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 profit 1				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
													Selling, general					Interest and					Income tax
			Cost of					Research and					and					other					(provision)
			revenues					development					administrative					expense, net					benefit
GAAP [i]			$	369,849				$	93,233				$	83,397				$	(21,615	)			$	(5,057	)
[1] Stock based compensation				3,584					6,713					8,161					—					—
[2] Changes in value of deferred compensation plan				61					272					350					(266	)				—
[3] 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
								Research					Selling, general					Interest and					Income tax
			Cost of					and					and					other expense,					(provision)
			revenues					development					administrative					net					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
											Selling, general				Interest and				Income tax
			Cost of				Research and				and				other expense,				(provision)
			revenues				development				administrative				net				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
			Forward looking																							Non-GAAP
			GAAP estimate																							estimate
			(A)			Adjustments (B)																				(C)=(A)+(B)
											Share-based
						Amortization of					compensation										Other
						intangibles					expense					Restructuring					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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