☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | 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.) |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☐ | |||
Emerging Growth Company ☐ |
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Item 2. | ||
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Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands, except per-share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 112,718 | $ | 151,596 | |||
Accounts receivable, net | 404,524 | 295,991 | |||||
Inventories | 286,761 | 272,127 | |||||
Other current assets | 113,204 | 103,637 | |||||
Total current assets | 917,207 | 823,351 | |||||
Property, plant and equipment, net | 291,026 | 289,554 | |||||
Equity method investments | 115,298 | 122,514 | |||||
Intangible assets, net | 607,137 | 715,120 | |||||
Goodwill | 1,439,472 | 1,439,472 | |||||
Other long-term assets | 134,357 | 147,039 | |||||
Total assets | $ | 3,504,497 | $ | 3,537,050 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 225,619 | $ | 213,101 | |||
Accrued compensation and employee benefits | 64,178 | 79,275 | |||||
Price adjustment and other revenue reserves | 201,594 | 173,592 | |||||
Dividend payable | 39,449 | 38,741 | |||||
Current portion of long-term debt | 6,720 | 27,303 | |||||
Other current liabilities | 130,120 | 143,485 | |||||
Total current liabilities | 667,680 | 675,497 | |||||
Deferred income taxes and other tax liabilities | 55,729 | 52,006 | |||||
Revolving credit facility and long-term portion of debt | 883,741 | 956,513 | |||||
Other long-term liabilities | 38,375 | 35,442 | |||||
Total liabilities | $ | 1,645,525 | $ | 1,719,458 | |||
Commitments and contingencies (Note 10) | — | — | |||||
Equity: | |||||||
Preferred stock, $.01 par value, 5,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock, $.01 par value, 650,000 and 650,000 shares authorized; 534,037 and 525,719 shares issued; 359,920 and 352,220 shares outstanding at July 1, 2018 and December 31, 2017, respectively | 5,103 | 4,936 | |||||
Additional paid-in-capital | 5,669,760 | 5,659,612 | |||||
Accumulated other comprehensive income (loss) | 2,817 | (1,362 | ) | ||||
Accumulated deficit | (1,474,924 | ) | (1,511,706 | ) | |||
Stockholders’ equity before treasury stock | 4,202,756 | 4,151,480 | |||||
Less: Shares of common stock held in treasury, at cost; 174,118 and 173,498 shares at July 1, 2018 and December 31, 2017, respectively | (2,344,940 | ) | (2,334,944 | ) | |||
Total Cypress stockholders’ equity | 1,857,816 | 1,816,536 | |||||
Non-controlling interest | 1,156 | 1,056 | |||||
Total equity | 1,858,972 | 1,817,592 | |||||
Total liabilities and equity | $ | 3,504,497 | $ | 3,537,050 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands, except per-share amounts) | |||||||||||||||
Revenues | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 | |||||||
Cost of revenues | 389,952 | 401,031 | 759,801 | 775,797 | |||||||||||
Gross profit | 234,138 | 192,745 | 446,530 | 349,853 | |||||||||||
Research and development | 96,693 | 88,595 | 189,926 | 177,943 | |||||||||||
Selling, general and administrative | 86,599 | 95,258 | 169,996 | 176,591 | |||||||||||
Total operating expenses | 183,292 | 183,853 | 359,922 | 354,534 | |||||||||||
Operating income (loss) | 50,846 | 8,892 | 86,608 | (4,681 | ) | ||||||||||
Interest expense | (15,577 | ) | (18,781 | ) | (34,436 | ) | (38,256 | ) | |||||||
Other income, net | 1,434 | 2,374 | 2,139 | 2,490 | |||||||||||
Income (loss) before income taxes and non-controlling interest | 36,703 | (7,515 | ) | 54,311 | (40,447 | ) | |||||||||
Income tax provision | (5,154 | ) | (4,504 | ) | (10,211 | ) | (9,431 | ) | |||||||
Share in net loss of equity method investees | (3,755 | ) | (4,835 | ) | (7,216 | ) | (9,911 | ) | |||||||
Net income (loss) | 27,794 | (16,854 | ) | 36,884 | (59,789 | ) | |||||||||
Net loss attributable to non-controlling interests | (88 | ) | (66 | ) | (100 | ) | (130 | ) | |||||||
Net income (loss) attributable to Cypress | $ | 27,706 | $ | (16,920 | ) | $ | 36,784 | $ | (59,919 | ) | |||||
Net income (loss) per share attributable to Cypress: | |||||||||||||||
Basic | $ | 0.08 | $ | (0.05 | ) | $ | 0.10 | $ | (0.18 | ) | |||||
Diluted | $ | 0.07 | $ | (0.05 | ) | $ | 0.10 | $ | (0.18 | ) | |||||
Cash dividend declared per share | $ | 0.11 | $ | 0.11 | $ | 0.22 | $ | 0.22 | |||||||
Shares used in net income (loss) per share calculation: | |||||||||||||||
Basic | 358,577 | 329,860 | 356,123 | 328,320 | |||||||||||
Diluted | 371,967 | 329,860 | 370,402 | 328,320 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Net income (loss) | $ | 27,794 | $ | (16,854 | ) | $ | 36,884 | $ | (59,789 | ) | |||||
Other comprehensive (loss) income: | |||||||||||||||
Net unrealized gain (loss) on cash flow hedges: | |||||||||||||||
Net unrealized gain (loss) arising during the period | 772 | (725 | ) | 5,236 | 1,515 | ||||||||||
Net (gain) loss reclassified into earnings for revenue hedges (effective portion) | 621 | (1,282 | ) | 1,228 | (3,871 | ) | |||||||||
Net loss (gain) reclassified into earnings for expense hedges (effective portion) | (1,148 | ) | 2,988 | (2,285 | ) | 8,638 | |||||||||
Provision for income tax | — | — | (808 | ) | |||||||||||
Total Other comprehensive income | 245 | 981 | 4,179 | 5,474 | |||||||||||
Comprehensive income (loss) | 28,039 | (15,873 | ) | 41,063 | (54,315 | ) | |||||||||
Comprehensive loss attributable to non-controlling interest | (112 | ) | (66 | ) | (100 | ) | (130 | ) | |||||||
Comprehensive income (loss) attributable to Cypress | $ | 27,927 | $ | (15,939 | ) | $ | 40,963 | $ | (54,445 | ) |
Six Months Ended | |||||||
July 1, 2018 | July 2, 2017 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 36,884 | $ | (59,789 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Stock-based compensation expense | 52,366 | 47,504 | |||||
Depreciation and amortization | 141,361 | 131,335 | |||||
Loss / (Gain) on disposal or impairment of property and equipment | 7,179 | (809 | ) | ||||
Share in net loss of equity method investees | 7,216 | 9,911 | |||||
Accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt | 13,272 | 10,071 | |||||
Restructuring and other adjustments | 3,643 | 61 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (104,087 | ) | (3,510 | ) | |||
Inventories | (13,956 | ) | (24,295 | ) | |||
Other current and long-term assets | (17,681 | ) | (4,987 | ) | |||
Price adjustment and other revenue reserves | 23,556 | 8,756 | |||||
Accounts payable and other liabilities | (7,341 | ) | (56,080 | ) | |||
Net cash provided by operating activities | 142,412 | 58,168 | |||||
Cash flows from investing activities: | |||||||
Cash received on sale of asset held for sale | — | 31,611 | |||||
Proceeds from divestiture | — | 6,509 | |||||
Distributions, net of contributions for deferred compensation plan | 4,583 | 4,206 | |||||
Acquisition of property, plant and equipment | (42,860 | ) | (29,350 | ) | |||
Cash paid for equity and cost method investments | — | (7,893 | ) | ||||
Cash received on sale of cost method investment | 18,538 | — | |||||
Other investing | (1,647 | ) | 1,575 | ||||
Net cash (used in) provided by investing activities | (21,386 | ) | 6,658 | ||||
Cash flows from financing activities: | |||||||
Borrowings under revolving credit facility | 94,000 | 70,000 | |||||
Repayment of revolving credit facility | (184,000 | ) | (85,000 | ) | |||
Repayment of Term Loan A and Term Loan B | (8,088 | ) | (15,000 | ) | |||
Repurchase of common stock | (9,999 | ) | — | ||||
Payment of cash dividends | (78,145 | ) | (71,754 | ) | |||
Proceeds from employee stock-based awards | 36,653 | 31,841 | |||||
Payment for extinguishment of 2% 2020 Spansion Exchangeable Notes | (10,000 | ) | — | ||||
Repayment of equipment leases and other | — | (111 | ) | ||||
Costs related to refinancing of debt | (325 | ) | (6,203 | ) | |||
Net cash used in financing activities | (159,904 | ) | (76,227 | ) | |||
Net decrease in cash and cash equivalents and restricted cash | (38,878 | ) | (11,401 | ) | |||
Cash, cash equivalents and restricted cash, beginning of period | 151,596 | 120,172 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 112,718 | $ | 108,771 | |||
Supplemental Cash Flows Disclosures: | |||||||
Unpaid purchases of property, plant and equipment | $ | 8,556 | $ | 354 |
Three Months Ended July 2, 2017 | |||||||||
As Revised* | Reclassification | As Adjusted | |||||||
(In thousands) | |||||||||
Cost of revenues | 356,761 | 44,270 | 401,031 | ||||||
Research and development | 88,237 | 358 | 88,595 | ||||||
Selling, general and administrative | 77,591 | 17,667 | 95,258 | ||||||
Amortization of intangible assets | 49,354 | (49,354 | ) | — | |||||
Costs and settlement charges related to shareholder matter | 12,043 | (12,043 | ) | — | |||||
Restructuring costs (benefit) | 898 | (898 | ) | — | |||||
Operating income | 8,892 | — | 8,892 |
Six Months Ended July 2, 2017 | |||||||||
As Revised* | Reclassification | As Adjusted | |||||||
(In thousands) | |||||||||
Cost of revenues | 688,129 | 87,668 | 775,797 | ||||||
Research and development | 175,233 | 2,710 | 177,943 | ||||||
Selling, general and administrative | 151,586 | 25,005 | 176,591 | ||||||
Amortization of intangible assets | 97,603 | (97,603 | ) | — | |||||
Costs and settlement charges related to shareholder matter | 14,310 | (14,310 | ) | — | |||||
Restructuring costs (benefit) | 3,470 | (3,470 | ) | — | |||||
Operating loss | (4,681 | ) | — | (4,681 | ) |
(a) | The customer simultaneously receives and consumes the benefits provided by the performance as Cypress performs. |
(b) | Cypress’ performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced. |
(c) | Cypress’ performance does not create an asset with an alternative use, and Cypress has an enforceable right to payment for performance completed to date. |
Three Months Ended July 2, 2017 | ||||||||||||
Revised Consolidated Statements of Operations Amounts | As previously reported | Adjustments | As revised | |||||||||
(In thousands, except per-share amounts) | ||||||||||||
Cost of revenues | $ | 357,594 | $ | (833 | ) | $ | 356,761 | |||||
Research and development | 89,736 | (1,499 | ) | 88,237 | ||||||||
Selling, general and administrative | 81,243 | (3,652 | ) | 77,591 | ||||||||
Total costs and expenses | 590,868 | (5,984 | ) | 584,884 | ||||||||
Operating loss | 2,908 | 5,984 | 8,892 | |||||||||
Loss before income taxes and non-controlling interest | (13,499 | ) | 5,984 | (7,515 | ) | |||||||
Net loss | (22,838 | ) | 5,984 | (16,854 | ) | |||||||
Net loss attributable to Cypress | $ | (22,904 | ) | $ | 5,984 | $ | (16,920 | ) | ||||
Net loss per share attributable to Cypress: | ||||||||||||
Basic | $ | (0.07 | ) | $ | 0.02 | $ | (0.05 | ) | ||||
Diluted | $ | (0.07 | ) | $ | 0.02 | $ | (0.05 | ) |
Six Months Ended July 2, 2017 | ||||||||||||
Revised Consolidated Statements of Operations Amounts | As previously reported | Adjustments | As revised | |||||||||
(In thousands, except per-share amounts) | ||||||||||||
Cost of revenues | $ | 690,408 | $ | (2,279 | ) | $ | 688,129 | |||||
Research and development | 178,217 | (2,984 | ) | 175,233 | ||||||||
Selling, general and administrative | 155,090 | (3,504 | ) | 151,586 | ||||||||
Total costs and expenses | 1,139,098 | (8,767 | ) | 1,130,331 | ||||||||
Operating loss | (13,448 | ) | 8,767 | (4,681 | ) | |||||||
Loss before income taxes and non-controlling interest | (49,214 | ) | 8,767 | (40,447 | ) | |||||||
Net loss | (68,556 | ) | 8,767 | (59,789 | ) | |||||||
Net loss attributable to Cypress | $ | (68,686 | ) | $ | 8,767 | $ | (59,919 | ) | ||||
Net loss per share attributable to Cypress: | ||||||||||||
Basic | $ | (0.21 | ) | $ | 0.03 | $ | (0.18 | ) | ||||
Diluted | $ | (0.21 | ) | $ | 0.03 | $ | (0.18 | ) |
Three Months Ended July 2, 2017 | ||||||||||||
Revised Consolidated Statements of Comprehensive Income (Loss): | As previously reported | Adjustments | As revised | |||||||||
(In thousands) | ||||||||||||
Net loss | $ | (22,838 | ) | $ | 5,984 | $ | (16,854 | ) | ||||
Comprehensive loss | (21,857 | ) | 5,984 | (15,873 | ) | |||||||
Comprehensive loss attributable for Cypress | $ | (21,923 | ) | $ | 5,984 | $ | (15,939 | ) |
Six Months Ended July 2, 2017 | ||||||||||||
Revised Consolidated Statements of Comprehensive Income (Loss): | As previously reported | Adjustments | As revised | |||||||||
(In thousands) | ||||||||||||
Net loss | $ | (68,556 | ) | $ | 8,767 | $ | (59,789 | ) | ||||
Comprehensive loss | (63,082 | ) | 8,767 | (54,315 | ) | |||||||
Comprehensive loss attributable for Cypress | $ | (63,212 | ) | $ | 8,767 | $ | (54,445 | ) |
Six Months Ended July 2, 2017 | ||||||||||||
Revised Consolidated Statements of Cash Flows: | As previously reported | Adjustments | As revised | |||||||||
(In thousands) | ||||||||||||
Net (loss) income | $ | (68,556 | ) | $ | 8,767 | $ | (59,789 | ) | ||||
Stock-based compensation expense | 56,271 | (8,767 | ) | 47,504 | ||||||||
Net cash provided by operating activities | $ | 58,168 | $ | — | $ | 58,168 |
Three Months Ended July 2, 2017 | ||||||||||||
Revised Stock-Based Compensation Footnote: | As Reported | Adjustments | As Revised | |||||||||
(In thousands) | ||||||||||||
Cost of revenues | $ | 4,833 | $ | (833 | ) | $ | 4,000 | |||||
Research and development | 11,275 | (1,499 | ) | 9,776 | ||||||||
Selling, general, and administrative | 14,226 | (3,652 | ) | 10,574 | ||||||||
Total stock-based compensation expense | $ | 30,334 | $ | (5,984 | ) | $ | 24,350 |
Six Months Ended July 2, 2017 | ||||||||||||
Revised Stock-Based Compensation Footnote: | As Reported | Adjustments | As Revised | |||||||||
(In thousands) | ||||||||||||
Cost of revenues | $ | 10,164 | $ | (2,279 | ) | $ | 7,885 | |||||
Research and development | 23,046 | (2,984 | ) | 20,062 | ||||||||
Selling, general, and administrative | 23,061 | (3,504 | ) | 19,557 | ||||||||
Total stock-based compensation expense | $ | 56,271 | $ | (8,767 | ) | $ | 47,504 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Microcontroller and Connectivity Division ("MCD") | $ | 368,526 | $ | 360,533 | $ | 705,236 | $ | 678,434 | |||||||
Memory Products Division ("MPD") | 255,564 | 233,243 | 501,095 | 447,216 | |||||||||||
Total revenues | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Product revenue | $ | 609,089 | $ | 572,685 | $ | 1,180,519 | $ | 1,077,699 | |||||||
Non-product revenue (1) | 15,001 | 21,091 | 25,812 | 47,951 | |||||||||||
Total revenue | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Goods/Services transferred at a point in time | $ | 619,748 | $ | 582,868 | $ | 1,198,058 | $ | 1,097,815 | |||||||
Goods/Services transferred over time | 4,342 | 10,908 | 8,273 | 27,835 | |||||||||||
Total revenue | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
United States | $ | 53,795 | $ | 60,737 | $ | 127,457 | $ | 108,093 | |||||||
China, Taiwan, and Hong Kong | 251,107 | 263,956 | 466,929 | 497,222 | |||||||||||
Japan | 149,254 | 127,197 | 284,608 | 242,335 | |||||||||||
Europe | 85,113 | 72,942 | 172,437 | 143,818 | |||||||||||
Rest of the World | 84,821 | 68,944 | 154,900 | 134,182 | |||||||||||
Total revenue | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Accounts receivable, gross | $ | 405,510 | $ | 301,465 | |||
Allowance for doubtful accounts receivable and sales returns | (986 | ) | (5,474 | ) | |||
Total accounts receivable, net | $ | 404,524 | $ | 295,991 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Raw materials | $ | 14,166 | $ | 15,635 | |||
Work-in-process | 207,665 | 176,427 | |||||
Finished goods | 64,930 | 80,065 | |||||
Total inventories | $ | 286,761 | $ | 272,127 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Prepaid tooling - current | $ | 23,474 | $ | 21,132 | |||
Advances to suppliers | 20,176 | 15,968 | |||||
Prepaid royalty and licenses | 17,964 | 16,630 | |||||
Derivative assets | 1,775 | 1,197 | |||||
Value added tax receivable | 11,872 | 11,412 | |||||
Prepaid expenses | 18,435 | 17,737 | |||||
Withholding tax receivable and tax advance | 5,005 | 5,790 | |||||
Other current assets | 14,503 | 13,771 | |||||
Total other current assets | $ | 113,204 | $ | 103,637 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Employee deferred compensation plan | $ | 46,644 | $ | 49,495 | |||
Investment in cost method equity securities | — | 17,017 | |||||
Deferred tax assets | 3,720 | 4,293 | |||||
Long-term licenses | 5,706 | 8,654 | |||||
Advance to suppliers | 4,798 | 11,315 | |||||
Deposit - non-current | 9,850 | 9,830 | |||||
Pension - non-current | 7,696 | 8,026 | |||||
Derivatives assets - non-current | 4,209 | 607 | |||||
Prepaid tooling and other non-current assets | 51,734 | 37,802 | |||||
Total other long-term assets | $ | 134,357 | $ | 147,039 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Employee deferred compensation plan | $ | 48,097 | $ | 50,629 | |||
Restructuring accrual - current portion (See Note 7) | 2,923 | 9,580 | |||||
Derivative liability | 1,558 | 2,033 | |||||
Accrued expenses | 50,746 | 47,789 | |||||
Accrued interest | 8,207 | 8,094 | |||||
Other current liabilities | 18,589 | 25,360 | |||||
Total other current liabilities | $ | 130,120 | $ | 143,485 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Long-term pension and other employee related liabilities | $ | 20,828 | $ | 16,779 | |||
Restructuring accrual - non-current portion (See Note 7) | 7,844 | 8,596 | |||||
Asset retirement obligation | 5,814 | 5,693 | |||||
Other long-term liabilities | 3,889 | 4,374 | |||||
Total other long-term liabilities | $ | 38,375 | $ | 35,442 |
As of July 1, 2018 | As of December 31, 2017 | ||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Developed technology and other intangible assets | |||||||||||||||||||||||
Acquisition-related intangible assets | $ | 1,162,365 | $ | (595,789 | ) | $ | 566,576 | $ | 1,072,824 | $ | (490,327 | ) | $ | 582,497 | |||||||||
Non-acquisition related intangible assets | 19,884 | (13,349 | ) | 6,535 | 19,884 | (10,828 | ) | 9,056 | |||||||||||||||
Total developed technology and other intangible assets | 1,182,249 | (609,138 | ) | 573,111 | 1,092,708 | (501,155 | ) | 591,553 | |||||||||||||||
In-process research and development | 34,026 | — | 34,026 | 123,567 | — | 123,567 | |||||||||||||||||
Total intangible assets | $ | 1,216,275 | $ | (609,138 | ) | $ | 607,137 | $ | 1,216,275 | $ | (501,155 | ) | $ | 715,120 |
(In thousands) | |||
As of December 31, 2017 | $ | 123,567 | |
Technological feasibility achieved | (89,541 | ) | |
As of July 1, 2018 | $ | 34,026 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Cost of revenues | $ | 48,102 | $ | 44,270 | $ | 96,204 | $ | 87,437 | |||||||
Research and development | 1,261 | — | 2,521 | — | |||||||||||
Selling, general and administrative | 4,310 | 5,084 | 9,258 | 10,166 | |||||||||||
Total amortization expense | $ | 53,673 | $ | 49,354 | $ | 107,983 | $ | 97,603 |
(In thousands) | |||
2018 (remaining six months) | 105,996 | ||
2019 | 205,726 | ||
2020 | 144,654 | ||
2021 | 49,982 | ||
2022 | 28,747 | ||
2023 and thereafter | 38,006 | ||
Total future amortization expense | $ | 573,111 |
As of July 1, 2018 | ||||
Deca Technologies Inc. | ||||
(in thousands) | ||||
Carrying value as of December 31, 2017 | $ | 122,514 | ||
Equity in net loss of equity method investee | (7,216 | ) | ||
Carrying value as of July 1, 2018 | $ | 115,298 |
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | |||||||||||||
(In thousands) | ||||||||||||||||
Operating data: | ||||||||||||||||
Revenue | $ | 4,453 | $ | 4,515 | $ | 8,602 | $ | 7,410 | ||||||||
Gross loss | (3,056 | ) | (1,754 | ) | (5,377 | ) | (3,941 | ) | ||||||||
Loss from operations | (7,091 | ) | (9,852 | ) | (13,840 | ) | (20,011 | ) | ||||||||
Net loss | (7,137 | ) | (9,903 | ) | (13,777 | ) | (20,974 | ) | ||||||||
Net loss attributable to Cypress | (3,744 | ) | (4,612 | ) | (7,227 | ) | (9,803 | ) |
As of | As of | |||||||
July 1, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Balance Sheet Data: | ||||||||
Current Assets | $ | 38,744 | $ | 70,101 | ||||
Long-term Assets | 54,241 | 55,673 | ||||||
Current Liabilities | 9,455 | 15,615 | ||||||
Long-term Liabilities | 7,707 | 1,859 |
As of July 1, 2018 | As of December 31, 2017 | ||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | 59,138 | $ | — | $ | 59,138 | $ | 20,477 | $ | — | $ | 20,477 | |||||||||||
Total cash equivalents | 59,138 | — | 59,138 | 20,477 | — | 20,477 | |||||||||||||||||
Other current assets: | |||||||||||||||||||||||
Certificates of deposit | — | 870 | 870 | — | 972 | 972 | |||||||||||||||||
Total other current assets | — | 870 | 870 | — | 972 | 972 | |||||||||||||||||
Employee deferred compensation plan assets: | |||||||||||||||||||||||
Cash equivalents | 2,248 | — | 2,248 | 3,561 | — | 3,561 | |||||||||||||||||
Mutual funds | 29,674 | — | 29,674 | 27,321 | — | 27,321 | |||||||||||||||||
Equity securities | 9,090 | — | 9,090 | 12,994 | — | 12,994 | |||||||||||||||||
Fixed income | 3,804 | — | 3,804 | 3,415 | — | 3,415 | |||||||||||||||||
Stable value funds | 1,828 | 1,828 | — | 2,204 | 2,204 | ||||||||||||||||||
Total employee deferred compensation plan assets | 44,816 | 1,828 | 46,644 | 47,291 | 2,204 | 49,495 | |||||||||||||||||
Interest rate swap | — | 4,899 | 4,899 | — | — | — | |||||||||||||||||
Foreign exchange forward contracts | — | 1,086 | 1,086 | — | 1,197 | 1,197 | |||||||||||||||||
Total financial assets | $ | 103,954 | $ | 8,683 | $ | 112,637 | $ | 67,768 | $ | 4,373 | $ | 72,141 | |||||||||||
Financial Liabilities | |||||||||||||||||||||||
Foreign exchange forward contracts | $ | — | $ | 1,558 | $ | 1,558 | $ | — | $ | 1,426 | $ | 1,426 | |||||||||||
Employee deferred compensation plan liability | 46,211 | 1,886 | 48,097 | 48,425 | 2,204 | 50,629 | |||||||||||||||||
Total financial liabilities | $ | 46,211 | $ | 3,444 | $ | 49,655 | $ | 48,425 | $ | 3,630 | $ | 52,055 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Personnel costs | $ | 1,239 | $ | 374 | $ | 5,335 | $ | 1,877 | |||||||
Other | — | 524 | — | 1,593 | |||||||||||
Total restructuring costs | $ | 1,239 | $ | 898 | $ | 5,335 | $ | 3,470 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Cost of goods sold | $ | 1,589 | $ | — | $ | 3,476 | $ | 231 | |||||||
Research and development | 33 | 358 | 326 | 2,710 | |||||||||||
Selling, general and administrative | (383 | ) | 540 | 1,533 | 529 | ||||||||||
Total restructuring costs | $ | 1,239 | $ | 898 | $ | 5,335 | $ | 3,470 |
(In thousands) | |||||||||||||||||||
2018 Plan | 2017 Plan | 2016 Plan | Spansion Integration Plan | Total | |||||||||||||||
Accrued restructuring balance as of December 31, 2017 | $ | — | $ | 6,139 | $ | 743 | $ | 11,297 | $ | 18,179 | |||||||||
Provision | 3,148 | 2,421 | (234 | ) | — | 5,335 | |||||||||||||
Cash payments and other adjustments | (2,319 | ) | (8,530 | ) | (509 | ) | (1,389 | ) | (12,747 | ) | |||||||||
Accrued restructuring balance as of July 1, 2018 | $ | 829 | $ | 30 | $ | — | $ | 9,908 | $ | 10,767 | |||||||||
Current portion of the restructuring accrual | $ | 829 | $ | 30 | $ | — | $ | 2,064 | $ | 2,923 | |||||||||
Non-current portion of the restructuring accrual | $ | — | $ | — | $ | — | $ | 7,844 | $ | 7,844 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Cost of revenues | $ | 3,985 | $ | 4,000 | $ | 7,569 | $ | 7,885 | |||||||
Research and development | 13,801 | 9,776 | 20,514 | 20,062 | |||||||||||
Selling, general and administrative | 16,122 | 10,574 | 24,283 | 19,557 | |||||||||||
Total stock-based compensation expense | $ | 33,908 | $ | 24,350 | $ | 52,366 | $ | 47,504 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Stock options | $ | — | $ | 109 | $ | 96 | $ | 109 | |||||||
Restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") | 31,772 | 23,052 | 49,021 | 45,018 | |||||||||||
Employee Stock Purchase Plan ("ESPP") | 2,136 | 1,189 | 3,249 | 2,377 | |||||||||||
Total stock-based compensation expense | $ | 33,908 | $ | 24,350 | $ | 52,366 | $ | 47,504 |
As of | |||||
July 1, 2018 | Weighted- Average Amortization Period | ||||
(In thousands) | (In years) | ||||
RSUs and PSUs | 107,973 | 1.54 | |||
ESPP | 998 | 0.50 | |||
Total unrecognized stock-based compensation expense | $ | 108,971 | 1.53 |
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 31, 2017 | 4,627 | $ | 11.63 | |||||||||
Exercised | (875 | ) | $ | 9.86 | ||||||||
Forfeited or expired | (41 | ) | $ | 15.86 | ||||||||
Options outstanding as of April 1, 2018 | 3,711 | $ | 12.00 | |||||||||
Exercised | (266 | ) | $ | 9.87 | ||||||||
Forfeited or expired | (20 | ) | $ | 15.35 | ||||||||
Options outstanding as of July 1, 2018 | 3,425 | $ | 37.22 | 2.15 | $ | 13.9 | ||||||
Options exercisable as of July 1, 2018 | 3,345 | $ | 12.18 | 2.11 | $ | 13.5 |
Shares | Weighted- Average Grant Date Fair Value Per Share | |||||
(In thousands, except per-share amounts) | ||||||
Balance as of December 31, 2017 | 11,976 | $ | 12.44 | |||
Granted | 5,310 | $ | 16.55 | |||
Released | (2,707 | ) | $ | 12.75 | ||
Forfeited | (666 | ) | $ | 12.85 | ||
Balance as of April 1, 2018 | 13,913 | $ | 13.92 | |||
Granted | 432 | $ | 16.52 | |||
Released | (1,022 | ) | $ | 12.99 | ||
Forfeited | (324 | ) | $ | 13.12 | ||
Balance as of July 1, 2018 | 12,999 | $ | 14.03 |
As of | ||||||||
July 1, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Current portion of long-term debt | ||||||||
Senior Secured Credit Facility: | ||||||||
Term Loan B | $ | 6,314 | $ | 27,303 | ||||
Capital lease obligations | 406 | — | ||||||
Current portion of long-term debt | 6,720 | 27,303 | ||||||
Revolving credit facility and long-term portion of debt | ||||||||
Senior Secured Credit Facility: | ||||||||
Revolving Credit Facility | — | 90,000 | ||||||
Term Loan B | 485,714 | 468,080 | ||||||
2% 2020 Spansion Exchangeable Notes | 11,274 | 20,375 | ||||||
4.5% 2022 Senior Exchangeable Notes | 251,695 | 246,636 | ||||||
2% 2023 Exchangeable Notes | 133,237 | 131,422 | ||||||
Capital lease obligations | 1,821 | — | ||||||
Credit facility and long-term debt | 883,741 | 956,513 | ||||||
Total debt | $ | 890,461 | $ | 983,816 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Equity component | $ | 22,971 | $ | 42,130 | |||
Liability component: | |||||||
Principal | 11,990 | 21,990 | |||||
Less debt discount and debt issuance costs, net | (716 | ) | (1,615 | ) | |||
Net carrying amount | $ | 11,274 | $ | 20,375 |
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | |||||||||||||
(In thousands) | ||||||||||||||||
Contractual interest expense at 2% per annum | $ | 61 | $ | 742 | $ | 121 | $ | 1,492 | ||||||||
Accretion of debt discount | 82 | 935 | 164 | 1,848 | ||||||||||||
Total | $ | 143 | $ | 1,677 | $ | 285 | $ | 3,340 |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Equity component | $ | 47,686 | $ | 47,686 | |||
Liability component: | |||||||
Principal | 287,500 | 287,500 | |||||
Less debt discount and debt issuance costs, net | (35,805 | ) | (40,864 | ) | |||
Net carrying amount | $ | 251,695 | $ | 246,636 |
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | |||||||||||||
(In thousands) | ||||||||||||||||
Contractual interest expense | $ | 3,234 | $ | 3,271 | $ | 6,469 | $ | 6,540 | ||||||||
Amortization of debt issuance costs | 320 | 320 | 641 | 639 | ||||||||||||
Accretion of debt discount | 2,209 | 2,202 | 4,418 | 4,403 | ||||||||||||
Total | $ | 5,763 | $ | 5,793 | $ | 11,528 | $ | 11,582 |
As of | ||||||||
July 1, 2018 | December 31, 2017 | |||||||
(In thousands) | ||||||||
Equity component | 15,028 | 15,028 | ||||||
Liability component: | ||||||||
Principal | 150,000 | 150,000 | ||||||
Less debt discount and debt issuance costs, net | (16,763 | ) | (18,578 | ) | ||||
Net carrying amount | $ | 133,237 | $ | 131,422 |
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | |||||||||||||
(In thousands) | ||||||||||||||||
Contractual interest expense at 2% Per annum | $ | 748 | $ | — | $ | 1,496 | $ | — | ||||||||
Amortization of debt issuance costs | 175 | — | 350 | — | ||||||||||||
Accretion of debt discount | 735 | — | 1,470 | — | ||||||||||||
Total | $ | 1,658 | $ | — | $ | 3,316 | $ | — |
Fiscal Year | Total | |||
(In thousands) | ||||
2018 (remaining six months) | $ | 2,726 | ||
2019 | 5,467 | |||
2020 | 17,476 | |||
2021 | 491,663 | |||
2022 and after | 438,221 | |||
Total | $ | 955,553 |
Fiscal Year | (In thousands) | ||
2018 (remaining six months) | $ | 9,727 | |
2019 | 14,364 | ||
2020 | 11,498 | ||
2021 | 6,641 | ||
2022 | 5,348 | ||
2023 and thereafter | 17,349 | ||
Total | $ | 64,927 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Beginning balance | $ | 4,445 | $ | 3,996 | $ | 4,445 | $ | 3,996 | |||||||
Settlements made | (1,029 | ) | (310 | ) | (2,978 | ) | (629 | ) | |||||||
Provisions | 1,029 | 631 | 2,978 | 950 | |||||||||||
Ending balance | $ | 4,445 | $ | 4,317 | $ | 4,445 | $ | 4,317 |
Buy / Sell | July 1, 2018 | December 31, 2017 | |
(In millions) | |||
US dollar / Japanese Yen | $89.8/ ¥9,749 | $58.7 / ¥6,476 | |
Japanese Yen / US dollar | ¥15,367 / $141.6 | ¥9,811 / $88.4 |
Buy / Sell | July 1, 2018 | December 31, 2017 | |
(In millions) | |||
US dollar / EUR | $1.7 / €2.0 | $8.8 / €7.4 | |
US dollar / Japanese Yen | $7.6/ ¥830 | $15.9 / ¥1,744 | |
Japanese Yen / US dollar | ¥2,474 / $22.5 | ¥4,790 / $43.0 |
July 1, 2018 | December 31, 2017 | |||||||||||||||
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 | $ | 1,615 | $ | 160 | $ | 805 | $ | 392 | ||||||||
Non-current Assets | ||||||||||||||||
Derivative Asset | 4,209 | — | — | 607 | ||||||||||||
Other Current Liabilities | ||||||||||||||||
Derivative Liability | $ | 1,373 | $ | 185 | $ | 775 | $ | 1,258 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands, except per-share amounts) | |||||||||||||||
Net income (loss) attributable to Cypress | $ | 27,706 | $ | (16,920 | ) | $ | 36,784 | $ | (59,919 | ) | |||||
Weighted-average common shares | 358,577 | 329,860 | 356,123 | 328,320 | |||||||||||
Weighted-average diluted shares | 371,967 | 329,860 | 370,402 | 328,320 | |||||||||||
Net income (loss) per share—basic | $ | 0.08 | $ | (0.05 | ) | $ | 0.10 | $ | (0.18 | ) | |||||
Net income (loss) per share—diluted | $ | 0.07 | $ | (0.05 | ) | $ | 0.10 | $ | (0.18 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
MCD | $ | 36,087 | $ | 13,141 | $ | 49,571 | $ | 12,223 | |||||||
MPD | 92,091 | 64,711 | 181,929 | 114,382 | |||||||||||
Unallocated items: | |||||||||||||||
Stock-based compensation expense | (33,908 | ) | (24,350 | ) | (52,366 | ) | (47,504 | ) | |||||||
Restructuring charges | (1,239 | ) | (898 | ) | (5,335 | ) | (3,470 | ) | |||||||
Amortization of intangible assets | (53,793 | ) | (49,353 | ) | (108,381 | ) | (97,602 | ) | |||||||
Reimbursement payment in connection with the cooperation and settlement agreement | — | (3,500 | ) | — | (3,500 | ) | |||||||||
Changes related to debt extinguishment | — | — | 630 | — | |||||||||||
Changes in value of deferred compensation plan | (18 | ) | (12 | ) | (435 | ) | (225 | ) | |||||||
Gain on sale of cost method investment | 1,521 | — | 1,521 | — | |||||||||||
Other adjustments | (4,038 | ) | (7,254 | ) | (12,823 | ) | (14,751 | ) | |||||||
Income (Loss) from operations before income taxes | $ | 36,703 | $ | (7,515 | ) | $ | 54,311 | $ | (40,447 | ) |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
United States | $ | 183,262 | $ | 186,824 | |||
Philippines | 34,586 | 36,747 | |||||
Thailand | 35,167 | 29,151 | |||||
Japan | 10,540 | 12,211 | |||||
Other | 27,471 | 24,621 | |||||
Total property, plant and equipment, net | $ | 291,026 | $ | 289,554 |
Accumulated net unrealized income (loss) on cash flow hedges | Cumulative translation adjustment and other | Unrecognized gain on the defined benefit Plan | Accumulated other comprehensive income (loss) | ||||||||||||
Balance as of December 31, 2017 | (504 | ) | 6 | (864 | ) | (1,362 | ) | ||||||||
Other comprehensive income (loss) before reclassification | 4,464 | — | — | 4,464 | |||||||||||
Amounts reclassified to operating income (loss) | (530 | ) | — | — | (530 | ) | |||||||||
Balance as of April 1, 2018 | $ | 3,430 | $ | 6 | $ | (864 | ) | $ | 2,572 | ||||||
Other comprehensive income (loss) before reclassification | $ | 772 | $ | — | $ | — | $ | 772 | |||||||
Amounts reclassified to operating income (loss) | $ | (527 | ) | $ | — | $ | — | $ | (527 | ) | |||||
Balance as of July 1, 2018 | $ | 3,675 | $ | 6 | $ | (864 | ) | $ | 2,817 |
Three Months Ended | Six Months Ended | |||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | |||||||||
(In thousands) | ||||||||||||
Total revenues | 8,679 | — | 11,955 | 495 | ||||||||
Total purchases | 21,257 | 325 | 37,346 | 4,482 |
Business Segments | Description | |
Microcontroller and Connectivity Division | MCD focuses on high-performance microcontroller (MCU), analog and wireless and wired connectivity solutions. The portfolio includes Traveo™ automotive MCUs, PSoC® programmable MCUs and general-purpose MCUs with Arm® Cortex®-M4, -M3, -M0+ and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive-sensing controllers, TrueTouch® touchscreen, Wi-Fi®, Bluetooth® and Bluetooth Low Energy solutions and the WICED® development platform, and a broad line of USB controllers, including solutions for the USB-C and USB Power Delivery standards. This division also includes our intellectual property (IP) business. | |
Memory Products Division | MPD focuses on specialized, high-performance parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), F-RAM™ ferroelectric memory devices, non-volatile SRAM (nvSRAM), other specialty memories and timing solutions. This division also includes our subsidiary AgigA Tech Inc. |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Microcontroller and Connectivity Division ("MCD") | $ | 368,526 | $ | 360,533 | $ | 705,236 | $ | 678,434 | |||||||
Memory Products Division ("MPD") | 255,564 | 233,243 | 501,095 | 447,216 | |||||||||||
Total revenues | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Revenue | $ | 624,090 | $ | 593,776 | $ | 1,206,331 | $ | 1,125,650 | |||||||
Less: Cost of goods sold | $ | (389,952 | ) | $ | (401,031 | ) | $ | (759,801 | ) | $ | (775,797 | ) | |||
Gross profit | 234,138 | 192,745 | 446,530 | 349,853 | |||||||||||
Gross margin (%) | 37.5 | % | 32.5 | % | 37.0 | % | 31.1 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
R&D expenses | $ | 96,693 | $ | 88,595 | $ | 189,926 | $ | 177,943 | |||||||
As a percentage of revenues | 15.5 | % | 14.9 | % | 15.7 | % | 15.8 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
July 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | ||||||||||||
(In thousands) | |||||||||||||||
SG&A expenses | $ | 86,599 | $ | 95,258 | $ | 169,996 | $ | 176,591 | |||||||
As a percentage of revenues | 13.9 | % | 16.0 | % | 14.1 | % | 15.7 | % |
As of | |||||||
July 1, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Cash and cash equivalents | $ | 112,718 | $ | 151,596 | |||
Working capital | $ | 249,527 | $ | 147,854 |
Six Months Ended | |||||||
July 1, 2018 | July 2, 2017 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 142,412 | $ | 58,168 | |||
Net cash provided by (used in) investing activities | $ | (21,386 | ) | $ | 6,658 | ||
Net cash used in financing activities | $ | (159,904 | ) | $ | (76,227 | ) |
• | depreciation and amortization of $141.4 million; |
• | stock-based compensation expense of $52.4 million; |
• | accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt of $13.3 million; |
• | loss on disposal and impairment of property and equipment of $7.2 million; |
• | our share in the net loss of an equity method investee of $7.2 million; and |
• | restructuring costs and other adjustments of $3.6 million |
• | an increase in accounts receivable of $104.1 million due to timing of invoicing and collections. Days sales outstanding for the six months ended July 1, 2018 was 59 days as compared to 51 days in the six months ended July 2, 2017; |
• | an increase in other current and long-term assets of $17.7 million for prepayments for licenses and other vendors; |
• | an increase in inventories of $14.0 million to support expected demand of MCD products for the second half of 2018; and |
• | a decrease in accounts payable and accrued and other liabilities of $7.3 million mainly due to timing of payments to vendors; |
• | partially offset by an increase of $28.0 million in price adjustments and other revenue reserves for sales to distributors due to an increase in revenue during the first six months of 2018. |
• | property and equipment expenditures of $42.9 million relating to purchases of certain manufacturing facility equipment; |
• | partially offset by proceeds of $18.5 million from the sale of a cost method investment and $4.6 million in net distributions for the deferred compensation plan |
• | a $78.1 million dividend payment, net repayments of $90.0 million on the Revolving Credit Facility, and payments of $8.1 million on Term Loan B; |
• | a $10.0 million outlay related to the repurchase of stock; and |
• | a $10.0 million outlay related to partial extinguishment of the 2% 2020 Spansion Exchangeable Notes; |
• | partially offset by proceeds of $36.7 million from employee equity awards. |
Total | 2018 (Remaining 6 months) | 2019 and 2020 | 2021 and 2022 | After 2022 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Purchase obligations (1) | $ | 377,783 | $ | 98,177 | $ | 271,727 | $ | 7,879 | $ | — | |||||||||
Operating lease commitments (2) | 81,233 | 9,799 | 32,475 | 20,255 | 18,704 | ||||||||||||||
Capital lease commitments | 2,227 | 201 | 850 | 930 | 246 | ||||||||||||||
Term Loan B | 503,835 | 2,525 | 10,102 | 491,208 | — | ||||||||||||||
2% 2020 Spansion Exchangeable Notes | 11,990 | — | 11,990 | — | — | ||||||||||||||
4.5% 2022 Senior Exchangeable Notes | 287,500 | — | — | 287,500 | — | ||||||||||||||
2% 2023 Exchangeable Notes | 150,000 | — | — | — | 150,000 | ||||||||||||||
Interest due on debt (3) | 130,083 | 18,652 | 74,528 | 36,653 | 250 | ||||||||||||||
Asset retirement obligations | 5,789 | 225 | 3,335 | 1,896 | 333 | ||||||||||||||
Total contractual obligations | $ | 1,550,440 | $ | 129,579 | $ | 405,007 | $ | 846,321 | $ | 169,533 |
(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) | Operating leases include payments relating to Spansion's lease for office space in San Jose for a new headquarters entered into May 22, 2014, which is no longer in use. The lease is for a period of 12 years, with two options to extend for periods of five years each after the initial lease term. The term of the lease commenced on January 1, 2015 and expires on December 31, 2026. |
(3) | Interest due on variable debt is based on the effective interest rates as of July 1, 2018. |
• | Revenue Recognition |
• | Business Combinations |
• | Valuation of Inventories |
• | Valuation of Long-Lived Assets |
• | Valuation of Goodwill |
• | Cash Flow Hedges |
• | Stock-Based Compensation |
• | Employee Benefits Plan |
• | 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. |
• | Redesigning controls over the evaluation of assumptions and detailed calculations relating to the ESPP and expanding control activities to adequately reconcile and validate assumptions in the models used to determine non-cash stock-based compensation expense; |
• | Effective January 1, 2018, management has changed the parameters of the ESPP, which is expected to reduce the number of inputs required to estimate the fair value of ESPP participation rights; |
• | Re-evaluating the design of stock-based compensation processes and implementing new and improved processes and controls, as appropriate, including adding supplemental oversight and review; and |
• | Strengthening the precision of the internal review process to ensure the completeness and accuracy of the assumptions and calculations used in accounting for stock-based compensation. |
• | political instability, and the possibility of a deteriorating relationship with the United States; |
• | the imposition of new or modified international trade restrictions, tariffs, import and excise duties or other taxes; |
• | import and export requirements, including restrictions on sales to certain end customers; |
• | restrictions on foreign ownership and investments, including potential intervention by the Committee on Foreign Investment in the United Stated (CFIUS) or by other applicable administrative review boards to block strategic transactions that might otherwise be in shareholders’ interests; |
• | restrictions on repatriation of cash earned in countries outside the U.S.; |
• | changes in local political, economic, social and labor conditions; |
• | a less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights and liability issues; and |
• | inadequate levels of compliance with applicable anti-bribery laws, including the Foreign Corrupt Practices Act. |
• | If the U.S. were to impose tariffs on components that we or our suppliers source from China, the tariffs could cause our cost for such components to increase, which could narrow the profits we earn from U.S. sales of products containing such components or force us to raise prices, negatively impacting our U.S. sales. |
• | Some of our customers manufacture products containing our components for re-sale into the U.S. If the U.S. were to impose tariffs on the finished goods that our customers import into the U.S., such tariffs could negatively impact our customers' sales, thereby causing an indirect negative impact on our own sales. |
• | If China were to impose new tariffs on the products we sell in China, or on finished goods our end customers sell in China, such tariffs could directly or indirectly reduce demand for our products, negatively impacting our sales. |
Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of the publicly announced programs | Maximum dollar value of shares that may yet be purchased under this program (In thousands) | |||||||||
Remaining balance available for purchases at the beginning of the period | 210,844 | |||||||||||
Repurchase during Q2 2018 | ||||||||||||
May 2018 | 610,000 | 16.38 | 610,000 | 9,999 | ||||||||
Total repurchases during Q2 2018 | 610,000 | 16.38 | 610,000 | 200,845 |
Incorporated by Reference | ||||||||||
Exhibit | Description | Form | Filing Date | File No. | Filed | |||||
Number | Herewith | |||||||||
3.1 | 10-Q | 5/2/2017 | 001-10079 | |||||||
3.2 | 8-K | 09/25/2017 | 001-10079 | |||||||
10.1 | S-8 | 06/20/2018 | 333-225759 | |||||||
10.2 | S-8 | 06/20/2018 | 333-225759 | |||||||
31.1 | X | |||||||||
31.2 | X | |||||||||
32.1+ | X | |||||||||
32.2+ | X | |||||||||
101.INS | XBRL Instance Document. | X | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
Commission File No. 001-10079 |
+ | 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: July 27, 2018 | By: | /s/ THAD TRENT | ||
Thad Trent | ||||
Executive Vice President, Finance and Administration and Chief Financial 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: | July 27, 2018 | 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: | July 27, 2018 | By: | /s/ THAD TRENT |
Thad Trent | |||
Executive Vice President, Finance and Administration and Chief Financial Officer |
Dated: | July 27, 2018 | By: | /s/ HASSANE EL-KHOURY |
HASSANE EL-KHOURY | |||
President and Chief Executive Officer |
Dated: | July 27, 2018 | By: | /s/ THAD TRENT |
Thad Trent | |||
Executive Vice President, Finance and Administration and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jul. 01, 2018 |
Jul. 20, 2018 |
|
Document Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 01, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | CY | |
Entity Registrant Name | CYPRESS SEMICONDUCTOR CORP /DE/ | |
Entity Central Index Key | 0000791915 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 361,539,110 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 650,000,000 | 650,000,000 |
Common stock, shares issued | 534,037,000 | 525,719,000 |
Common stock, shares outstanding | 359,920,000 | 352,220,000 |
Common stock held in treasury (in shares) | 174,118,000 | 173,498,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Income Statement [Abstract] | ||||
Revenues | $ 624,090 | $ 593,776 | $ 1,206,331 | $ 1,125,650 |
Cost of revenues | 389,952 | 401,031 | 759,801 | 775,797 |
Gross profit | 234,138 | 192,745 | 446,530 | 349,853 |
Research and development | 96,693 | 88,595 | 189,926 | 177,943 |
Selling, general and administrative | 86,599 | 95,258 | 169,996 | 176,591 |
Total operating expenses | 183,292 | 183,853 | 359,922 | 354,534 |
Operating income (loss) | 50,846 | 8,892 | 86,608 | (4,681) |
Interest expense | (15,577) | (18,781) | (34,436) | (38,256) |
Other income, net | 1,434 | 2,374 | 2,139 | 2,490 |
Income (loss) before income taxes and non-controlling interest | 36,703 | (7,515) | 54,311 | (40,447) |
Income tax provision | (5,154) | (4,504) | (10,211) | (9,431) |
Share in net loss of equity method investees | (3,755) | (4,835) | (7,216) | (9,911) |
Net income (loss) | 27,794 | (16,854) | 36,884 | (59,789) |
Net loss attributable to non-controlling interests | (88) | (66) | (100) | (130) |
Net income (loss) attributable to Cypress | $ 27,706 | $ (16,920) | $ 36,784 | $ (59,919) |
Net income (loss) per share attributable to Cypress: | ||||
Basic (in dollars per share) | $ 0.08 | $ (0.05) | $ 0.10 | $ (0.18) |
Diluted (in dollars per share) | 0.07 | (0.05) | 0.10 | (0.18) |
Cash dividend declared per share (in dollars per share) | $ 0.11 | $ 0.11 | $ 0.22 | $ 0.22 |
Shares used in net income (loss) per share calculation: | ||||
Basic (in shares) | 358,577 | 329,860 | 356,123 | 328,320 |
Diluted (in shares) | 371,967 | 329,860 | 370,402 | 328,320 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) |
Jul. 01, 2018 |
Mar. 12, 2015 |
---|---|---|
2% 2020 Spansion Exchangeable Notes | ||
Interest rate (percent) | 2.00% | 2.00% |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Years Cypress Semiconductor Corporation (together with its consolidated subsidiaries, "Cypress" or the "Company") reports on a fiscal-year basis. The Company ends its quarters on the Sunday closest to the end of the applicable calendar quarter, except in a 53-week fiscal year, in which case the additional week falls into the fourth quarter of that fiscal year. Fiscal years 2018 and 2017 each contain(ed) 52 weeks. The second quarter of fiscal 2018 ended on July 1, 2018 and the second quarter of fiscal 2017 ended on July 2, 2017. Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Cypress Semiconductor Corporation and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments of a normal, recurring nature, which are necessary to state fairly the financial information included therein. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Cypress' Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Certain balances included on the Consolidated Balance Sheets and in the Consolidated Statements of Cash Flows for prior periods have been reclassified to conform to the current period presentation. Beginning fiscal year 2018, the Company is allocating the amortization of acquisition-related intangible assets, restructuring costs and certain other expenses by function in the Consolidated Statements of Operations. The Consolidated Statements of Operations for the prior comparative periods have been reclassified to conform to the current period presentation as follow:
* See "Revision of prior period financial statements" below. Results reported in the Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2018 are not necessarily indicative of the results to be expected for the full fiscal year. Summary of Significant Accounting Policies The Company's significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-02, "Leases, (Topic 842)," which replaces most current lease guidance when it becomes effective. This standard update intends to increase the transparency and improve comparability by requiring entities to recognize assets and liabilities on the balance sheet for all leases, with certain exceptions. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Operations. The new guidance will be effective for the Company starting in the first quarter of fiscal 2019. Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures. In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The amendments in ASU 2017-12 are intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The guidance in ASU 2017-12 is effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact this guidance will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in ASU 2018-02 are intended to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance in ASU 2018-02 is effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact this guidance will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-03, "Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The corrections and improvements are effective for the Company for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years beginning after June 15, 2018. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements Adoption of ASU No. 2014-09, Revenue from Contracts with Customers: In May 2014, the FASB issued an ASU on revenue from contracts with customers, ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." This standard update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance is effective for annual reporting periods beginning after December 15, 2017 and for interim periods within those fiscal years. Collectively, we refer to ASU No. 2014-09, its related amendments, and Subtopic 340-40 as "Topic 606." On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to all contracts that are not completed contracts at the date of initial application (i.e., January 1, 2018). Results for reporting periods after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There was no impact on the opening accumulated deficit as of January 1, 2018 due to the adoption of Topic 606. We reclassified the sales return reserve to current liabilities presented as "Price adjustment and other revenue reserves" from the allowance for accounts receivable due to the adoption of Topic 606. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Sales of products with alternative use account for the majority of our revenue and are recognized at a point in time, the timing of such recognition remained the same under Topic 606. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer and deposited with the relevant government authority, are excluded from revenue. The Company's revenue arrangements do not contain significant financing components. Revenue is recognized over a period of time when it is assessed that performance obligations are satisfied over a period rather than at a point in time. When any of the following criteria is fulfilled, revenue is recognized over a period of time:
We then select an appropriate method for measuring progress toward complete satisfaction of the performance obligation, usually costs incurred to date relative to the total expected costs to the satisfaction of that performance obligation. Sales to certain distributors are made under arrangements that provide the distributors with price adjustments, price protection, stock rotation and other allowances under certain circumstances. These adjustments and allowances are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized. We believe that there will not be significant changes to our estimates of variable consideration. Our non-recurring engineering ("NRE") contracts with customers may include multiple performance obligations. For NRE arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine the standalone selling price of intellectual property licenses based on the residual approach, and service based on cost plus a reasonable margin. We recognize revenue in the amount to which we have a right to invoice, if the right to consideration from the customer is in an amount that corresponds reasonably with the value to the customer of the entity’s performance completed to date. We license or sell our rights to use portions of our intellectual property ("IP") portfolio, which includes certain patent rights useful in the manufacture and sales of certain products. IP revenue recognition is dependent on the nature and terms of each agreement. We recognize IP revenue upon delivery of the IP if we have no substantive future obligation to perform under the arrangement. We defer recognition of IP revenue where future performance obligations are required to earn the revenue or the revenue is not guaranteed. Sales-based or usage-based royalties from license of our IP are recognized at the later of the period the sales or usages occur or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated. If a customer pays consideration, or Cypress has a right to an amount of consideration that is unconditional before we transfer a good or service to the customer, those amounts are classified as deferred income/ advances received from customers which are included in other current liabilities or other long-term liabilities when the payment is made or it is due, whichever is earlier. If the arrangement includes variable contingent consideration, the Company recognizes revenue over time if management can reasonably measure its progress or is capable of providing reliable information as required to apply an appropriate method of measuring progress. Practical Expedients and Elections Sales commissions are owed and are recorded at the time of sell-through of our products to end customers. These costs are recorded within sales and marketing expenses. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Other Recently Adopted Pronouncements: In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory." For public entities, ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this guidance in the first quarter of fiscal 2018. The adoption of this guidance did not have a material impact on its consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18 Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company adopted the provisions of ASU 2016-18 as of January 1, 2018. There was no material impact on the Company's consolidated financial statements resulting from the adoption of this guidance. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for annual and interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 amends the requirements in GAAP related to accounting for changes to stock-based compensation awards. The guidance in ASU 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance in the first quarter of fiscal 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. Revision of Prior Period Financial Statements During the fiscal year ended December 31, 2017, the Company identified and recorded certain immaterial errors that originated in fiscal years ended January 1, 2017 and January 3, 2016. These errors consisted primarily of errors in certain assumptions and calculations used in the determination of non-cash stock-based compensation primarily relating to the Employee Stock Purchase Plan ("ESPP"). The Company determined that the errors were not material to the previously issued financial statements and disclosures included in its Annual Report on Form 10-K for the year ended December 31, 2017 or for any quarterly periods included therein. For the three and six months ended July 1, 2018, the Company is presenting comparative fiscal 2017 quarterly information. The fiscal 2017 results for the three and six months ended July 2, 2017 have been revised to reflect the quarterly impact of the adjustments described above. The effect of the immaterial corrections on the Consolidated Statements of Operations for the three and six months ended July 2, 2017 is as follows:
The effect of the immaterial corrections on the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended July 2, 2017 is as follows:
The effect of the immaterial corrections on the Consolidated Statements of Cash Flows for the six months ended July 2, 2017 is as follows:
The effect of the immaterial corrections on the disclosures related to stock-based compensation for the three and six months ended July 2, 2017 is as follows:
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REVENUE |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | REVENUE The following table presents the Company's revenue disaggregated by revenue source, segment and geographical locations:
(1) Non-product revenues primarily include royalty, NRE, and patent revenues.
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BALANCE SHEET COMPONENTS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Accounts Receivable, Net
Inventories
Other Current Assets
Other Long-term Assets
Other Current Liabilities
Other Long-term Liabilities
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INTANGIBLE ASSETS |
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Gross (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS | INTANGIBLE ASSETS The following table presents details of the Company's intangible assets:
The below table presents details of the in-process research and development assets as of July 1, 2018:
During the three months ended July 1, 2018, there were no projects that had reached technological feasibility and were transferred to developed technology. During the six months ended July 1, 2018, three projects representing $89.5 million of the total capitalized in-process research and development ("IPR&D"), with estimated useful lives of 5 years, had reached technological feasibility and were transferred to developed technology. The following table summarizes the amortization expense by line item recorded in the Condensed Consolidated Statements of Operations:
The estimated future amortization expense related to developed technology and other intangible assets as of July 1, 2018 is as follows:
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INVESTMENT IN EQUITY METHOD INVESTMENTS |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN EQUITY METHOD INVESTMENTS | INVESTMENT IN EQUITY METHOD INVESTMENTS Privately-held equity investments in entities the Company does not control are accounted for under the equity method of accounting if the Company has an ownership interest of 20% or greater or if it has the ability to exercise significant influence over the operations of such companies. Enovix Corporation ("Enovix") During the fourth quarter of fiscal 2017, the Company determined that its investment in Enovix, which is accounted for as an equity method investment, had suffered an other-than temporary impairment primarily because Enovix had not achieved certain key planned product development milestones. Consequently, the Company recognized a charge of $51.2 million during the fourth quarter of fiscal 2017, reducing its carrying value to zero as of December 31, 2017. The Company held 41.1% of Enovix's outstanding voting shares as of July 1, 2018. Deca Technologies Inc. ("Deca") The Company held 52.5% of Deca's outstanding voting shares as of July 1, 2018 and December 31, 2017. The Company's investment in Deca is accounted for as an equity method investment. The below table presents the changes in carrying value of the equity method investment related to Deca.
The following table presents summarized aggregate financial information derived from the respective consolidated financial statements of Deca for the three and six month ended July 1, 2018, and of Deca and Enovix for the three and six months ended July 2, 2017.
The following table represents the assets and liabilities held by Deca as of July 1, 2018, and by Deca and Enovix as of December 31, 2017.
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FAIR VALUE MEASUREMENTS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets/Liabilities Measured at Fair Value on a Recurring Basis The following table presents the fair value hierarchy for the Company's financial assets and liabilities measured at fair value on a recurring basis as of July 1, 2018 and December 31, 2017:
The Company did not have any material assets or liabilities measured at fair value on a recurring basis using Level 3 inputs as of July 1, 2018 and December 31, 2017. There were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies during the three and six months ended July 1, 2018 and July 2, 2017 related to these securities. Valuation Techniques: There have been no changes to the valuation techniques used to measure the fair value of the Company's assets and liabilities. For a description of the valuation techniques, refer to Note 6 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain of the Company’s assets, including intangible assets, goodwill and cost-method investments, are measured at fair value on a nonrecurring basis if impairment is indicated. Fair Value of Long-Term Debt As of July 1, 2018, the carrying value of the Company's senior secured credit facility was $492.0 million (See Note 9). The carrying value of the Company's senior secured credit facility approximates its fair value since it bears an interest rate that is comparable to rates on similar credit facilities and is determined using Level 2 inputs. The Company's 2% 2020 Spansion Exchangeable Notes assumed as part of the Company's merger with Spansion Inc. ("Spansion"), which was completed on March 12, 2015 (the "Merger"), are traded in the secondary market for debt instruments and are categorized as a Level 2 liability. The principal and the estimated fair value of the principal of theses notes as of July 1, 2018 were $12.0 million and $37.2 million, respectively. See Note 9 for further details. The Company’s 4.5% 2022 Senior Exchangeable Notes are traded in the secondary market for debt instruments and the fair value is determined using Level 2 inputs. The principal and the estimated fair value of the principal of these notes as of July 1, 2018 were $287.5 million and $380.2 million, respectively. See Note 9 for further details. The Company's 2% 2023 Exchangeable Notes are traded in the secondary market and the fair value is determined using Level 2 inputs. The principal and the estimated fair value of the principal of these notes as of July 1, 2018 were $150.0 million and $156.6 million, respectively. See Note 9 for further details. |
RESTRUCTURING |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING | RESTRUCTURING Since 2016, the Company has launched certain long-term strategic corporate transformation initiatives which required restructuring activities to streamline internal processes and redeploy personnel and resources to target markets as discussed below: 2018 Restructuring Plan During the first quarter of fiscal 2018, the Company began implementation of a reduction in workforce (the "2018 Plan") which will result in elimination of approximately 75 positions across various functions. The restructuring costs of $1.6 million and $3.1 million during the three and six months ended July 1, 2018, respectively, consist of personnel costs. The Company anticipates that the remaining restructuring accrual balance of $0.8 million will be paid out in cash through fiscal 2018. 2017 Restructuring Plan In December 2017, the Company began implementation of a reduction in workforce (the "2017 Plan") which resulted in the elimination of approximately 80 positions worldwide across various functions. A restructuring credit of $0.1 million and a cost of $2.4 million for the three and six months ended July 1, 2018, respectively, consist of personnel costs. The Company anticipates that the remaining restructuring accrual balance of $30 thousand will be paid out in cash through fiscal 2018. 2016 Restructuring Plan In September 2016, the Company began the implementation of a reduction in workforce (the "2016 Plan") which resulted in the elimination of approximately 430 positions worldwide across various functions. A restructuring credit of $0.2 million was recorded for the three and six months ended July 1, 2018 related to the 2016 Plan. The restructuring cost related to the 2016 Plan during the three months ended July 2, 2017 consists of $0.4 million personnel cost and $0.5 million facilities-related expenses. The restructuring cost of $3.5 million recorded for the six months ended July 2, 2017 consists of personnel costs of $1.9 million, and other charges related to the write-off of certain licenses and facilities-related expenses of $1.6 million. The Company paid out the remaining restructuring cost of $0.5 million, which consisted of personnel costs, by July 1, 2018. Spansion Integration-Related Restructuring Plan ("Spansion Integration Plan") In March 2015, the Company implemented cost reduction and restructuring activities in connection with the Merger. No restructuring charges were recorded for the three and six months ended July 1, 2018 or July 2, 2017, related to the Spansion Integration Plan. The Company anticipates that the remaining restructuring accrual balance of $9.9 million, which relates to an excess lease obligation, will be paid out in cash over the remaining lease term through fiscal 2026. Summary of Restructuring Costs The following table summarizes the restructuring charges recorded in the Consolidated Statements of Operations:
The following table summarizes the restructuring costs by line item recorded in the Condensed Consolidated Statements of Operations:
Roll-Forward of the Restructuring Reserves Restructuring activity under the Company's restructuring plans was as follows:
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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION | EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION The following table summarizes the stock-based compensation expense by line item recorded in the Condensed Consolidated Statements of Operations:
As of July 1, 2018 and December 31, 2017, stock-based compensation capitalized in inventory totaled $3.9 million and $3.3 million, respectively. The following table summarizes the stock-based compensation expense by type of awards:
The following table summarizes the unrecognized stock-based compensation expense, by type of awards:
Equity Incentive Program As of July 1, 2018, approximately 38.4 million stock options, or 21.6 million RSUs and PSUs were available for grant as stock-based awards under the 2013 Stock Plan, the 2010 Equity Incentive Award Plan (formerly the Spansion 2010 Equity Incentive Award Plan) and the 2012 Incentive Award Plan (formerly the Ramtron Plan). As of July 1, 2018, there were 1.9 million shares of stock available for issuance under the ESPP plan. Stock Options The following table summarizes the Company's stock option activities:
No options were granted during the three or six months ended July 1, 2018. RSUs and PSUs The following table summarizes the Company's RSU and PSU activities:
2018 Long-Term Incentive Program During the first quarter of 2018, the Compensation Committee of the Company approved the issuance of service-based and performance-based restricted stock units under the Company's Long-Term Incentive Program ("LTIP") to certain employees. The milestones for the 2018 LTIP grants include service and performance conditions based on revenue growth and profit milestones over the next 3 years. A portion of the LTIP awards include a multiplier based on certain market conditions. |
DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Total debt is comprised of the following:
As of July 1, 2018, the Company was in compliance with all of the financial covenants under all of its debt facilities. Senior Secured Credit Facility: Revolving Credit Facility and Term Loan B On March 12, 2018, the Company amended its Amended and Restated Credit and Guaranty Agreement, which governs the Senior Secured Credit Facility. The amendment reduces the applicable margins on the Revolving Credit Facility and Term Loan B. After giving effect to the amendment, the Term Loan B bears interest, at the option of the Company, at the base rate plus an applicable margin of 1.25% or the Eurodollar rate plus an applicable margin of 2.25%; and the Revolving Credit Facility bears interest, at the option of the Company, at the base rate plus an applicable margin of either 0.75% or 1.00%, depending on the Company's secured leverage ratio, or the Eurodollar rate plus an applicable margin of 1.75% or 2.00%, depending on the Company's secured leverage ratio. The amendment removed the fixed charge coverage ratio financial covenants. In addition, for Term Loan B, the amendment removed the total leverage ratio covenant, changed the required amortization payments to 1% per annum, and waived the excess cash flow mandatory repayment for fiscal 2017. As of July 1, 2018, $504.0 million aggregate principal amount of loans, all of which related to Term Loan B, were outstanding under the senior secured credit facility. 2% 2020 Spansion Exchangeable Notes Pursuant to the Merger, Cypress assumed Spansion's 2% 2020 Spansion Exchangeable Notes (the "Spansion Notes") on March 12, 2015. They are fully and unconditionally guaranteed on a senior unsecured basis by the Company. The Spansion Notes will mature on September 1, 2020, unless earlier repurchased or converted, and bear interest of 2% per year payable semi-annually in arrears on March 1 and September 1. The Spansion Notes may be due and payable immediately in certain events of default. On March 7, 2018, the Company entered into a privately negotiated agreement to induce the extinguishment of $10 million out of the $22 million of Spansion Notes outstanding. The Company paid the holders of the Spansion Notes cash for the aggregate principal of $10 million and delivered 1.4 million shares of common stock for the conversion spread. The Company recorded $0.2 million in loss on extinguishment and a reduction in additional paid-in capital of $25.7 million towards the deemed repurchase of the equity component of the notes. The loss on extinguishment is recorded in "Interest Expense" in the Condensed Consolidated Statements of Operations. The Spansion Notes consisted of the following:
The following table summarizes the components of the total interest expenses on the Spansion Notes recognized during the three and six months ended July 1, 2018 and July 2, 2017:
4.5% 2022 Exchangeable Notes On June 23, 2016, the Company issued, at face value, $287.5 million of Senior Exchangeable Notes due in 2022 (the "2022 Notes") in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. The 2022 Notes are governed by an indenture, dated June 23, 2016, between the Company and U.S. Bank National Association, as Trustee. The 2022 Notes will mature on January 15, 2022, unless earlier repurchased or converted, and bear interest of 4.5% per year payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2017. The 2022 Notes may be due and payable immediately in certain events of default. The 2022 Notes consisted of the following:
The following table summarizes the components of the total interest expense related to the 2022 Notes recognized as expense:
Capped Calls In connection with the issuance of the 2022 Notes, the Company entered into capped call transactions with certain bank counterparties to reduce the risk of potential dilution of the Company’s common stock upon the exchange of the 2022 Notes. The capped call transactions have an initial strike price of approximately $13.49 and an initial cap price of approximately $15.27, in each case, subject to adjustment. The capped calls expire in January 2022. 2% 2023 Exchangeable Notes On November 6, 2017, the Company, issued at face value, $150.0 million of Senior Exchangeable Notes due in 2023 (the "2023 Notes") in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. The 2023 Notes are governed by an indenture, dated November 6, 2017, between the Company and U.S. Bank National Association, as Trustee. The 2023 Notes will mature on February 1, 2023 unless earlier repurchased or converted, and bear interest of 2% per year payable semi-annually. The 2023 Notes consisted of the following:
The following table summarizes the component of the total interest expense related to the 2023 Notes recognized as an expense:
Capital Lease Commitments In June 2018, the Company entered into a capital lease agreement for equipment. The lease has a term of 5 years through June 2023. As of July 1, 2018, the Company recorded a capital lease obligation of approximately $2.2 million. Future Debt Payments The future scheduled principal payments for the outstanding Company's debt as of July 1, 2018, were as follows:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Company leases certain facilities and equipment under non-cancelable operating lease agreements that expire at various dates through fiscal 2022 and thereafter. Some leases include renewal options, which would permit extensions of the expiration dates at rates approximating fair market rental values at the time of the extension. As of July 1, 2018, future minimum lease payments under non-cancelable operating leases were as follows:
Restructuring accrual balances related to operating facility leases were $9.9 million and $11.5 million as of July 1, 2018 and December 31, 2017, respectively. Product Warranties The Company generally warrants its products against defects in materials and workmanship for a period of one year, and that product warranty is generally limited to a refund of the original purchase price of the product or a replacement part. The Company estimates its warranty costs based upon its historical warranty claim experience. Warranty returns are recorded as an allowance for sales returns. The allowance for sales returns is reviewed quarterly to verify that it reflects the remaining obligations based on the anticipated returns over the balance of the obligation period. The following table presents the Company's warranty reserve activities:
Contractual Obligations The Company has entered into agreements with certain vendors that include "take or pay" terms. Take or pay terms obligate the Company to purchase a minimum required amount of materials or services or make specified payments in lieu of such purchase. The Company may not be able to consume minimum commitments under these take or pay terms, requiring payments to vendors, which may have a material adverse impact on the Company’s earnings. Litigation and Asserted Claims On August 15, 2016, a patent infringement lawsuit was filed by the California Institute of Technology ("Caltech") against the Company in the U.S. District Court for the Central District of California (Case No. 16-cv-03714). The other co-defendants are Apple Inc., Avago Technologies Limited, Broadcom Corporation, and Broadcom Limited. Caltech alleges that defendants infringe four patents. On July 12, 2017, the Court issued a claim construction order. Trial will likely not occur until at least the first quarter of 2019, and the Company will defend against the allegations accordingly. In addition, the Company is currently involved in various other legal proceedings, claims, and disputes arising in the ordinary course of business, including intellectual property claims and other matters. For many legal matters, particularly those in early stages, the Company cannot reasonably estimate the possible loss (or range of loss), if any. The Company records an accrual for legal matters at the time or times it determines that a loss is both probable and reasonably estimable. Amounts accrued at July 1, 2018 were not material. Regarding matters for which no accrual has been made (including the potential for losses in excess of amounts accrued), the Company currently believes based on its own investigations, that any losses (or ranges of losses) that are reasonably possible and estimable will not, in the aggregate, have a material adverse effect on its financial position, results of operations, or cash flows. However, the ultimate outcome of legal proceedings involves judgments, estimates, and inherent uncertainties and cannot be predicted with certainty. Should the ultimate outcome of any legal matter be unfavorable, the Company's business, financial condition, results of operations, or cash flows could be materially and adversely affected. The Company may also incur substantial legal fees, which are expensed as incurred, in defending against legal claims. Indemnification Obligations The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify other parties to such agreements with respect to certain matters. Typically, these obligations arise in the context of contracts that the Company has entered into, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants or terms and conditions related to such matters as the sale and/or delivery of its products, title to assets sold, certain intellectual property claims, defective products, specified environmental matters and certain income taxes. With respect to the sale of a manufacturing facility or subsidiary business, such indemnification may also cover tax matters and the Company's management of the facility or business prior to the sale. In the foregoing circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party’s claims and vigorously defend itself and the other party against related third-party claims. Further, the Company's obligations under these agreements may be limited in terms of time, amount or the scope of its responsibility and in some instances, the Company may have recourse against third parties for certain payments made under these agreements. It is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of the Company's obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments the Company has made under these agreements have not had a material effect on the Company’s business, financial condition or results of operations. Management believes that if the Company were to incur a loss in any of these matters, such loss would not have a material effect on its business, financial condition, cash flows or results of operations, although there can be no assurance of this. As of July 1, 2018, the Company had no reason to believe a loss exceeding amounts already recognized would be incurred. |
FOREIGN CURRENCY AND INTEREST RATE DERIVATIVES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FOREIGN CURRENCY AND INTEREST RATE DERIVATIVES | FOREIGN CURRENCY AND INTEREST RATE DERIVATIVES The Company enters into multiple foreign exchange forward contracts to hedge certain foreign currency risk resulting from fluctuations in Japanese yen (¥) and Euro (€) exchange rates. In addition, the Company entered into fixed-for-interest rate forward swap agreements and has designated these swaps as hedging instruments. The Company does not enter into derivative securities for speculative purposes. The Company’s hedging policy is designed to mitigate the impact of foreign currency exchange rate fluctuations on its operating results. Some foreign currency forward contracts are considered to be economic hedges that were not designated as hedging instruments while others were designated as cash flow hedges. Whether designated or undesignated as cash flow hedges or not, these forward contracts protect the Company against the variability of forecasted foreign currency cash flows resulting from revenues, expenses and net asset or liability positions designated in currencies other than the U.S. dollar. The maximum original duration of any contract allowable under the Company’s hedging policy is thirteen months for foreign currency hedging contracts. Cash Flow Hedges The Company enters into cash flow hedges to protect non-functional currency inventory purchases and certain other operational expenses, in addition to its on going program of cash flow hedges to protect its non-functional currency revenues against variability in cash flows due to foreign currency fluctuations. The Company’s foreign currency forward contracts that were designated as cash flow hedges have maturities between three and thirteen months. All hedging relationships are formally documented, and the hedges are designed to offset changes to future cash flows on hedged transactions at the inception of the hedge. The Company recognizes derivative instruments from hedging activities as either assets or liabilities on the balance sheet and measures them at fair value on a monthly basis. The Company records changes in the intrinsic value of its cash flow hedges in accumulated other comprehensive income on the Condensed Consolidated Balance Sheets, until the forecasted transaction occurs. Interest charges or "forward points" on the forward contracts are excluded from the assessment of hedge effectiveness and are recorded in interest and other income, net in the Condensed Consolidated Statements of Operations. In the second quarter of 2018, the Company entered into cash flow hedges, in which interest charges or "forward points" on the forward contracts are included in the assessment of hedge effectiveness, and are recorded in the underlying hedged items in the Condensed Consolidated Statements of Operations. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to revenue or costs, depending on the risk hedged. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company will reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive income to interest and other income, net in its Condensed Consolidated Statements of Operations at that time. For the six months ended July 1, 2018, the Company had a loss of $0.5 million, which was related to cash flow hedges, recorded in other comprehensive income. The Company evaluates hedge effectiveness at the inception of the hedge prospectively as well as retrospectively and records any ineffective portion of the hedge in interest and other income, net in its Condensed Consolidated Statements of Operations. Designated Hedges Total notional amounts of net outstanding contracts were as summarized below:
Non-designated hedges Total notional amounts of net outstanding contracts were as summarized below:
In December 2017, the Company entered into fixed-for-floating interest rate forward swap agreements with two counterparties to swap variable interest payments on certain debt for fixed interest payments; these agreements will expire in July 2021. The objective of the swap was to effectively fix the interest rate at current levels without having to refinance the outstanding term loan, thereby avoiding the incurrence of transaction costs. The interest rate on the variable debt was fixed in December 2017 and became effective in April 2018. On January 3, 2018, the Company evaluated the hedge effectiveness of the interest rate swaps and designated these swaps as hedging instruments. Upon designation as cash flow hedge instruments, future changes in fair value of these swaps are recognized in accumulated other comprehensive income. For the six months ended July 1, 2018, the Company had a gain of $4.7 million, which was related to interest rate swaps, recorded in other comprehensive income. The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2018 was not material. The gross fair values of derivative instruments on the Condensed Consolidated Balance Sheets as of July 1, 2018 and December 31, 2017 were as follows:
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NET INCOME (LOSS) PER SHARE |
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NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net income (loss) per share:
For the three months ended July 1, 2018 and July 2, 2017, approximately 2.9 million and 27.6 million weighted average potentially dilutive shares underlying outstanding stock-based awards and convertible debt, respectively, were excluded in the computation of diluted net loss per share because their effect would have been anti-dilutive. For the six months ended July 1, 2018 and July 2, 2017, approximately 2.6 million and 27.9 million weighted average potentially dilutive shares underlying outstanding stock-based awards and convertible debt, respectively, were excluded in the computation of diluted net loss per share because their effect would have been anti-dilutive. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's income tax expense was $5.2 million and $4.5 million for the three months ended July 1, 2018 and July 2, 2017, respectively. The Company's income tax expense was $10.2 million and $9.4 million for the six months ended July 1, 2018, and July 2, 2017, respectively. The income tax expenses for the three months ended July 1, 2018 and July 2, 2017 were primarily attributable to non-U.S. taxes associated with the Company's non-U.S. operations. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Act") was signed into law, making significant changes to the U.S. Internal Revenue Code effective for tax years beginning after December 31, 2017. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21%, the repeal of corporate alternative minimum tax, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. For the six months ended July 1, 2018, the Company did not obtain any additional information affecting the provisional amount initially recorded at December 31, 2017. Additional work is still necessary for a more detailed analysis of the Company’s historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 in which the analysis is complete. The Company intends to continue maintaining a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, considering the Company's current assessment of the probability of maintaining profitability, there is a reasonable possibility that, within the next 12 months, sufficient positive evidence may become available to reach a conclusion that a significant portion, or all, of the valuation allowance will no longer be needed. As such, the Company may release a significant portion, or all, of its valuation allowance against its deferred tax assets within the next 12 months. This release, if any, would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period such release is recorded. Unrecognized Tax Benefits As of July 1, 2018, and December 31, 2017, the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate totaled $30.2 million and $28.9 million, respectively. Management believes events that could occur in the next 12 months and cause a change in unrecognized tax benefits include, but are not limited to, the following: •completion of examinations by, and resolution of agreements with, U.S. or foreign taxing authorities; and •expiration of statutes of limitations applicable to the Company's tax returns. The calculation of unrecognized tax benefits involves uncertainties in the application of complex global tax regulations. Management regularly assesses the Company’s tax positions in light of legislative, bilateral tax treaty, regulatory, and judicial developments in the countries in which the Company does business. The Company believes it is reasonably possible that it may recognize up to approximately $2.5 million of its existing unrecognized tax benefits within the next 12 months as a result of the events listed above. Classification of Interest and Penalties The Company classifies interest and penalties as components of the income tax provision in the Condensed Consolidated Statements of Operations. As of July 1, 2018 and December 31, 2017, the amounts of accrued interest and penalties totaled $12.0 million and $11.0 million, respectively. |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION | SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION Segment Information The Company designs, develops, manufactures and markets a broad range of solutions for embedded systems, from automotive, industrial, consumer electronics, and medical products. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker ("CODM") is considered to be the Chief Executive Officer. Income (Loss) Before Income Taxes
The Company does not allocate goodwill and intangible assets impairment charges, impact of purchase accounting, IPR&D impairment, severance and retention costs, acquisition-related costs, stock-based compensation, interest income and other, and interest expense to its segments. In addition, the Company does not allocate assets to its segments. The Company excludes these items consistent with the manner it internally evaluates its results of operations. Geographical Information Property, plant and equipment, net, by geographic locations were as follows:
The Company tracks its assets by physical location. Although management reviews asset information on a corporate level and allocates depreciation expense by segment, the Company’s CODM does not review asset information on a segment basis. Customer Information Outstanding accounts receivable from two of the Company's distributors accounted for 23.8% and 12.3% of its consolidated accounts receivable as of July 1, 2018. Outstanding accounts receivable from one of the Company's distributors accounted for 28.0% of its consolidated accounts receivable as of December 31, 2017. Revenue earned through two of the Company's distributors accounted for 18.9% and 12.7% of its consolidated revenues for the three months ended July 1, 2018. Revenue earned through two of the Company's distributors accounted for 19.1% and 13.1% of its consolidated revenues for the six months ended July 1, 2018. No other distributors or customers accounted for 10% or more of the Company's consolidated revenues for the three months or six months ended July 1, 2018. Revenue earned through one of the Company’s distributors accounted for 16.4% of its consolidated revenues for the three months ended July 2, 2017. Revenue earned through one of the Company’s distributors accounted for 16.7% of its consolidated revenues for the six months ended July 2, 2017. No other distributors or customers accounted for 10% or more of the Company's consolidated revenues for the three months or six months ended July 2, 2017. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):
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RELATED PARTY TRANSACTIONS |
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RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In the ordinary course of business, the Company purchases from, or sells to (a) entities for which one of the Company's directors or executive officers serves as a director or (b) entities that are otherwise affiliated with one of the Company's directors or executive officers (collectively, "related parties"). For the indicated periods, the following table presents information on the Company's transactions with such entities occurring at a time when the other entity was a related party of the Company
As of July 1, 2018, and July 2, 2017, balances receivable from related parties totaled $2.4 million and $4.6 million, respectively, and balances payable to related parties totaled $6.5 million and $1.2 million, respectively. |
EQUITY |
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Equity [Abstract] | |
EQUITY | EQUITY Stock Buyback Program On October 20, 2015, the Company's Board of Directors (the "Board") authorized a $450 million stock buyback program. The program allows the Company to purchase its common stock or enter into equity derivative transactions related to its common stock. The timing and actual amount expended with the authorized funds will depend on a variety of factors including the market price of the common stock, regulatory, legal, and contractual requirements, other uses of cash, and other market factors. The program does not obligate us to repurchase any particular amount of common stock and may be modified or suspended at any time at the discretion of the Board. During fiscal quarter ended July 1, 2018, the Company repurchased 610 thousand shares for an aggregate consideration of $10.0 million. As of July 1, 2018, the total remaining dollar amount of shares that may be repurchased under the program was approximately $200.8 million. Dividend On May 11, 2018, the Company's Board of Directors approved a cash dividend of $0.11 per share payable to holders of record of its common stock at the close of the business day on June 28, 2018. This cash dividend was paid on July 19, 2018 and totaled approximately $39.4 million which was accrued for and shown as "Dividends payable" on the Condensed Consolidated Balance Sheets as of July 1, 2018. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Fiscal Years | Fiscal Years Cypress Semiconductor Corporation (together with its consolidated subsidiaries, "Cypress" or the "Company") reports on a fiscal-year basis. The Company ends its quarters on the Sunday closest to the end of the applicable calendar quarter, except in a 53-week fiscal year, in which case the additional week falls into the fourth quarter of that fiscal year. |
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Basis of Presentation | Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Cypress Semiconductor Corporation and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments of a normal, recurring nature, which are necessary to state fairly the financial information included therein. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Cypress' Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. |
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Recent Accounting Pronouncements Not Yet Adopted And Recently Adopted Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-02, "Leases, (Topic 842)," which replaces most current lease guidance when it becomes effective. This standard update intends to increase the transparency and improve comparability by requiring entities to recognize assets and liabilities on the balance sheet for all leases, with certain exceptions. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Operations. The new guidance will be effective for the Company starting in the first quarter of fiscal 2019. Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures. In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The amendments in ASU 2017-12 are intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The guidance in ASU 2017-12 is effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact this guidance will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in ASU 2018-02 are intended to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance in ASU 2018-02 is effective for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact this guidance will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-03, "Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The corrections and improvements are effective for the Company for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years beginning after June 15, 2018. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements Adoption of ASU No. 2014-09, Revenue from Contracts with Customers: In May 2014, the FASB issued an ASU on revenue from contracts with customers, ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." This standard update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance is effective for annual reporting periods beginning after December 15, 2017 and for interim periods within those fiscal years. Collectively, we refer to ASU No. 2014-09, its related amendments, and Subtopic 340-40 as "Topic 606." On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to all contracts that are not completed contracts at the date of initial application (i.e., January 1, 2018). Results for reporting periods after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There was no impact on the opening accumulated deficit as of January 1, 2018 due to the adoption of Topic 606. We reclassified the sales return reserve to current liabilities presented as "Price adjustment and other revenue reserves" from the allowance for accounts receivable due to the adoption of Topic 606. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Sales of products with alternative use account for the majority of our revenue and are recognized at a point in time, the timing of such recognition remained the same under Topic 606. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer and deposited with the relevant government authority, are excluded from revenue. The Company's revenue arrangements do not contain significant financing components. Revenue is recognized over a period of time when it is assessed that performance obligations are satisfied over a period rather than at a point in time. When any of the following criteria is fulfilled, revenue is recognized over a period of time:
We then select an appropriate method for measuring progress toward complete satisfaction of the performance obligation, usually costs incurred to date relative to the total expected costs to the satisfaction of that performance obligation. Sales to certain distributors are made under arrangements that provide the distributors with price adjustments, price protection, stock rotation and other allowances under certain circumstances. These adjustments and allowances are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized. We believe that there will not be significant changes to our estimates of variable consideration. Our non-recurring engineering ("NRE") contracts with customers may include multiple performance obligations. For NRE arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine the standalone selling price of intellectual property licenses based on the residual approach, and service based on cost plus a reasonable margin. We recognize revenue in the amount to which we have a right to invoice, if the right to consideration from the customer is in an amount that corresponds reasonably with the value to the customer of the entity’s performance completed to date. We license or sell our rights to use portions of our intellectual property ("IP") portfolio, which includes certain patent rights useful in the manufacture and sales of certain products. IP revenue recognition is dependent on the nature and terms of each agreement. We recognize IP revenue upon delivery of the IP if we have no substantive future obligation to perform under the arrangement. We defer recognition of IP revenue where future performance obligations are required to earn the revenue or the revenue is not guaranteed. Sales-based or usage-based royalties from license of our IP are recognized at the later of the period the sales or usages occur or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated. If a customer pays consideration, or Cypress has a right to an amount of consideration that is unconditional before we transfer a good or service to the customer, those amounts are classified as deferred income/ advances received from customers which are included in other current liabilities or other long-term liabilities when the payment is made or it is due, whichever is earlier. If the arrangement includes variable contingent consideration, the Company recognizes revenue over time if management can reasonably measure its progress or is capable of providing reliable information as required to apply an appropriate method of measuring progress. Practical Expedients and Elections Sales commissions are owed and are recorded at the time of sell-through of our products to end customers. These costs are recorded within sales and marketing expenses. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. Other Recently Adopted Pronouncements: In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory." For public entities, ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this guidance in the first quarter of fiscal 2018. The adoption of this guidance did not have a material impact on its consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18 Restricted Cash, which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company adopted the provisions of ASU 2016-18 as of January 1, 2018. There was no material impact on the Company's consolidated financial statements resulting from the adoption of this guidance. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for annual and interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 amends the requirements in GAAP related to accounting for changes to stock-based compensation awards. The guidance in ASU 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance in the first quarter of fiscal 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prior Period Adjustments | The Consolidated Statements of Operations for the prior comparative periods have been reclassified to conform to the current period presentation as follow:
* See "Revision of prior period financial statements" below. |
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Schedule of Immaterial Corrections | The effect of the immaterial corrections on the Consolidated Statements of Operations for the three and six months ended July 2, 2017 is as follows:
The effect of the immaterial corrections on the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended July 2, 2017 is as follows:
The effect of the immaterial corrections on the Consolidated Statements of Cash Flows for the six months ended July 2, 2017 is as follows:
The effect of the immaterial corrections on the disclosures related to stock-based compensation for the three and six months ended July 2, 2017 is as follows:
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REVENUE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregated Revenue | The following table presents the Company's revenue disaggregated by revenue source, segment and geographical locations:
(1) Non-product revenues primarily include royalty, NRE, and patent revenues.
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BALANCE SHEET COMPONENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | Accounts Receivable, Net
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Inventories | Inventories
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Other Current Assets | Other Current Assets
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Other Long-term Assets | Other Long-term Assets
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Other Current Liabilities | Other Current Liabilities
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Other Long-term Liabilities | Other Long-term Liabilities
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INTANGIBLE ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Gross (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Intangible Assets | The following table presents details of the Company's intangible assets:
The below table presents details of the in-process research and development assets as of July 1, 2018:
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Amortization Expense | The following table summarizes the amortization expense by line item recorded in the Condensed Consolidated Statements of Operations:
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Estimated Future Amortization Expense Related to Developed Technology and Other Intangible Assets | The estimated future amortization expense related to developed technology and other intangible assets as of July 1, 2018 is as follows:
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INVESTMENT IN EQUITY METHOD INVESTMENTS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Gain Related to Investment | The below table presents the changes in carrying value of the equity method investment related to Deca.
The following table presents summarized aggregate financial information derived from the respective consolidated financial statements of Deca for the three and six month ended July 1, 2018, and of Deca and Enovix for the three and six months ended July 2, 2017.
The following table represents the assets and liabilities held by Deca as of July 1, 2018, and by Deca and Enovix as of December 31, 2017.
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value | The following table presents the fair value hierarchy for the Company's financial assets and liabilities measured at fair value on a recurring basis as of July 1, 2018 and December 31, 2017:
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RESTRUCTURING (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Costs | The following table summarizes the restructuring charges recorded in the Consolidated Statements of Operations:
The following table summarizes the restructuring costs by line item recorded in the Condensed Consolidated Statements of Operations:
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Schedule of Restructuring Reserve by Type of Cost | Restructuring activity under the Company's restructuring plans was as follows:
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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes the stock-based compensation expense by line item recorded in the Condensed Consolidated Statements of Operations:
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Schedule of Stock-Based Compensation Expense Award Type | The following table summarizes the stock-based compensation expense by type of awards:
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Schedule of Unrecognized Stock-Based Compensation Balance, Net by Award Type | The following table summarizes the unrecognized stock-based compensation expense, by type of awards:
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Schedule of Stock Option Activities | The following table summarizes the Company's stock option activities:
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Schedule of Restricted Stock Unit and Restricted Stock Award Activities | The following table summarizes the Company's RSU and PSU activities:
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DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Total debt is comprised of the following:
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Schedule of Long-term Debt Instruments | The 2022 Notes consisted of the following:
The following table summarizes the components of the total interest expense related to the 2022 Notes recognized as expense:
The 2023 Notes consisted of the following:
The following table summarizes the component of the total interest expense related to the 2023 Notes recognized as an expense:
The Spansion Notes consisted of the following:
The following table summarizes the components of the total interest expenses on the Spansion Notes recognized during the three and six months ended July 1, 2018 and July 2, 2017:
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Schedule of Future Debt Payments | The future scheduled principal payments for the outstanding Company's debt as of July 1, 2018, were as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments Under Non-Cancelable Operating Leases | As of July 1, 2018, future minimum lease payments under non-cancelable operating leases were as follows:
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Schedule of Warranty Reserve Activities | The following table presents the Company's warranty reserve activities:
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FOREIGN CURRENCY AND INTEREST RATE DERIVATIVES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | Designated Hedges Total notional amounts of net outstanding contracts were as summarized below:
Non-designated hedges Total notional amounts of net outstanding contracts were as summarized below:
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Gross Fair Values of Derivative Instruments on Condensed Consolidated Balance Sheets | The gross fair values of derivative instruments on the Condensed Consolidated Balance Sheets as of July 1, 2018 and December 31, 2017 were as follows:
|
NET INCOME (LOSS) PER SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Income (Loss) Per Share | The following table sets forth the computation of basic and diluted net income (loss) per share:
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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (Loss) before Income Taxes | Income (Loss) Before Income Taxes
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Property, Plant and Equipment, Net, by Geographic Locations | Property, plant and equipment, net, by geographic locations were as follows:
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):
|
RELATED PARTY TRANSACTIONS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | For the indicated periods, the following table presents information on the Company's transactions with such entities occurring at a time when the other entity was a related party of the Company
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revised Consolidated Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||
Net loss | $ 27,794 | $ (16,854) | $ 36,884 | $ (59,789) |
Comprehensive loss | 28,039 | (15,873) | 41,063 | (54,315) |
Comprehensive loss attributable for Cypress | $ 27,927 | (15,939) | $ 40,963 | (54,445) |
As previously reported | ||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||
Net loss | (22,838) | (68,556) | ||
Comprehensive loss | (21,857) | (63,082) | ||
Comprehensive loss attributable for Cypress | (21,923) | (63,212) | ||
Adjustments | ||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||
Net loss | 5,984 | 8,767 | ||
Comprehensive loss | 5,984 | 8,767 | ||
Comprehensive loss attributable for Cypress | $ 5,984 | $ 8,767 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revised Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||
Net (loss) income | $ 27,794 | $ (16,854) | $ 36,884 | $ (59,789) |
Stock-based compensation expense | $ 33,908 | 24,350 | 52,366 | 47,504 |
Net cash provided by operating activities | $ 142,412 | 58,168 | ||
As previously reported | ||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||
Net (loss) income | (22,838) | (68,556) | ||
Stock-based compensation expense | 30,334 | 56,271 | ||
Net cash provided by operating activities | 58,168 | |||
Adjustments | ||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||
Net (loss) income | 5,984 | 8,767 | ||
Stock-based compensation expense | $ (5,984) | (8,767) | ||
Net cash provided by operating activities | $ 0 |
BALANCE SHEET COMPONENTS - Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable, gross | $ 405,510 | $ 301,465 |
Allowance for doubtful accounts receivable and sales returns | (986) | (5,474) |
Total accounts receivable, net | $ 404,524 | $ 295,991 |
BALANCE SHEET COMPONENTS - Inventories (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 14,166 | $ 15,635 |
Work-in-process | 207,665 | 176,427 |
Finished goods | 64,930 | 80,065 |
Total inventories | $ 286,761 | $ 272,127 |
BALANCE SHEET COMPONENTS - Other Current Assets (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid tooling - current | $ 23,474 | $ 21,132 |
Advances to suppliers | 20,176 | 15,968 |
Prepaid royalty and licenses | 17,964 | 16,630 |
Derivative assets | 1,775 | 1,197 |
Value added tax receivable | 11,872 | 11,412 |
Prepaid expenses | 18,435 | 17,737 |
Withholding tax receivable and tax advance | 5,005 | 5,790 |
Other current assets | 14,503 | 13,771 |
Total other current assets | $ 113,204 | $ 103,637 |
BALANCE SHEET COMPONENTS - Other Long-Term Assets (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Employee deferred compensation plan | $ 46,644 | $ 49,495 |
Investment in cost method equity securities | 0 | 17,017 |
Deferred tax assets | 3,720 | 4,293 |
Long-term licenses | 5,706 | 8,654 |
Advance to suppliers | 4,798 | 11,315 |
Deposit - non-current | 9,850 | 9,830 |
Pension - non-current | 7,696 | 8,026 |
Derivatives assets - non-current | 4,209 | 607 |
Prepaid tooling and other non-current assets | 51,734 | 37,802 |
Total other long-term assets | $ 134,357 | $ 147,039 |
BALANCE SHEET COMPONENTS - Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Employee deferred compensation plan | $ 48,097 | $ 50,629 |
Restructuring accrual - current portion (See Note 7) | 2,923 | 9,580 |
Derivative liability | 1,558 | 2,033 |
Accrued expenses | 50,746 | 47,789 |
Accrued interest | 8,207 | 8,094 |
Other current liabilities | 18,589 | 25,360 |
Total other current liabilities | $ 130,120 | $ 143,485 |
BALANCE SHEET COMPONENTS - Other Long-Term Liabilities (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Long-term pension and other employee related liabilities | $ 20,828 | $ 16,779 |
Restructuring accrual - non-current portion (See Note 7) | 7,844 | 8,596 |
Asset retirement obligation | 5,814 | 5,693 |
Other long-term liabilities | 3,889 | 4,374 |
Total other long-term liabilities | $ 38,375 | $ 35,442 |
INTANGIBLE ASSETS - Total Intangible Assets (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 1,216,275 | $ 1,216,275 |
Accumulated Amortization | (609,138) | (501,155) |
Net | 607,137 | 715,120 |
Total Developed Technology and Other Intangible Assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 1,182,249 | 1,092,708 |
Accumulated Amortization | (609,138) | (501,155) |
Net | 573,111 | 591,553 |
Acquisition-related intangible assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 1,162,365 | 1,072,824 |
Accumulated Amortization | (595,789) | (490,327) |
Net | 566,576 | 582,497 |
Non-acquisition related intangible assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 19,884 | 19,884 |
Accumulated Amortization | (13,349) | (10,828) |
Net | 6,535 | 9,056 |
In-process research and development | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 34,026 | 123,567 |
Net | $ 34,026 | $ 123,567 |
INTANGIBLE ASSETS - Intangible Assets Rollforward (Details) $ in Thousands |
6 Months Ended |
---|---|
Jul. 01, 2018
USD ($)
| |
Finite-lived Intangible Assets [Roll Forward] | |
Intangible assets, beginning balance | $ 715,120 |
Intangible assets, ending balance | 607,137 |
In-Process Research and Development | |
Finite-lived Intangible Assets [Roll Forward] | |
Intangible assets, beginning balance | 123,567 |
Technological feasibility achieved | (89,541) |
Intangible assets, ending balance | $ 34,026 |
INTANGIBLE ASSETS - Narrative (Details) - In-Process Research and Development $ in Millions |
6 Months Ended |
---|---|
Jul. 01, 2018
USD ($)
project
| |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Number of projects transferred | project | 3 |
Impairment charge | $ | $ 89.5 |
Estimated useful life | 5 years |
INTANGIBLE ASSETS - Summary of Amortization Expense by Line Item in Consolidated Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | $ 53,673 | $ 49,354 | $ 107,983 | $ 97,603 |
Cost of revenues | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | 48,102 | 44,270 | 96,204 | 87,437 |
Research and development | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | 1,261 | 0 | 2,521 | 0 |
Selling, general and administrative | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | $ 4,310 | $ 5,084 | $ 9,258 | $ 10,166 |
INTANGIBLE ASSETS - Estimated Future Amortization Expense Related to Developed Technology and Other Intangible Assets (Details) $ in Thousands |
Jul. 01, 2018
USD ($)
|
---|---|
Intangible Assets, Gross (Excluding Goodwill) [Abstract] | |
2018 (remaining six months) | $ 105,996 |
2019 | 205,726 |
2020 | 144,654 |
2021 | 49,982 |
2022 | 28,747 |
2023 and thereafter | 38,006 |
Total future amortization expense | $ 573,111 |
RESTRUCTURING - Schedule of Restructuring Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring costs | $ 1,239 | $ 898 | $ 5,335 | $ 3,470 |
Personnel costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring costs | 1,239 | 374 | 5,335 | 1,877 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring costs | $ 0 | $ 524 | $ 0 | $ 1,593 |
RESTRUCTURING - Schedule of Restructuring costs by Line Item in Statement of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 1,239 | $ 898 | $ 5,335 | $ 3,470 |
Cost of goods sold | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 1,589 | 0 | 3,476 | 231 |
Research and development | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 33 | 358 | 326 | 2,710 |
Selling, general and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ (383) | $ 540 | $ 1,533 | $ 529 |
EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) shares in Millions, $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jul. 01, 2018 |
Dec. 31, 2017 |
|
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation capitalized in inventories | $ 3.9 | $ 3.3 |
Stock options available for grant | 38.4 | |
Vesting period | 3 years | |
RSUs and PSUs | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock options available for grant | 21.6 | |
ESPP | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock options available for grant | 1.9 |
EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Restricted Stock Unit and Restricted Stock Award Activities (Details) - Service Based Restricted Stock Units and Awards - $ / shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jul. 01, 2018 |
Apr. 01, 2018 |
|
Shares | ||
Beginning balance (in shares) | 13,913 | 11,976 |
Granted (in shares) | 432 | 5,310 |
Released (in shares) | (1,022) | (2,707) |
Forfeited (in shares) | (324) | (666) |
Ending balance (in shares) | 12,999 | 13,913 |
Weighted- Average Grant Date Fair Value Per Share | ||
Beginning Balance (in usd per share) | $ 13.92 | $ 12.44 |
Granted (in usd per share) | 16.52 | 16.55 |
Released (in usd per share) | 12.99 | 12.75 |
Forfeited (in usd per share) | 13.12 | 12.85 |
Ending Balance (in usd per share) | $ 14.03 | $ 13.92 |
DEBT - Schedule of 2.00% 2020 Spansion Exchangeable Notes (Details) - 2% 2020 Spansion Exchangeable Notes - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
Dec. 31, 2017 |
Mar. 12, 2015 |
|
Components of the Total Interest Expense | ||||||
Contractual interest expense at 2% per annum | $ 61 | $ 742 | $ 121 | $ 1,492 | ||
Accretion of debt discount | 82 | 935 | 164 | 1,848 | ||
Total | $ 143 | $ 1,677 | $ 285 | $ 3,340 | ||
Interest rate (percent) | 2.00% | 2.00% | 2.00% | |||
Equity component | ||||||
Debt Instrument [Line Items] | ||||||
Net carrying amount | $ 22,971 | $ 22,971 | $ 42,130 | |||
Liability component | ||||||
Debt Instrument [Line Items] | ||||||
Net carrying amount | 11,274 | 11,274 | 20,375 | |||
Principal amount | 11,990 | 11,990 | 21,990 | |||
Less debt discount and debt issuance costs, net | $ (716) | $ (716) | $ (1,615) |
DEBT - Schedule of 4.50% 2022 Senior Exchangeable Notes (Details) - 4.5% 2022 Senior Exchangeable Notes - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
Dec. 31, 2017 |
Jun. 23, 2016 |
|
Debt Instrument [Line Items] | ||||||
Principal amount | $ 287,500,000.0 | |||||
Equity component | ||||||
Debt Instrument [Line Items] | ||||||
Net carrying amount | $ 47,686,000 | $ 47,686,000 | $ 47,686,000 | |||
Liability component | ||||||
Debt Instrument [Line Items] | ||||||
Net carrying amount | 251,695,000 | 251,695,000 | 246,636,000 | |||
Principal amount | 287,500,000 | 287,500,000 | 287,500,000 | |||
Less debt discount and debt issuance costs, net | (35,805,000) | (35,805,000) | $ (40,864,000) | |||
Convertible Senior Notes | ||||||
Components of the Total Interest Expense | ||||||
Contractual interest expense | 3,234,000 | $ 3,271,000 | 6,469,000 | $ 6,540,000 | ||
Amortization of debt issuance costs | 320,000 | 320,000 | 641,000 | 639,000 | ||
Accretion of debt discount | 2,209,000 | 2,202,000 | 4,418,000 | 4,403,000 | ||
Total | $ 5,763,000 | $ 5,793,000 | $ 11,528,000 | $ 11,582,000 |
DEBT - Schedule of 2.00% 2023 Exchangeable Notes (Details) - 2% 2023 Exchangeable Notes - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
Dec. 31, 2017 |
Nov. 06, 2017 |
|
Debt Instrument [Line Items] | ||||||
Principal amount | $ 150,000,000.0 | |||||
Components of the Total Interest Expense | ||||||
Interest rate (percent) | 2.00% | 2.00% | 2.00% | |||
Equity component | ||||||
Debt Instrument [Line Items] | ||||||
Net carrying amount | $ 15,028,000 | $ 15,028,000 | $ 15,028,000 | |||
Liability component | ||||||
Debt Instrument [Line Items] | ||||||
Net carrying amount | 133,237,000 | 133,237,000 | 131,422,000 | |||
Principal amount | 150,000,000 | 150,000,000 | 150,000,000 | |||
Less debt discount and debt issuance costs, net | $ (16,763,000) | $ (16,763,000) | $ (18,578,000) | |||
Convertible Senior Notes | ||||||
Components of the Total Interest Expense | ||||||
Interest rate (percent) | 2.00% | 2.00% | ||||
Contractual interest expense at 2% per annum | $ 748,000 | $ 0 | $ 1,496,000 | $ 0 | ||
Amortization of debt issuance costs | 175,000 | 0 | 350,000 | 0 | ||
Accretion of debt discount | 735,000 | 0 | 1,470,000 | 0 | ||
Total | $ 1,658,000 | $ 0 | $ 3,316,000 | $ 0 |
DEBT - Capital Lease Commitments (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 01, 2018 |
|
Debt Disclosure [Abstract] | ||
Capital lease agreement, terms (in years) | 5 years | |
Capital lease obligations | $ 2.2 |
DEBT - Scheduled Future Debt Payments (Details) $ in Thousands |
Jul. 01, 2018
USD ($)
|
---|---|
Fiscal Year | |
2018 (remaining six months) | $ 2,726 |
2019 | 5,467 |
2020 | 17,476 |
2021 | 491,663 |
2022 and after | 438,221 |
Total | $ 955,553 |
COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Aug. 15, 2016
Patent
|
Jul. 01, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Commitments And Contingencies [Line Items] | |||
Restructuring reserve | $ 10,767 | $ 18,179 | |
Product warranty period against material and workmanship defects in years | 1 year | ||
Case No.16-cv-03714 | Pending Litigation | |||
Commitments And Contingencies [Line Items] | |||
Number of patents allegedly infringed | Patent | 4 | ||
Operating Facility Leases | |||
Commitments And Contingencies [Line Items] | |||
Restructuring reserve | $ 9,900 | $ 11,500 |
COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments Under Non-Cancelable Operating Leases (Details) $ in Thousands |
Jul. 01, 2018
USD ($)
|
---|---|
Fiscal Year | |
2018 (remaining six months) | $ 9,727 |
2019 | 14,364 |
2020 | 11,498 |
2021 | 6,641 |
2022 | 5,348 |
2023 and thereafter | 17,349 |
Total | $ 64,927 |
COMMITMENTS AND CONTINGENCIES - Schedule of Warranty Reserve Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||||
Beginning balance | $ 4,445 | $ 3,996 | ||
Settlements made | $ (1,029) | $ (310) | (2,978) | (629) |
Provisions | 1,029 | 631 | 2,978 | 950 |
Ending balance | $ 4,445 | $ 4,317 | $ 4,445 | $ 4,317 |
FOREIGN CURRENCY AND INTEREST RATE DERIVATIVES - Narrative (Details) $ in Millions |
1 Months Ended | 6 Months Ended |
---|---|---|
Dec. 31, 2017
counterparty
|
Jul. 01, 2018
USD ($)
|
|
Derivative [Line Items] | ||
Maximum original duration of any contract | 13 months | |
Number of counterparties | counterparty | 2 | |
Forward Contracts | ||
Derivative [Line Items] | ||
Net unrealized (loss) gain on cash flow hedges | $ (0.5) | |
Interest rate swap | ||
Derivative [Line Items] | ||
Net unrealized (loss) gain on cash flow hedges | $ 4.7 | |
Cash Flow Hedging | Minimum | ||
Derivative [Line Items] | ||
Derivative term of contract | 3 months | |
Cash Flow Hedging | Maximum | ||
Derivative [Line Items] | ||
Derivative term of contract | 13 months |
NET INCOME (LOSS) PER SHARE - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Cypress | $ 27,706 | $ (16,920) | $ 36,784 | $ (59,919) |
Weighted-average common shares (in shares) | 358,577 | 329,860 | 356,123 | 328,320 |
Weighted-average diluted shares (in shares) | 371,967 | 329,860 | 370,402 | 328,320 |
Net income (loss) per share—basic (in dollars per share) | $ 0.08 | $ (0.05) | $ 0.10 | $ (0.18) |
Net income (loss) per share—diluted (in dollars per share) | $ 0.07 | $ (0.05) | $ 0.10 | $ (0.18) |
NET INCOME (LOSS) PER SHARE - Narrative (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
RSUs and PSUs | Convertible Debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of diluted net income (loss) per share | 2.9 | 27.6 | 2.6 | 27.9 |
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 5,154 | $ 4,504 | $ 10,211 | $ 9,431 | |
Amount of unrecognized tax benefits that, if recognized, would affect effective tax rate | 30,200 | 30,200 | $ 28,900 | ||
Approximate amount of unrecognized tax benefits that, if recognized, would affect effective tax rate, in the next 12 months | 2,500 | 2,500 | |||
Accrued interest and penalties | $ 12,000 | $ 12,000 | $ 11,000 |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Property, Plant and Equipment, Net, by Geographic Locations (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total property, plant and equipment, net | $ 291,026 | $ 289,554 |
United States | ||
Segment Reporting Information [Line Items] | ||
Total property, plant and equipment, net | 183,262 | 186,824 |
Philippines | ||
Segment Reporting Information [Line Items] | ||
Total property, plant and equipment, net | 34,586 | 36,747 |
Thailand | ||
Segment Reporting Information [Line Items] | ||
Total property, plant and equipment, net | 35,167 | 29,151 |
Japan | ||
Segment Reporting Information [Line Items] | ||
Total property, plant and equipment, net | 10,540 | 12,211 |
Other | ||
Segment Reporting Information [Line Items] | ||
Total property, plant and equipment, net | $ 27,471 | $ 24,621 |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Narrative (Details) - Customer Concentration Risk |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jul. 01, 2018
customer
|
Jul. 02, 2017 |
Jul. 01, 2018
customer
distributor
|
Jul. 02, 2017
distributor
|
Dec. 31, 2017
distributor
|
|
Segment Reporting Information [Line Items] | |||||
Number of distributors | 1 | ||||
Number of end customers | customer | 2 | 2 | |||
Accounts Receivable | |||||
Segment Reporting Information [Line Items] | |||||
Number of distributors | 2 | 1 | |||
Distributor 1 | Accounts Receivable | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (percent) | 23.80% | 28.00% | |||
Distributor 1 | Sales Revenue, Net | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (percent) | 18.90% | 16.40% | 19.10% | 16.70% | |
Distributor 2 | Accounts Receivable | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (percent) | 12.30% | ||||
Distributor 2 | Sales Revenue, Net | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (percent) | 12.70% | 13.10% |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
|
Related Party Transactions [Abstract] | ||||
Total revenues | $ 8,679 | $ 0 | $ 11,955 | $ 495 |
Total purchases | $ 21,257 | $ 325 | 37,346 | 4,482 |
Total receivable balances with related parties | 2,400 | 4,600 | ||
Total payable balances with related parties | $ 6,500 | $ 1,200 |
EQUITY (Details) - USD ($) $ / shares in Units, shares in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
May 11, 2018 |
Jul. 01, 2018 |
Jul. 02, 2017 |
Jul. 01, 2018 |
Jul. 02, 2017 |
Dec. 31, 2017 |
Oct. 20, 2015 |
|
Equity [Abstract] | |||||||
Stock buyback program, authorized amount | $ 450,000,000 | ||||||
Stock repurchased (in shares) | 610 | ||||||
Stock repurchased, value | $ 10,000,000 | ||||||
Stock buyback program, remaining authorized repurchase amount | $ 200,800,000 | $ 200,800,000 | |||||
Cash dividend declared per share (in dollars per share) | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.22 | $ 0.22 | ||
Dividend payable | $ 39,449,000 | $ 39,449,000 | $ 38,741,000 |
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