
|
$
|
134,226
|
|
|
$
|
138,064
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Pension and other employee-related liabilities
|
$
|
16,552
|
|
|
$
|
14,083
|
|
Asset retirement obligation
|
6,039
|
|
|
5,916
|
|
||
Derivative liability
|
14,026
|
|
|
4,051
|
|
||
Operating lease liability
|
37,475
|
|
|
—
|
|
||
Other long-term liabilities
|
4,855
|
|
|
3,870
|
|
||
Total other long-term liabilities
|
$
|
78,947
|
|
|
$
|
27,920
|
|
|
As of June 30, 2019
|
|
As of December 30, 2018
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Acquisition-related intangible assets
|
$
|
1,188,521
|
|
|
$
|
(805,265
|
)
|
|
$
|
383,256
|
|
|
$
|
1,188,521
|
|
|
$
|
(702,883
|
)
|
|
$
|
485,638
|
|
Non-acquisition related intangible assets
|
19,884
|
|
|
(16,326
|
)
|
|
3,558
|
|
|
19,884
|
|
|
(14,932
|
)
|
|
4,952
|
|
||||||
Total intangible assets
|
$
|
1,208,405
|
|
|
$
|
(821,591
|
)
|
|
$
|
386,814
|
|
|
$
|
1,208,405
|
|
|
$
|
(717,815
|
)
|
|
$
|
490,590
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Cost of revenues
|
$
|
46,881
|
|
|
$
|
48,102
|
|
|
$
|
93,761
|
|
|
$
|
96,204
|
|
Research and development
|
697
|
|
|
1,261
|
|
|
1,395
|
|
|
2,521
|
|
||||
Selling, general and administrative
|
4,310
|
|
|
4,310
|
|
|
8,620
|
|
|
9,258
|
|
||||
Total amortization expense
|
$
|
51,888
|
|
|
$
|
53,673
|
|
|
$
|
103,776
|
|
|
$
|
107,983
|
|
|
(In thousands)
|
||
2019 (remaining six months)
|
$
|
103,631
|
|
2020
|
153,689
|
|
|
2021
|
58,489
|
|
|
2022
|
33,000
|
|
|
2023
|
28,335
|
|
|
2024 and thereafter
|
9,670
|
|
|
Total future amortization expense
|
$
|
386,814
|
|
|
|
As of June 30, 2019
|
||
|
|
(In thousands)
|
||
|
|
Total
|
||
Carrying value as of December 30, 2018
|
|
$
|
65,145
|
|
Additional investment
|
|
2,400
|
|
|
Share in net (loss) income of equity method investees
|
|
(6,490
|
)
|
|
Impairment of investment
|
|
(29,505
|
)
|
|
Carrying value as of June 30, 2019
|
|
$
|
31,550
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Operating data:
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
17,573
|
|
|
$
|
4,453
|
|
|
$
|
22,194
|
|
|
$
|
8,602
|
|
Gross profit (loss)
|
|
2,240
|
|
|
(3,056
|
)
|
|
314
|
|
|
(5,377
|
)
|
||||
Loss from operations
|
|
(4,643
|
)
|
|
(7,091
|
)
|
|
(11,105
|
)
|
|
(13,840
|
)
|
||||
Net loss
|
|
(5,173
|
)
|
|
(7,137
|
)
|
|
(12,016
|
)
|
|
(13,777
|
)
|
||||
Net loss attributable to Cypress
|
|
$
|
(2,900
|
)
|
|
$
|
(3,744
|
)
|
|
$
|
(6,490
|
)
|
|
$
|
(7,227
|
)
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
|
(In thousands)
|
||||||
Balance Sheet Data:
|
|
|
|
|
||||
Current assets
|
|
$
|
45,427
|
|
|
$
|
25,865
|
|
Long-term assets
|
|
49,361
|
|
|
51,176
|
|
||
Current liabilities
|
|
31,564
|
|
|
9,635
|
|
||
Long-term liabilities
|
|
$
|
481
|
|
|
$
|
877
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money market funds
|
$
|
238,331
|
|
|
$
|
—
|
|
|
$
|
238,331
|
|
|
$
|
171,777
|
|
|
$
|
—
|
|
|
$
|
171,777
|
|
Other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Certificates of deposit
|
—
|
|
|
870
|
|
|
870
|
|
|
—
|
|
|
870
|
|
|
870
|
|
||||||
Total cash equivalents other current assets
|
238,331
|
|
|
870
|
|
|
239,201
|
|
|
171,777
|
|
|
870
|
|
|
172,647
|
|
||||||
Employee deferred compensation plan assets
|
16,743
|
|
|
28,268
|
|
|
45,011
|
|
|
18,648
|
|
|
25,749
|
|
|
44,397
|
|
||||||
Interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,548
|
|
|
2,548
|
|
||||||
Foreign exchange forward contracts
|
—
|
|
|
1,618
|
|
|
1,618
|
|
|
—
|
|
|
2,362
|
|
|
2,362
|
|
||||||
Total financial assets
|
$
|
255,074
|
|
|
$
|
30,756
|
|
|
$
|
285,830
|
|
|
$
|
190,425
|
|
|
$
|
31,529
|
|
|
$
|
221,954
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange forward contracts
|
—
|
|
|
902
|
|
|
902
|
|
|
—
|
|
|
1,621
|
|
|
1,621
|
|
||||||
Interest rate swap
|
—
|
|
|
14,878
|
|
|
14,878
|
|
|
—
|
|
|
4,051
|
|
|
4,051
|
|
||||||
Total financial liabilities
|
$
|
—
|
|
|
$
|
15,780
|
|
|
$
|
15,780
|
|
|
$
|
—
|
|
|
$
|
5,672
|
|
|
$
|
5,672
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Personnel and other costs
|
$
|
3,021
|
|
|
$
|
1,239
|
|
|
$
|
3,117
|
|
|
$
|
5,335
|
|
Total restructuring costs
|
$
|
3,021
|
|
|
$
|
1,239
|
|
|
$
|
3,117
|
|
|
$
|
5,335
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Cost of goods sold
|
$
|
1,018
|
|
|
$
|
1,589
|
|
|
$
|
1,018
|
|
|
$
|
3,476
|
|
Research and development
|
1,362
|
|
|
33
|
|
|
1,362
|
|
|
326
|
|
||||
Selling, general and administrative
|
641
|
|
|
(383
|
)
|
|
737
|
|
|
1,533
|
|
||||
Total restructuring costs
|
$
|
3,021
|
|
|
$
|
1,239
|
|
|
$
|
3,117
|
|
|
$
|
5,335
|
|
|
|
|
(In thousands)
|
||||||||||||||||
|
2019 Plan
|
|
2018 Plan
|
|
2017 Plan
|
|
Spansion Integration Plan
|
|
Total
|
||||||||||
Accrued restructuring balance as of December 30, 2018
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
30
|
|
|
$
|
14,258
|
|
|
$
|
14,536
|
|
Provision
|
3,021
|
|
|
7
|
|
|
—
|
|
|
89
|
|
|
3,117
|
|
|||||
Cash payments and other adjustments
|
(1,152
|
)
|
|
(144
|
)
|
|
(30
|
)
|
|
(14,347
|
)
|
|
(15,673
|
)
|
|||||
Accrued restructuring balance as of June 30, 2019
|
$
|
1,869
|
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,980
|
|
Current portion of the restructuring accrual
|
$
|
1,869
|
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,980
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Cost of revenues
|
$
|
2,817
|
|
|
$
|
3,985
|
|
|
$
|
5,501
|
|
|
$
|
7,569
|
|
Research and development
|
12,304
|
|
|
13,801
|
|
|
18,984
|
|
|
20,514
|
|
||||
Selling, general and administrative
|
15,359
|
|
|
16,122
|
|
|
26,390
|
|
|
24,283
|
|
||||
Total stock-based compensation expense
|
$
|
30,480
|
|
|
$
|
33,908
|
|
|
$
|
50,875
|
|
|
$
|
52,366
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs")
|
$
|
28,843
|
|
|
$
|
31,772
|
|
|
$
|
47,481
|
|
|
$
|
49,021
|
|
Employee Stock Purchase Plan (“ESPP”) and stock option
|
1,637
|
|
|
2,136
|
|
|
3,394
|
|
|
3,345
|
|
||||
Total stock-based compensation expense
|
$
|
30,480
|
|
|
$
|
33,908
|
|
|
$
|
50,875
|
|
|
$
|
52,366
|
|
|
|
|
Weighted-
Average Amortization Period |
||
|
(In thousands)
|
|
(In years)
|
||
RSUs and PSUs
|
$
|
101,239
|
|
|
1.48
|
Total unrecognized stock-based compensation expense
|
$
|
101,239
|
|
|
1.48
|
|
Shares
|
|
Weighted-
Average Exercise Price Per Share |
|
Weighted Average Remaining Contractual term
|
|
Aggregate Intrinsic Value
|
|||||
|
(In thousands, except
per-share amounts) |
|
(In years)
|
|
($ in millions)
|
|||||||
Options outstanding as of December 30, 2018
|
2,639
|
|
|
$
|
11.75
|
|
|
|
|
|
|
|
Exercised
|
(379
|
)
|
|
$
|
8.14
|
|
|
|
|
|
|
|
Forfeited or expired
|
(66
|
)
|
|
$
|
21.59
|
|
|
|
|
|
|
|
Options outstanding as of March 31, 2019
|
2,194
|
|
|
$
|
12.07
|
|
|
1.94
|
|
$
|
7.3
|
|
Exercised
|
(459
|
)
|
|
$
|
12.47
|
|
|
|
|
|
||
Forfeited or expired
|
(18
|
)
|
|
$
|
20.18
|
|
|
|
|
|
||
Options outstanding as of June 30, 2019
|
1,717
|
|
|
$
|
11.88
|
|
|
1.74
|
|
$
|
17.8
|
|
Options exercisable as of June 30, 2019
|
1,715
|
|
|
$
|
11.88
|
|
|
1.74
|
|
$
|
17.8
|
|
|
Shares
|
|
Weighted-
Average Grant Date Fair Value Per Share |
|||
|
(In thousands, except
per-share amounts) |
|||||
Balance as of December 30, 2018
|
10,175
|
|
|
$
|
14.42
|
|
Granted
|
6,026
|
|
|
15.08
|
|
|
Released
|
(2,437
|
)
|
|
14.38
|
|
|
Forfeited
|
(172
|
)
|
|
12.80
|
|
|
Balance as of March 31, 2019
|
13,592
|
|
|
$
|
14.64
|
|
Granted
|
323
|
|
|
16.65
|
|
|
Released
|
(1,330
|
)
|
|
14.11
|
|
|
Forfeited
|
(225
|
)
|
|
13.50
|
|
|
Balance as of June 30, 2019
|
12,360
|
|
|
14.26
|
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
|
(In thousands)
|
||||||
Current portion of long-term debt
|
|
|
|
|
|
|
||
Senior Secured Credit Facility: Term Loan B
|
|
$
|
6,314
|
|
|
$
|
5,051
|
|
Finance lease obligations
|
|
1,820
|
|
|
1,892
|
|
||
Current portion of long-term debt
|
|
8,134
|
|
|
6,943
|
|
||
Revolving credit facility and long-term portion of debt
|
|
|
|
|
|
|
||
Senior Secured Credit Facility: Term Loan B
|
|
435,794
|
|
|
462,868
|
|
||
2% Exchangeable Senior Notes due 2020
|
|
11,603
|
|
|
11,438
|
|
||
4.5% Convertible Senior Notes due 2022
|
|
261,785
|
|
|
256,726
|
|
||
2% Convertible Senior Notes due 2023
|
|
136,878
|
|
|
135,057
|
|
||
Finance lease obligations
|
|
8,244
|
|
|
8,146
|
|
||
Credit facility, finance lease obligations, and long-term debt
|
|
854,304
|
|
|
874,235
|
|
||
Total debt
|
|
$
|
862,438
|
|
|
$
|
881,178
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
Equity component
|
$
|
22,971
|
|
|
$
|
22,971
|
|
Liability component:
|
|
|
|
|
|||
Principal
|
11,990
|
|
|
11,990
|
|
||
Less debt discount and debt issuance costs, net
|
(387
|
)
|
|
(552
|
)
|
||
Net carrying amount
|
$
|
11,603
|
|
|
$
|
11,438
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Contractual interest expense at 2% per annum
|
|
$
|
61
|
|
|
$
|
61
|
|
|
$
|
121
|
|
|
$
|
121
|
|
Accretion of debt discount
|
|
82
|
|
|
82
|
|
|
165
|
|
|
164
|
|
||||
Total
|
|
$
|
143
|
|
|
$
|
143
|
|
|
$
|
286
|
|
|
$
|
285
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
Equity component
|
$
|
47,686
|
|
|
$
|
47,686
|
|
Liability component:
|
|
|
|
|
|||
Principal
|
287,500
|
|
|
287,500
|
|
||
Less debt discount and debt issuance costs, net
|
(25,715
|
)
|
|
(30,774
|
)
|
||
Net carrying amount
|
$
|
261,785
|
|
|
$
|
256,726
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Contractual interest expense
|
|
$
|
3,198
|
|
|
$
|
3,234
|
|
|
$
|
6,469
|
|
|
$
|
6,469
|
|
Amortization of debt issuance costs
|
|
317
|
|
|
320
|
|
|
641
|
|
|
641
|
|
||||
Accretion of debt discount
|
|
2,184
|
|
|
2,209
|
|
|
4,418
|
|
|
4,418
|
|
||||
Total
|
|
$
|
5,699
|
|
|
$
|
5,763
|
|
|
$
|
11,528
|
|
|
$
|
11,528
|
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||
Equity component
|
|
$
|
15,028
|
|
|
$
|
15,028
|
|
Liability component:
|
|
|
|
|
||||
Principal
|
|
150,000
|
|
|
150,000
|
|
||
Less debt discount and debt issuance costs, net
|
|
(13,122
|
)
|
|
(14,943
|
)
|
||
Net carrying amount
|
|
$
|
136,878
|
|
|
$
|
135,057
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
Contractual interest expense
|
|
$
|
748
|
|
|
$
|
748
|
|
|
$
|
1,496
|
|
|
$
|
1,496
|
|
Amortization of debt issuance costs
|
|
175
|
|
|
175
|
|
|
350
|
|
|
350
|
|
||||
Accretion of debt discount
|
|
735
|
|
|
735
|
|
|
1,471
|
|
|
1,470
|
|
||||
Total
|
|
$
|
1,658
|
|
|
$
|
1,658
|
|
|
$
|
3,317
|
|
|
$
|
3,316
|
|
Fiscal Year
|
|
Total
|
||
2019 (remaining six months)
|
|
$
|
2,525
|
|
2020
|
|
17,041
|
|
|
2021
|
|
441,209
|
|
|
2022
|
|
287,500
|
|
|
2023
|
|
150,000
|
|
|
Total (excluding finance leases)
|
|
$
|
898,275
|
|
Finance lease liabilities
|
|
10,064
|
|
|
Total debt
|
|
$
|
908,339
|
|
|
As of
|
||
|
June 30, 2019
|
||
Finance Leases
|
|
||
Property and equipment, at cost
|
$
|
9,583
|
|
Accumulated depreciation
|
(1,049
|
)
|
|
Property and equipment, net
|
$
|
8,534
|
|
|
|
||
Finance leases included in current portion of long-term debt
|
$
|
1,820
|
|
Finance leases included in revolving credit facility and long-term portion of debt
|
8,244
|
|
|
Total finance lease liabilities
|
$
|
10,064
|
|
|
|
||
Operating Leases
|
|
||
Operating lease right-of-use assets
|
$
|
47,612
|
|
Operating leases included in other current liabilities
|
12,735
|
|
|
Operating leases included in other long-term liabilities
|
37,475
|
|
|
Total operating lease liabilities
|
$
|
50,210
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2019
|
||||||
Lease cost
|
|
|
|
||||
Finance lease cost
|
|
|
|
||||
Amortization of right-of-use assets
|
$
|
413
|
|
|
$
|
826
|
|
Interest on lease liabilities
|
98
|
|
|
200
|
|
||
Operating lease cost
|
3,930
|
|
|
7,300
|
|
||
Short term lease cost
|
150
|
|
|
488
|
|
||
Variable lease cost
|
390
|
|
|
949
|
|
||
Total lease cost
|
$
|
4,981
|
|
|
$
|
9,763
|
|
|
Operating lease liabilities
|
Finance lease liabilities
|
||||
Fiscal Year
|
(In thousands)
|
|||||
2019 (remaining six months)
|
$
|
7,936
|
|
$
|
1,121
|
|
2020
|
15,758
|
|
2,177
|
|
||
2021
|
8,060
|
|
2,189
|
|
||
2022
|
6,122
|
|
2,191
|
|
||
2023
|
4,861
|
|
2,068
|
|
||
Thereafter
|
18,876
|
|
1,437
|
|
||
Total undiscounted future cash flows
|
$
|
61,613
|
|
$
|
11,183
|
|
Less: Imputed interest
|
$
|
11,403
|
|
$
|
1,119
|
|
Present value of undiscounted future cash flows
|
$
|
50,210
|
|
$
|
10,064
|
|
|
|
|
||||
Presentation on statement of financial position
|
|
|
||||
Current
|
$
|
12,735
|
|
$
|
1,820
|
|
Non-current
|
$
|
37,475
|
|
$
|
8,244
|
|
Fiscal Year
|
(In thousands)
|
||
2019
|
$
|
29,315
|
|
2020
|
12,860
|
|
|
2021
|
8,176
|
|
|
2022
|
6,241
|
|
|
2023
|
2,476
|
|
|
Thereafter
|
3,808
|
|
|
Total
|
$
|
62,876
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Beginning balance
|
$
|
3,555
|
|
|
$
|
4,445
|
|
|
$
|
3,982
|
|
|
$
|
4,445
|
|
Settlements made
|
(631
|
)
|
|
(1,029
|
)
|
|
(2,385
|
)
|
|
(2,978
|
)
|
||||
Provisions
|
631
|
|
|
1,029
|
|
|
1,958
|
|
|
2,978
|
|
||||
Ending balance
|
$
|
3,555
|
|
|
$
|
4,445
|
|
|
$
|
3,555
|
|
|
$
|
4,445
|
|
Buy / Sell
|
|
June 30, 2019
|
December 30, 2018
|
|
|
(In millions)
|
|
U.S. dollar / Japanese Yen
|
|
$43.9 / ¥4,710
|
$44.5 / ¥4,850
|
Japanese Yen / U.S. dollar
|
|
¥8,617 / $80.0
|
¥10,827 / $98.8
|
Buy / Sell
|
|
June 30, 2019
|
December 30, 2018
|
|
|
(In millions)
|
|
EUR / U.S. dollar
|
|
€1.4 / $1.6
|
$9.1 / €8.0
|
U.S. dollar / Japanese Yen
|
|
$14.5 / ¥1,570
|
$13.2 / ¥1,430
|
Japanese Yen / U.S. dollar
|
|
¥3,800 / $34.9
|
¥4,210 / $38.0
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
June 30, 2019
|
||||||||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
|
|
Revenue
|
|
Cost of Goods Sold
|
|
Operating Expenses
|
|
Interest Expense
|
|
Revenue
|
|
Cost of Goods Sold
|
|
Operating Expenses
|
|
Interest Expense
|
||||||||
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value and cash flow hedges are recorded
|
|
532,221
|
|
|
333,463
|
|
|
185,272
|
|
|
12,311
|
|
|
1,071,225
|
|
|
670,058
|
|
|
355,865
|
|
|
25,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gain or (loss) on cash flow hedge relationships in Subtopic ASC 815-20:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amount of gain or (loss) reclassified from AOCI into income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
729
|
|
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amount of gain or (loss) reclassified from AOCI into income
|
|
395
|
|
|
(464
|
)
|
|
(90
|
)
|
|
—
|
|
|
568
|
|
|
(591
|
)
|
|
(48
|
)
|
|
—
|
|
|
|
June 30, 2019
|
|
December 30, 2018
|
||||||||||||
Balance Sheet location
|
|
Derivatives designated as hedging instruments
|
|
Derivatives not designated as hedging instruments
|
|
Derivatives designated as hedging instruments
|
|
Derivatives not designated as hedging instruments
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Other Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative Asset
|
|
$
|
1,089
|
|
|
$
|
529
|
|
|
$
|
2,767
|
|
|
$
|
725
|
|
Non-Current Assets
|
|
|
|
|
|
|
|
|
||||||||
Derivative Asset
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,419
|
|
|
$
|
—
|
|
Other Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative Liability
|
|
$
|
1,523
|
|
|
$
|
231
|
|
|
$
|
1,210
|
|
|
$
|
411
|
|
Non-Current Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liability
|
|
$
|
14,026
|
|
|
$
|
—
|
|
|
$
|
4,051
|
|
|
$
|
—
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands, except per-share amounts)
|
||||||||||||||
Net (loss) income attributable to Cypress
|
$
|
(12,729
|
)
|
|
$
|
27,706
|
|
|
$
|
6,985
|
|
|
$
|
36,784
|
|
Weighted-average common shares
|
365,600
|
|
|
358,577
|
|
|
364,842
|
|
|
356,123
|
|
||||
Weighted-average diluted shares
|
365,600
|
|
|
371,967
|
|
|
377,195
|
|
|
370,402
|
|
||||
Net (loss) income per share—basic
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
0.02
|
|
|
$
|
0.10
|
|
Net (loss) income per share—diluted
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.10
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
MCD
|
$
|
31,606
|
|
|
$
|
36,087
|
|
|
$
|
48,354
|
|
|
$
|
49,571
|
|
MPD
|
67,766
|
|
|
92,091
|
|
|
155,800
|
|
|
181,929
|
|
||||
Unallocated items:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
(30,480
|
)
|
|
(33,908
|
)
|
|
(50,875
|
)
|
|
(52,366
|
)
|
||||
Restructuring charges
|
(3,021
|
)
|
|
(1,239
|
)
|
|
(3,117
|
)
|
|
(5,335
|
)
|
||||
Amortization of intangible assets and other
|
(51,597
|
)
|
|
(53,793
|
)
|
|
(104,124
|
)
|
|
(108,381
|
)
|
||||
Merger-related expenses
|
(8,409
|
)
|
|
—
|
|
|
(8,409
|
)
|
|
—
|
|
||||
Impairment of assets held for sale
|
—
|
|
|
—
|
|
|
(3,532
|
)
|
|
—
|
|
||||
Changes related to debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
630
|
|
||||
Changes in value of deferred compensation plan
|
(244
|
)
|
|
(18
|
)
|
|
(843
|
)
|
|
(435
|
)
|
||||
Gain on sale of cost method investment
|
—
|
|
|
1,521
|
|
|
—
|
|
|
1,521
|
|
||||
Other adjustments
|
(4,138
|
)
|
|
(4,038
|
)
|
|
(9,198
|
)
|
|
(12,823
|
)
|
||||
Income from operations before income taxes
|
$
|
1,483
|
|
|
$
|
36,703
|
|
|
$
|
24,056
|
|
|
$
|
54,311
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
United States
|
$
|
154,427
|
|
|
$
|
173,973
|
|
Philippines
|
36,179
|
|
|
33,413
|
|
||
Thailand
|
32,512
|
|
|
34,581
|
|
||
Japan
|
11,065
|
|
|
11,251
|
|
||
Other
|
26,006
|
|
|
29,768
|
|
||
Total property, plant and equipment (excluding finance leases), net
|
$
|
260,189
|
|
|
$
|
282,986
|
|
|
Accumulated net unrealized income (loss) on cash flow hedges and other
|
|
Accumulated unrecognized gain (loss) on the Defined Benefit Plan
|
|
Accumulated other comprehensive income (loss)
|
||||||
Balance as of December 30, 2018
|
$
|
(763
|
)
|
|
$
|
2,592
|
|
|
$
|
1,829
|
|
Other comprehensive income (loss) before reclassification
|
(5,938
|
)
|
|
—
|
|
|
(5,938
|
)
|
|||
Amounts reclassified to operating income
|
(502
|
)
|
|
—
|
|
|
(502
|
)
|
|||
Net unrealized gain (loss) on the defined benefit plan
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
|||
Balance as of March 31, 2019
|
$
|
(7,203
|
)
|
|
$
|
2,579
|
|
|
$
|
(4,624
|
)
|
Other comprehensive income (loss) before reclassification
|
$
|
(6,963
|
)
|
|
$
|
—
|
|
|
$
|
(6,963
|
)
|
Amounts reclassified to operating income
|
(156
|
)
|
|
—
|
|
|
(156
|
)
|
|||
Net unrealized gain (loss) on the defined benefit plan
|
—
|
|
|
(928
|
)
|
|
(928
|
)
|
|||
Balance as of June 30, 2019
|
$
|
(14,322
|
)
|
|
$
|
1,651
|
|
|
$
|
(12,671
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Total revenues
|
|
$
|
3,525
|
|
|
$
|
8,679
|
|
|
$
|
3,646
|
|
|
$
|
11,955
|
|
Total purchases
|
|
$
|
2,763
|
|
|
$
|
21,257
|
|
|
$
|
4,764
|
|
|
$
|
37,346
|
|
Business Segments
|
|
Description
|
|
|
|
Microcontroller and Connectivity Division
|
|
MCD focuses on connectivity and computing solutions for the Internet of Things and automotive solutions that enhance the in-cabin user experience. MCD offerings include robust wireless and wired connectivity solutions that combine with flexible, high-performance microcontroller ("MCU") and analog solutions, backed with a focus on superior design software. The portfolio includes Wi-Fi® and Bluetooth® and Bluetooth Low Energy (BLE), and Wi-Fi plus Bluetooth combo solutions; Traveo™ automotive MCUs, PSoC® programmable MCUs and general-purpose MCUs; CapSense® capacitive-sensing controllers and automotive TrueTouch® touchscreen solutions; a broad line of USB controllers, including solutions for the USB-C and USB Power Delivery standards; and analog PMIC Power Management ICs. This division also includes our intellectual property ("IP") business.
|
|
|
|
Memory Products Division
|
|
MPD focuses on fail-safe storage and datalogging solutions for mission critical applications. The portfolio includes specialized, high-performance parallel and serial NOR flash memories, static random access memories ("SRAM"), F-RAM™ ferroelectric memory devices, nonvolatile SRAMs ("nvSRAM"), and other specialty memories. This division also includes our nonvolatile DIMM subsidiary AgigA Tech, Inc.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Microcontroller and Connectivity Division ("MCD")
|
$
|
354,225
|
|
|
$
|
368,526
|
|
|
$
|
664,615
|
|
|
$
|
705,236
|
|
Memory Products Division ("MPD")
|
177,996
|
|
|
255,564
|
|
|
406,610
|
|
|
501,095
|
|
||||
Total revenues
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
Revenues
|
$
|
532,221
|
|
|
$
|
624,090
|
|
|
$
|
1,071,225
|
|
|
$
|
1,206,331
|
|
Less: Cost of revenues
|
333,463
|
|
|
389,952
|
|
|
670,058
|
|
|
759,801
|
|
||||
Gross profit
|
$
|
198,758
|
|
|
$
|
234,138
|
|
|
$
|
401,167
|
|
|
$
|
446,530
|
|
Gross margin (%)
|
37.3
|
%
|
|
37.5
|
%
|
|
37.4
|
%
|
|
37.0
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
R&D expenses
|
$
|
93,639
|
|
|
$
|
96,693
|
|
|
$
|
182,245
|
|
|
$
|
189,926
|
|
As a percentage of revenues
|
17.6
|
%
|
|
15.5
|
%
|
|
17.0
|
%
|
|
15.7
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
July 1, 2018
|
|
June 30, 2019
|
|
July 1, 2018
|
||||||||
|
(In thousands)
|
||||||||||||||
SG&A expenses
|
$
|
91,633
|
|
|
$
|
86,599
|
|
|
$
|
173,620
|
|
|
$
|
169,996
|
|
As a percentage of revenues
|
17.2
|
%
|
|
13.9
|
%
|
|
16.2
|
%
|
|
14.1
|
%
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 30, 2018
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
372,180
|
|
|
$
|
285,720
|
|
Working capital, net
|
$
|
506,146
|
|
|
$
|
396,208
|
|
|
Six Months Ended
|
||||||
|
June 30, 2019
|
|
July 1, 2018
|
||||
|
(In thousands)
|
||||||
Net cash provided by operating activities
|
$
|
180,171
|
|
|
$
|
142,412
|
|
Net cash used in investing activities
|
$
|
(11,197
|
)
|
|
$
|
(21,386
|
)
|
Net cash used in financing activities
|
$
|
(82,514
|
)
|
|
$
|
(159,904
|
)
|
•
|
depreciation and amortization of $142.7 million;
|
•
|
stock-based compensation expense of $50.9 million;
|
•
|
impairment of investment in Deca of $29.5 million;
|
•
|
accretion of interest expense on senior exchangeable notes and amortization of debt and financing costs on other debt of $9.4 million;
|
•
|
restructuring costs and other adjustments of $4.0 million; and
|
•
|
loss related to assets held for sale of $3.5 million.
|
•
|
$53.8 million in operating lease right-of-use assets recorded upon adoption of ASC 842, partially offset by $50.2 million of operating lease liability;
|
•
|
an increase in inventories of $38.4 million primarily due to inventory builds to support certain supplier transitions;
|
•
|
a decrease of $21.6 million in price adjustments and other revenue reserves for sales to distributors due to a decrease in revenue during the six months of 2019; and
|
•
|
a decrease in accounts payable and accrued and other liabilities of $66.6 million mainly due to timing of payments to vendors;
|
•
|
partially offset by a decrease in accounts receivable of $56.5 million due to timing of invoicing and collections. Days sales outstanding for the six months ended June 30, 2019 was 46 days as compared to 59 days in the six months ended July 1, 2018.
|
•
|
property and equipment expenditures of $18.0 million relating to purchases of certain manufacturing facility equipment; and
|
•
|
cash paid for equity method investments of $2.4 million;
|
•
|
partially offset by 6.3 million in net distributions for the deferred compensation plan; and
|
•
|
proceeds of $2.9 million from the sale of inventories to SkyHigh.
|
•
|
dividend payments of $79.9 million;
|
•
|
payments of $27.5 million on Term Loan B;
|
•
|
payments of $6.1 million on net shares settlement of restricted stock units; and
|
•
|
payments of $0.8 million on finance lease liabilities;
|
•
|
partially offset by proceeds of $31.9 million from employee equity awards.
|
|
Total
|
|
2019 (Remaining 6 months)
|
|
2020 and 2021
|
|
2022 and 2023
|
|
After 2023
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Purchase obligations (1)
|
$
|
275,532
|
|
|
$
|
67,003
|
|
|
$
|
150,539
|
|
|
$
|
57,990
|
|
|
$
|
—
|
|
Operating lease commitments
|
61,613
|
|
|
7,936
|
|
|
23,818
|
|
|
10,983
|
|
|
18,876
|
|
|||||
Finance lease commitments
|
11,183
|
|
|
1,121
|
|
|
4,366
|
|
|
4,259
|
|
|
1,437
|
|
|||||
Term Loan B
|
448,785
|
|
|
2,525
|
|
|
446,260
|
|
|
—
|
|
|
—
|
|
|||||
2% Exchangeable Senior Notes due 2020
|
11,990
|
|
|
—
|
|
|
11,990
|
|
|
—
|
|
|
—
|
|
|||||
4.5% Convertible Senior Notes due 2022
|
287,500
|
|
|
—
|
|
|
—
|
|
|
287,500
|
|
|
—
|
|
|||||
2% Convertible Senior Notes due 2023
|
150,000
|
|
|
—
|
|
|
—
|
|
|
150,000
|
|
|
—
|
|
|||||
Interest and commitment fee due on debt (2)
|
85,390
|
|
|
18,196
|
|
|
56,225
|
|
|
10,969
|
|
|
—
|
|
|||||
Asset retirement obligations
|
6,039
|
|
|
1,637
|
|
|
4,058
|
|
|
344
|
|
|
—
|
|
|||||
Total contractual obligations (3)
|
$
|
1,338,032
|
|
|
$
|
98,418
|
|
|
$
|
697,256
|
|
|
$
|
522,045
|
|
|
$
|
20,313
|
|
(1)
|
Purchase obligations primarily include commitments under "take or pay" arrangements, non-cancelable purchase orders for materials, services, manufacturing equipment, building improvements and supplies in the ordinary course of business. Purchase obligations are defined as enforceable agreements that are legally binding on us and that specify all significant terms, including quantity, price and timing.
|
(2)
|
Interest and commitment fees due on variable debt is based on the effective interest rates as of June 30, 2019.
|
(3)
|
Total contractual obligations do not include transaction fees of approximately $63 million which are contingently payable upon the completion of the proposed Merger with Infineon. If the proposed Merger does not close under circumstances in which we receive a reverse break-up fee, transaction fees of approximately $22.2 million are contingently payable by us.
|
•
|
Estimation of price adjustment reserves related to sales to distributors which impacts revenue
|
•
|
Assessment of excess and obsolete inventory which impacts valuation of Inventories;
|
•
|
Estimation of fair value of investments in equity interests;
|
•
|
Valuation of certain awards that contain market based vesting condition which impacts our share-based compensation expense;
|
•
|
Actuarial valuation of certain defined benefit plans; and
|
•
|
Estimation of exposure related to uncertain tax positions which impacts our accounting for Income Taxes.
|
•
|
sales of our products to Japanese distributors are denominated in U.S. dollars, Japanese yen and Euros;
|
•
|
some of our manufacturing costs and operating expenses are denominated in Japanese yen, and other foreign currencies such as the Thai Baht, Philippine Peso and Malaysian Ringgit; and
|
•
|
some fixed asset purchases and sales are denominated in other foreign currencies.
|
•
|
the uncertainty of the pending acquisition may cause our existing customers to investigate alternatives and/or switch to alternate suppliers;
|
•
|
other parties with whom we have business relationships may experience uncertainty as to the future of those relationships and may delay or defer certain business decisions, seek alternative relationships with third parties, or seek to alter their present business relationships with us;
|
•
|
parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties instead of us;
|
•
|
current and prospective employees may experience uncertainty about their roles following the Merger and we might not be able to attract, recruit, retain, and motivate key talent, including senior leaders, to the same extent that we have previously been able to attract, recruit, retain, and motivate employees;
|
•
|
legal proceedings challenging the Merger may divert management time and attention, may require us to incur significant attorneys fees and other expenses, and may result in unfavorable outcomes that could delay or prevent the Merger from being completed;
|
•
|
restrictions in the Agreement and Plan of Merger dated June 3, 2019, by and among Infineon, its subsidiary IFX Merger Sub, Inc., and the Company (the "Merger Agreement") may prevent us from pursuing opportunities without Infineon’s approval or taking other actions that we might have undertaken in the absence of the Merger, and may affect our ability to execute our business strategies, respond effectively to competitive pressures and industry developments, and attain our financial and other goals (including with respect to our current and prospective employees and parties with whom we have or seek to establish business relationships);
|
•
|
restrictions in the Merger Agreement on our ability to pursue alternative transactions to the Merger could, in specified circumstances, require us to pay Infineon a termination fee of $330 million, and could otherwise discourage or deter a third party from considering or proposing an alternative transaction with us; and
|
•
|
we have diverted, and will continue to divert, significant management and other internal resources towards the completion of the Merger.
|
•
|
we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, and these fees and costs are payable by us regardless of whether the Merger is completed;
|
•
|
the failure of the Merger to be completed may result in adverse publicity and a negative impression of us in the financial markets and investment community, and negative responses from customers, partners and other third parties;
|
•
|
legal proceedings may be instituted against us, our directors and others relating to the transactions contemplated by the Merger Agreement;
|
•
|
any disruptions to our business resulting from the announcement and pendency of the acquisition, including any adverse changes in our relationships with our customers, vendors and employees, may continue or intensify in the event the Merger is not completed;
|
•
|
we could be required to pay a termination fee of up to $330 million to Infineon under certain circumstances as described in the Merger Agreement; and
|
•
|
we may not be able to take advantage of alternative business opportunities or effectively respond to competitive pressures.
|
•
|
During the fourth quarter of fiscal 2017, we determined that our investment in Enovix Corporation, which is accounted for as an equity method investment, was other-than temporarily impaired as Enovix did not achieve key planned product development milestones. Consequently, we recognized an impairment charge of $51.2 million related to our investment in Enovix, reducing its carrying value on our books to zero.
|
•
|
During the fourth quarter of fiscal 2018, we determined that our investment in Deca Technologies Inc. ("Deca") was other-than temporarily impaired due to significant delays in Deca's commercialization and achievement of scalable production of certain key products, and consequently we recognized an impairment charge of $41.5 million to write down the carrying value of our investment in Deca to $65.1 million (the estimated fair value of our investment as of the end of fiscal 2018).
|
•
|
During the second quarter of fiscal 2019, we determined that our investment in Deca had become further impaired due to a significant reduction in orders from Deca's key customers, and based on other objective indicators of enterprise value. Consequently, we recognized an additional impairment charge of $29.5 million to write down the carrying value of our investment in Deca to $28.6 million (the estimated fair value of our investment as of June 30, 2019).
|
|
|
|
|
Incorporated by Reference to
|
|
|
||||
Exhibit
|
|
Description
|
|
Form*
|
|
Filing Date
|
|
Exhibit
|
|
Filed
|
Number
|
Herewith
|
|||||||||
2.4
|
|
|
|
8-K
|
|
2019-06-03
|
|
2.1
|
|
|
3.1.1
|
|
Second Restated Certificate of Incorporation of Cypress Semiconductor Corporation, dated June 12, 2000 (included in Exhibit 3.1.2 below)
|
|
|
|
|
|
|
|
|
3.1.2
|
|
|
10-Q
|
|
2017-05-02
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
8-K
|
|
2017-09-25
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1.16
|
|
|
8-K
|
|
2019-08-01
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2.8+
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1‡
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2‡
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
iXBRL (Inline eXtensible Business Reporting Language) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
iXBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
iXBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
iXBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
iXBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
iXBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
Cover Page Interactive Data File (contained in Exhibit 101)
|
|
|
|
|
|
|
|
X
|
*
|
Commission File Number for incorporated documents is 001-10079.
|
+
|
Management contract or compensatory plan or arrangement.
|
‡
|
Exhibits 32.1 and 32.2 are 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 exhibits 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 otherwise specifically stated in such filing.
|
|
|
CYPRESS SEMICONDUCTOR CORPORATION
|
||
|
|
|
|
|
Date: August 2, 2019
|
|
By:
|
|
/s/ THAD TRENT
|
|
|
|
|
Thad Trent
|
|
|
|
|
Executive Vice President, Finance and Administration
and Chief Financial Officer
|
Performance Milestone
|
Target Number of RSUs
|
Vesting Date
|
[Milestone 1]
|
[number of shares]
|
[date]
|
[Milestone 2]
|
[number of shares]
|
[date]
|
[Milestone 3]
|
[number of shares]
|
[date]
|
[Milestone 4]
|
[number of shares]
|
[date]
|
[Milestone 5]
|
[number of shares]
|
[date]
|
[Milestone 6]
|
[number of shares]
|
[date]
|
[Milestone 7]
|
[number of shares]
|
[date]
|
[Milestone 8]
|
[number of shares]
|
[date]
|
[Milestone 9]
|
[number of shares]
|
[date]
|
[Milestone 10]
|
[number of shares]
|
[date]
|
[Milestone 11]
|
[number of shares]
|
[date]
|
[Milestone 12]
|
[number of shares]
|
[date]
|
[Milestone 13]
|
[number of shares]
|
[date]
|
[Milestone 14]
|
[number of shares]
|
[date]
|
[Milestone 15]
|
[number of shares]
|
[date]
|
•
|
you acknowledge receiving and reviewing this Notice of Grant, the RSU Agreement, the Plan, and the Company's related Prospectus;
|
•
|
you agree that the RSUs are granted under and governed by the terms and conditions of, and you agree to be bound by the terms of, this Notice of Grant, the RSU Agreement, and the Plan;
|
•
|
you agree to accept as binding, conclusive, and final all decisions or interpretations of the Plan Administrator upon any questions relating to the Plan and this Award; and
|
•
|
you consent to the collection, use and transfer, in electronic or other form, of your personal data as described in the RSU Agreement for the purpose of implementing, administering and managing your participation in the Plan.
|
(1)
|
if a Milestone's Performance Period is one fiscal year or less and the portion of such Performance Period during which the Participant is on LOA is less than or equal to 25% of such Performance Period, then the number of Shares that actually vests on the Vesting Date associated with such Milestone shall be the number that otherwise would have vested for such Milestone on such date under Section 3(b) above multiplied by a fraction, the numerator of which is the number of calendar days in such Performance Period during which the Participant was not on LOA, and the denominator of which is the number of calendar days in such Performance Period;
|
(2)
|
if a Milestone's Performance Period is one fiscal year or less and the portion of such Performance Period during which the Participant is on LOA is greater than 25% of such Performance Period, then the Target Number of RSUs associated with such Milestone shall be forfeited when the length of the LOA exceeds 25% of the Performance Period and no RSUs shall be eligible to be earned or to vest for such Milestone;
|
(3)
|
if a Milestone's Performance Period is longer than one fiscal year and the portion of such Performance Period during which the Participant is on LOA is 180 days or less, then the number of Shares that actually vests on the Vesting Date associated with such Milestone shall be the number that otherwise would have vested for such Milestone on such date under Section 3(b) above multiplied by a fraction, the numerator of which is the number of calendar days in such Performance Period during which the Participant was not on LOA, and the denominator of which is the number of calendar days in such Performance Period; and
|
(4)
|
if a Milestone's Performance Period is longer than one fiscal year and the portion of such Performance Period during which the Participant is on LOA is 181 days or more, then the Target Number of RSUs associated with such Milestone shall be forfeited on such 181st day and no RSUs shall be eligible to be earned or to vest for such Milestone.
|
(1)
|
This Agreement and the rights of the Participant hereunder shall be construed and determined in accordance with the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof).
|
(2)
|
For the purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the Award or this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the State of California where this grant is made and/or to be performed and agree that such litigation shall be conducted only in the courts of Santa Clara County, California, or the federal court of the United States for the Northern District of California, and no other courts.
|
•
|
The proceeds of any shares of Common Stock issued upon vesting of the RSUs will be remitted by the Company or its designated broker to the Trustee to administer on Participant's behalf, pursuant to the terms of Section 102 and the Trust Agreement.
|
•
|
Participant is familiar with the terms and provisions of Section 102, particularly the Capital Gains Track (as defined in the Israeli Sub-Plan) described in subsection (b)(2) thereof, and agrees that Participant will not release or sell (or require the Trustee to release or sell) the RSUs or underlying shares of Common Stock during the Restricted Holding Period (as defined in the Israeli Sub-Plan), unless permitted to do so by applicable law.
|
(i)
|
confers upon the Participant any right to continue to be an Employee, Consultant or Director of the Company or any of its subsidiaries or interferes in any way with the right of the Company or any of its subsidiaries to terminate the Participant's employment at any time; or
|
(ii)
|
forms part of the Participant's entitlement to remuneration and benefits in terms of his/her employment, or affects the Participant's terms and conditions of employment.
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1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cypress Semiconductor Corporation;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
August 2, 2019
|
By:
|
/s/ HASSANE EL-KHOURY
|
|
|
|
HASSANE EL-KHOURY
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cypress Semiconductor Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
August 2, 2019
|
By:
|
/s/ THAD TRENT
|
|
|
|
Thad Trent
|
|
|
|
Executive Vice President, Finance and
Administration and Chief Financial Officer
|
Dated:
|
August 2, 2019
|
By:
|
/s/ HASSANE EL-KHOURY
|
|
|
|
HASSANE EL-KHOURY
|
|
|
|
President and Chief Executive Officer
|
Dated:
|
August 2, 2019
|
By:
|
/s/ THAD TRENT
|
|
|
|
Thad Trent
|
|
|
|
Executive Vice President, Finance and
Administration and Chief Financial Officer
|