10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 3, 2016

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             .

Commission file number: 1-10079  

CYPRESS SEMICONDUCTOR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-2885898
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

198 Champion Court, San Jose, California 95134

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (408) 943-2600

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	The NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ý  Yes    ¨  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨  Yes    ý  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months ( or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “larger accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ý    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    ¨  Yes    ý  No

The market value of voting and non-voting common stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock on June 28, 2015 as reported on the NASDAQ Global Select Market, was approximately $3.9 billion. Shares of common stock held by each executive officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded from the foregoing calculation in that such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 26, 2016, 314,558,619 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Definitive Proxy Statement for the registrant’s Annual Meeting of Stockholders to be filed pursuant to Regulation 14A for the year ended January 3, 2016 are incorporated by reference in Items 10 - 14 of Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

		Page
	PART I
Item 1	Business	4
Item 1A	Risk Factors	18
Item 1B	Unresolved Staff Comments	29
Item 2	Properties	29
Item 3	Legal Proceedings	29
Item 4	Mine Safety Disclosures	29
	PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6	Selected Financial Data	35
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 7A	Quantitative and Qualitative Disclosure About Market Risk	57
Item 8	Financial Statements and Supplementary Data	59
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	110
Item 9A	Controls and Procedures	110
Item 9B	Other Information	111
	PART III
Item 10	Directors, Executive Officers and Corporate Governance	112
Item 11	Executive Compensation	112
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	112
Item 13	Certain Relationships and Related Transactions and Director Independence	112
Item 14	Principal Accountant Fees and Services	113
	PART IV
Item 15	Exhibits and Financial Statement Schedule	114
Signatures and Power of Attorney		118

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FORWARD-LOOKING STATEMENTS

The discussion in this Annual Report on Form 10-K contains statements that are not historical in nature, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties, including, but not limited to, statements related to our manufacturing strategy; the expected timing and costs related to our integration with Spansion Inc. (“Spansion”) as a result of our recent merger; our ability to execute on planned synergies related to the merger; our expectations regarding dividends and stock repurchases; our expectations regarding future technology transfers and other licensing arrangements; our expectations regarding the timing and cost of our restructuring liabilities; our expectations regarding our active litigation matters and our intent to defend ourselves in those matters; the competitive advantage we believe we have with our patents as well as our proprietary programmable technologies and programmable products; our backlog as an indicator of future performance; the risk associated with our yield investment agreements; our foreign currency exposure and the impact exchange rates could have on our operating margins; the adequacy of our cash and working capital positions; the value and liquidity of our investments; including auction rate securities and our other debt investments; our ability to recognize certain unrecognized tax benefits within the next twelve months as well as the resolution of agreements with various foreign tax authorities; our investment strategy; the impact of interest rate fluctuations on our investments; the volatility of our stock price; the adequacy of our real estate properties; the utility of our non-GAAP reporting; the adequacy of our audits; and the potential impact of our indemnification obligations and the impact of new accounting standards on our financial statements. We use words such as “may,” “will,” “should,” “plan,” “anticipate,” “believe,” “expect,” “future,” “intend,” “estimate,” “predict,” “potential,” “continue,” and similar expressions to identify forward-looking statements. Such forward-looking statements are made as of the date hereof and are based on our current expectations, beliefs and intentions regarding future events or our financial performance and the information available to management as of the date hereof. Except as required by law, we assume no responsibility to update any such forward-looking statements. Our actual results could differ materially from those expected, discussed or projected in the forward-looking statements contained in this Annual Report on Form 10-K for any number of reasons, including, but not limited to, the state and future of the general economy and its impact on the markets and consumers we serve and our investments; our ability to effectively integrate our company with Spansion in a timely manner; our ability to attract and retain key personnel; our ability to timely deliver our proprietary and programmable technologies and products; the current credit conditions; our ability to expand our customer base; our ability to transform our business with a leading portfolio of programmable products; the number and nature of our competitors; the changing environment and/or cycles of the semiconductor industry; foreign currency exchange rates; our ability to efficiently manage our manufacturing facilities and achieve our cost goals emanating from our flexible manufacturing strategy; our ability to achieve our goals related to our restructuring activities; our success in our pending litigation matters; our ability to manage our investments and interest rate and exchange rate exposure; changes in the law; the results of our pending tax examinations; our ability to achieve liquidity in our investments; the failure or success of our Emerging Technology division; and/or the materialization of one or more of the risks set forth above or under Item 1A ( Risk Factors ) in this Annual Report on Form 10-K.

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PART I

ITEM 1.

General

Cypress Semiconductor Corporation (“Cypress”) delivers high-performance, high-quality solutions at the heart of today’s most advanced embedded systems, from automotive, industrial and networking platforms to highly interactive consumer and mobile devices. With a broad, differentiated product portfolio that includes NOR flash memories, SRAM and F-RAM™, Traveo™ microcontrollers, the industry’s only PSoC® programmable system-on-chip solutions, analog and PMIC Power Management ICs, CapSense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth Low-Energy and USB connectivity solutions, Cypress is committed to providing its customers worldwide with consistent innovation, best-in-class support and exceptional system value. Cypress serves numerous major markets, including automotive, industrial, communications, consumer, computation, data communications, mobile handsets and military markets.

Cypress was incorporated in California in December 1982. The initial public offering took place in May 1986, at which time our common stock commenced trading on the NASDAQ National Market. In February 1987, we were reincorporated in Delaware. Our stock is listed on the NASDAQ Global Select Market under the ticker symbol “CY”.

Our corporate headquarters are located at 198 Champion Court, San Jose, California 95134, and our main telephone number is (408) 943-2600. We maintain a website at www.cypress.com. The contents of our website are not incorporated into, or otherwise to be regarded as part of, this Annual Report on Form 10-K.

Our fiscal 2015 ended on January 3, 2016, fiscal 2014 ended on December 28, 2014, and fiscal 2013 ended on December 29, 2013.

Business Segments

As of the end of fiscal 2015, our organization included the following business segments:

Business Segments	Description
PSD: Programmable Systems Division	PSD focuses on high-performance, programmable solutions. The programmable portfolio includes high-performance Traveo™ automotive microcontrollers, PSoC® programmable system-on-chip products, ARM® Cortex®-M4, -M3, -M0+ microcontrollers and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive-sensing controllers, TrueTouch® touchscreen and fingerprint reader products, and PSoC Bluetooth Low Energy solutions for the Internet of Things (“IoT”). Effective March 12, 2015, PSD added Spansion’s microcontroller and analog products.
MPD: Memory Products Division	MPD focuses on high-performance parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), and high-reliability F-RAM™ ferroelectric memory devices. Its purpose is to enhance our position in these products and invent new products and derivatives. Effective March 12, 2015, MPD added Spansion’s Flash memory products.
DCD: Data Communications Division	DCD focuses on USB controllers, Bluetooth® Low Energy solutions that leverage Cypress’s PRoC™ programmable radio-on-chip technology, WirelessUSB™ solutions, module solutions such as trackpads and Bluetooth Low Energy modules, and controllers for the new USB Type-C standard, which enables data transmission and power delivery over a single cable with a slimmer plug. DCD focuses primarily on industrial, handset and consumer electronics markets and applications.
ETD: Emerging Technologies Division	Also known as our “startup” division, ETD includes subsidiaries AgigA, Tech Inc. and Deca Technologies Inc., as well as our foundry business and other development-stage activities.

For additional information on our segments, see Note 20 of Notes to Consolidated Financial Statements under Item 8.

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Recent Developments

Business Strategies

Cypress is committed to growing revenue in profitable and attractive markets, managing its expenses and to maintaining a strong balance sheet. We maintain many of our business operations in low-cost centers, including Malaysia, Thailand, India, the Philippines and China. In addition, we are using foundry partners to supplement our manufacturing needs.

In 2013, Cypress introduced the PSoC 4 programmable system-on-chip architecture and with a sophisticated 32-bit ARM^® Cortex™-M0 processor and the high-performance analog and digital circuitry of PSoC 3 and PSoC 5LP, all in a small-footprint, low-power single-chip solution.

In 2014, Cypress introduced the CapSense MBR3 mechanical button replacement family and the industry’s most integrated one-chip Bluetooth Low Energy solutions for the IoT. The low-cost CapSense MBR3 capacitive touch-sensing controllers do not require coding, enabling designers to quickly implement sleek, reliable user interfaces for a broad range of markets. They offer leading noise immunity, proximity sensing and water tolerance. The new PSoC 4 BLE offers unprecedented ease-of-use and integration in a customizable solution for IoT applications, home automation, healthcare equipment, sports and fitness monitors, and other wearable devices. The PRoC™ BLE programmable radio-on-chip provides a cost-effective, turnkey solution for wireless human interface devices, remote controls and toys.

In March 2015, Cypress completed the merger (“Merger”) with Spansion for a total consideration of approximately $2.8 billion. Spansion was a leading designer, manufacturer and developer of embedded systems semiconductors with flash memory, microcontrollers, analog and mixed-signal products. Spansion’s broad portfolio of Traveo™ automotive MCUs, NOR flash and HyperFlash™ memories, and automotive power management ICs (PMICs) combined with Cypress’s flexible PSoC® solutions, CapSense® capacitive-sensing solutions, TrueTouch® touchscreen solutions and nonvolatile ferroelectric-RAMs (F-RAMs) to make Cypress the No. 3 supplier of automotive MCUs and memories. Spansion’s portfolio of ARM®-based MCUs complemented Cypress’s ARM-based PSoC solutions, and Spansion’s NOR and NAND flash memories enhanced the Cypress SRAM and nonvolatile memory portfolio, creating a global leader in embedded systems.  

In August 2015, we completed the sale of the TrueTouch® mobile touchscreen business, which is a business unit within our Programmable Systems Division, to Parade Technologies (“Parade”) for total cash proceeds of $98.6 million pursuant to the definitive agreement. Post-sale, Cypress will continue to provide TrueTouch® solutions to its automotive, industrial and home appliance customers.  

Our primary focus is profitable growth in our key markets. With the addition of the legacy Spansion business, we plan to capitalize on our expanded product portfolio and leadership positions in embedded processing and specialized memories to significantly extend our penetration of global markets such as automotive, industrial, communications, consumer, computation, data communications and military markets. Our revenue model is based on the following product and market strategies: (a) increasing market share in our memory products by leveraging our market position and expanding our portfolio with new and complementary products, (b) growing revenue from our high-performance, programmable solutions and derivatives including PSoC programmable system-on-chip products and microcontrollers in the automotive and industrial markets, (c) increasing our DCD revenue through the introduction of new products such as USB Type-C solutions, SuperSpeed USB 3.0 peripheral controllers and Bluetooth® Low Energy solutions that leverage Cypress’s PRoC™ programmable radio-on-chip technology for the IoT and other applications, and (d) revenue growth from ETD, which includes our internal startup companies. For profitability, our focus is to integrate the acquired Spansion business successfully and realize the anticipated product cost and operational cost synergies. Our integration effort includes the re-focusing of portions of legacy Spansion business to higher-margin opportunities, particularly in the Flash memory business segment. We monitor our operating expenses closely to improve our operating leverage as driven by various company-wide initiatives, including our World Class Cost program to continuously reduce cost line items as well as a Human Resources effort to reduce redundancy and improve efficiency across the company.

In order to achieve our goals on revenue growth and profitability, Cypress will continue to pursue the following strategies:

· Successfully integrate our business with Spansion. We are committed to integrating the business of Cypress and Spansion successfully to realize the anticipated cost synergies and improve the bottom line.

· Cross-sell products from Cypress’s expanded product portfolio in the wake of the Spansion Merger. We will continue to take advantage of product and business synergies and grow our top-line revenue.

· Focus on large and growing markets. We will continue to pursue business opportunities in large and growing markets, particularly the automotive and industrial markets.

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· Drive profitability. Cypress has implemented and maintained a tight, corporate wide focus on gross margin and operating expenses. We are committed to maintaining our current strong operating expense management without compromising our new product development and investments in our Emerging Technologies Division.

· Drive programmable technologies, extend our leadership in programmable products and drive PSoC and microcontroller proliferation. We will continue to define, design and develop new programmable products and solutions that offer our customers increased flexibility and efficiency, higher performance, and higher levels of integration with a focus on analog functionality. We will continue to drive PSoC and microcontroller adoption in our key market segments.

· Collaborate with customers to build system-level solutions. We work closely with our customers from initial product design through manufacturing and delivery to optimize their design efforts, help them achieve product differentiation, improve their time-to-market and help them to develop whole product solutions.

· Leverage flexible manufacturing. Our manufacturing strategy combines capacity from leading foundries with output from our internal manufacturing facilities. This enables us to meet rapid swings in customer demand while reducing the burden of high fixed costs.

· Identify and exit legacy or non-strategic, underperforming businesses. We will continue to monitor and, if necessary, to exit certain business units that are inconsistent with our future initiatives and long-term financial plans so that we can focus our resources and efforts on our core programmable and proprietary business model. The sale of our TrueTouch^® mobile business to Parade Technologies, Ltd. during the third quarter of 2015 is an example of this business strategy.

· Pursue complementary strategic relationships. We will continue to assess opportunities to develop strategic relationships through acquisitions, investments, licensing and joint development projects. We also will continue to make significant investments in current ventures as well as new ventures.

As we continue to implement our strategies, there are many internal and external factors that could impact our ability to meet any or all of our objectives. Some of these factors are discussed under Item 1A.

Product/Service Overview

Programmable Solutions Division (PSD):

The Programmable Solutions Division designs and develops solutions for many of the world’s leading end-product manufacturers. PSD delivers high-performance, programmable solutions at the heart of today's most advanced embedded systems. The product portfolio includes high-performance Traveo™ automotive microcontrollers, the industry’s only PSoC® programmable system-on-chip solutions, ARM® Cortex®-M4, M3, M0+ microcontrollers and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive touch-sensing controllers, TrueTouch® fingerprint readers, TrueTouch® touchscreen controllers and wireless BLE Bluetooth® Low-Energy devices. Our automotive business unit is part of PSD and is designed to offer complete solutions for systems such as instrument clusters, infotainment and body electronics. Cypress is committed to delivering best-in-class support, exceptional technical documentation and flexible, low-cost development kits for embedded system developers.

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The following table summarizes the markets and certain applications related to our products in this segment:

Products	Markets	Applications
Traveo™ MCUs and Flexible Microcontrollers	Automotive, industrial, consumer, IoT, computation, white goods, communication	Automotive body electronics, battery management, driver information systems, factory automation, machine-to-machine systems, building management systems, smart meters, printers and many other applications.
PSoC® 1, PSoC 3, PSoC 4 and PSoC 5LP	Consumer, handsets, Industrial, medical, IoT, communications, automotive	IoT applications, industrial and automotive control applications, digital still and video cameras, home appliances, handheld devices and accessories, notebook computers, LCD monitors, medical devices, mice, keyboards, toys, e-Bikes and many other applications.
CapSense®	Handsets, consumer, industrial, IoT, computation, white goods, communication, automotive	Notebook computers and PCs, home appliances, handheld devices, wearables, automotive control pads/media centers, digital cameras, toys, consumer products and many other applications.
TrueTouch®	Automotive, industrial	Automotive infotainment systems, factory automation
Analog PMICs, LED drivers and energy harvesting solutions	Automotive, industrial, consumer, IoT	Advanced Driver Assistance Systems (ADAS), body control modules, instrument cluster systems, front lighting systems, factory automation, IoT beacons, wireless sensor nodes and many other applications.

Traveo™ MCUs and Flexible Microcontrollers. Our Traveo™ automotive MCU family offers high-performance Human Machine Interfaces for automotive dashboards. The microcontrollers integrate 2-D and 3-D graphic engines. This is a development where we are integrating our flash memory technologies with our microcontrollers and analog IP. This family also features our HyperBus memory interface. The combination of our HyperFlash memory with the HyperBus interface eliminates memory bottlenecks, increases performance, and extends the memory space for MCU and graphic engines without increasing the package pin count. Our Flexible Microcontroller (FM) portfolio, which is based on the ARM^® Cortex^®-M4, Cortex^®-M3, Cortex^®-M0+ CPUs, is a scalable platform for industrial and consumer applications.

PSoC Programmable System-on-Chip products. Our PSoC products are highly integrated, high-performance mixed-signal devices with an on-board microcontroller, programmable analog and digital blocks, SRAM and flash memory. They provide a low-cost, single-chip solution for a variety of consumer, industrial, medical, and system management applications. A single PSoC device can potentially integrate as many as 100 peripheral functions, saving customers design time, board space, power consumption and system costs. Because of its programmability, PSoC allows customers to make modifications at any point during the design cycle, providing unmatched flexibility.

Cypress’s PSoC 1 device offers performance, programmability and flexibility with a cost-optimized 8-bit M8 CPU subsystem. PSoC 3 uses an 8-bit, Intel^® 8051-based microcontroller with 7.5 times more computing power than PSoC 1. The 32-bit, ARM^® -Cortex™ M3-based PSoC 5LP has 25 times more computing power than PSoC 1. The analog-to-digital converters on PSoC 3 and PSoC 5LP are 256 times more accurate and 10 to 30 times faster than PSoC 1, and there are 10 times more programmable logic gates available. PSoC 4 is based on a 32-bit ARM Cortex-M0 processor combined with precision analog circuitry, high-performance digital blocks, fully-routable I/Os and our leading CapSense capacitive touch technology. Platform PSoC is supported by the unique PSoC Creator™ design tool that allows engineers to use intuitive schematic-based capture and dozens of PSoC Components™, free embedded ICs represented by icons that can be dragged and dropped into a design to integrate multiple ICs and system interfaces into one PSoC. PSoC 4 BLE, a Bluetooth Low Energy solution that integrates a Bluetooth Smart radio and balun into the PSoC 4 architecture, offers unprecedented ease-of-use and integration for IoT applications, home automation, healthcare equipment, sports and fitness monitors, and other wearable smart devices. Cypress has shipped more than two billion PSoC devices.

TrueTouch® Touchscreen solutions. TrueTouch® provides capacitive touchscreen solutions for automotive infotainment systems, industrial equipment and home appliances. The TrueTouch® family includes devices that perform traditional touchscreen functions including interpreting multitouch operation, single touches, and gestures such as tap, double-tap, pan, pinch, scroll and rotate. In 2015, Cypress introduced the Automotive TrueTouch® CYAT8168X controller family, which enables screen sizes up to 15-inches with industry-leading performance in harsh automotive environments. The controller uses Cypress’s proprietary AutoArmor™ technology for robust immunity to the strong electromagnetic interference (EMI) emissions found in cars, buses and trucks, and it provides liquid tolerance and tracking of fingers in gloves.

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CapSense^® solutions. Our CapSense capacitive touch-sensing solutions replace mechanical switches and buttons with simple, touch-sensitive controls by detecting the presence or absence of a conductive object (such as a finger) and measuring changes in capacitance. This technology lends itself equally well to buttons, sliders, touchpads, touchscreens and proximity sensors, taking industrial design possibilities to a much higher level. The CapSense portfolio supports all different ranges of general purpose inputs/outputs, buttons and slider devices. Cypress’s CapSense devices feature SmartSense™ technology, an automatic tuning solution that dynamically detects and adjusts a system’s capacitive-sensing parameters, eliminating the need for manual tuning. The low-cost CapSense MBR3 mechanical button replacement solution that does not require coding, enabling designers to quickly implement reliable user interfaces for a broad range of markets. MBR3 devices offer leading noise immunity, proximity sensing and water tolerance. CapSense has replaced more than 5 billion buttons, making Cypress the worldwide capacitive sensing market share leader.

Analog Semiconductors. Analog semiconductors measure, condition and regulate “real world” functions such as temperature, speed, sound and electrical current. Our lineup of power management integrated circuits (PMICs) includes DC/DC converters, voltage regulators and supervisors, and power monitoring and reset ICs. In addition, we offer a family of LED lighting driver ICs and energy harvesting solutions. These solutions target automotive and industrial applications, and our energy harvesting solutions are ideal for eliminating the need to replace batteries in IoT applications.

Memory Products Division (MPD):

Our Memory Products Division designs and manufactures the broadest portfolio of high-performance memories for embedded systems. Cypress has established itself as the marketshare leader in NOR Flash and SRAM memories that form the brains of today's most advanced embedded systems. The memory product portfolio includes the world's highest throughput QDR®-IV SRAMs, low-power MoBL® SRAMs, high-performance serial and parallel NOR Flash memories and high-reliability F-RAM™ ferroelectric memory devices that capture and protect the world's most-critical data. Cypress's industry-leading HyperFlash™ memories deliver 333 megabytes per second read throughput-more than five times faster than traditional Quad SPI flash, and one-third the number of pins of parallel NOR flash.

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Our MPD Division also includes timing technology products and specialty memory offerings. The following table summarizes the markets and applications related to our products in this segment:

Products	Markets	Applications
NOR Flash and HyperFlash™	Automotive, industrial, IoT, consumer	Automotive advanced driver assistance systems (ADAS), automotive instrument cluster, automotive infotainment systems, networking routers and switches, high-definition televisions and set-top boxes, digital SLR cameras, toys, wearables and many other applications
NAND Flash	Industrial, IoT, consumer	Set-top boxes, point-of-sale systems, security systems, wearables, toys, smart home appliances and many other applications.
HyperRAM™	Automotive, industrial, IoT	Automotive advanced driver assistance systems (ADAS), automotive instrument cluster, automotive infotainment systems, digital cameras, projectors, factory automation, medical equipment, home automation and appliances, handhelds and many other applications.
Asynchronous SRAMs	Consumer, networking, industrial	Consumer electronics, switches and routers, test equipment, automotive and industrial electronics.
Synchronous SRAMs	Telecommunications, networking	Enterprise routers and switches, wireless base stations, high bandwidth applications and industrial and defense electronics.
nvSRAMs	Networking, industrial	Redundant array of independent disk (RAID) servers, point of sale terminals, set-top boxes, copiers, industrial automation, printers, single-board computers and gaming.
F-RAMs	Automotive, medical	Smart electric meters, aerospace, medical systems, automotive, industrial controls, electronic point-of-sale terminals, printers and wireless (RFID) memory.
Dual-port Memories	Networking, telecommunication	Medical and instrumentation, storage, wireless infrastructure, military communications, image processors and base stations.
First-in, first-out (FIFO) Memories	Video, data communications, telecommunications, networking	Video, data communications, telecommunications, and network switching/routing.
Programmable clocks	Communications, computation	Set-top boxes, copiers, printers, HDTV, Industrial automation, printers, single-board computers, IP phones, storage devices, servers and routers.
RoboClock® buffers	Communications	Base stations, high-end telecom equipment (switches, routers), servers and storage.

NOR Flash memories and HyperFlash™. Cypress offers the broadest portfolio of NOR flash memories for embedded systems. The portfolio features the highest-performance HyperFlash™ and Quad SPI NOR flash memories delivering up to 333MB/s read bandwidth, with the industry leading program and erase, and extended automotive temperature ranges (-40°C to 125°C). Our HyperBus™ interface is being implemented broadly by many of our partners. It is being designed across our industrial, automotive, and communication segments.

NAND Flash memories. Our NAND products add reliable, high-density data storage to our flash product line. Cypress applies its stringent process for qualification, testing, extended temperature support and packaging to its line of SLC NAND products. Our high-performance and high-reliability SLC NAND product portfolio is available in 1Gb - 16 Gb densities. There are two standard product families offering 1bit and 4bit ECC SLC NAND. We also offer SecureNAND™, which is an SLC NAND with enhanced security features.

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HyperRAM™. Our HyperRAM™ memory is the first companion device to our HyperFlash™ memory and the second device to operate on our 12-pin HyperBus interface. With a read throughput up to 333 megabytes-per-second, the HyperRAM devices are ideal for SoCs with limited RAM providing a scalable solution for extending fast read and write operations externally, allowing fast delivery of high-resolution graphics in the early part of the boot process for automotive, industrial and IoT applications.

Asynchronous SRAMs. We manufacture a wide selection of fast asynchronous and micropower SRAMs with densities ranging from 16 Kbits to 64 Mbits. These memories are available in many combinations of bus widths, packages and temperature ranges, and include offering for the automotive market. They are ideal for use in point-of-sale terminals, gaming machines, network switches and routers, IP phones, IC testers, DSLAM Cards and various automotive applications.

Synchronous SRAMs. Our high-speed synchronous SRAMs include standard synchronous pipelined, No Bus Latency (NoBL), Quad Data Rate (QDR^®), and Double Data Rate (DDR) SRAMs, and are typically used in networking applications. NoBL synchronous SRAMs are optimized for high-speed applications that require maximum bus bandwidth up to 250 MHz, including those in the networking, instrumentation, video and simulation businesses. Double Data Rate SRAMs target network applications and servers that operate at data rates up to 633 MHz. Quad Data Rate products are targeted toward next-generation networking applications, particularly switches and routers that operate at data rates beyond 633 MHz, and offer twice the bus bandwidth of DDR SRAMs. Cypress introduced the industry’s first 65-nm QDR and DDR SRAMs. The 144-Mbit and 72-Mbit devices, developed with foundry partner UMC, feature the industry’s fastest clock speeds and operate at half the power of their 90-nm predecessors. They are ideal for networking, medical imaging and military signal processing. In 2014, Cypress introduced the industry’s first QDR-IV SRAM, which enables 100-400 Gigabit line card rates for next-generation routers and switches.

nvSRAMs. nvSRAMs are products that operate similar to standard asynchronous SRAM and reliably store data into an internal nonvolatile array during unanticipated power outages. The competitive advantage of an nvSRAM is infinite endurance and much faster read/write speed than a serial flash or EEPROM. Additionally, these high-speed nonvolatile SRAM devices can store data for more than 20 years without battery backup. These memories are ideal for redundant array of independent disks (“RAID”) storage arrays, metering applications, multifunction printers and other industrial applications, such as PLCs. Cypress offers parallel nvSRAMs with an integrated real-time clock, providing failsafe battery-free data backup in mission-critical applications.

F-RAMs. Cypress’s F-RAM memories offer extremely low power with the same non-volatility as nvSRAM products. F-RAM memory cells are immune to gamma radiation and EMI, making them well-suited to certain aerospace and medical systems. Other applications include automotive, smart electric meters, industrial controls, electronic point-of-sale terminals, printers and wireless (RFID) memory.

Dual-Port Memories. Dual ports, which can be accessed by two different processors or buses simultaneously, target shared-memory and switching applications, including networking switches and routers, cellular base stations, mass-storage devices and telecommunications equipment. We offer a portfolio of more than 250 synchronous and asynchronous dual-port interconnects ranging in densities from 8 Kbits to 36 Mbits with speeds of up to 250 MHz. Our dual ports are compelling solutions for interprocessor communication in a broad range of applications. For high-volume multiprocessor applications (wireless handsets, PDAs, consumer, etc.) we offer the MoBL™ (More Battery-Life™) dual port, providing a low cost, quick time-to-market interconnect solution with the industry’s lowest power-consumption.

FIFO Memories. FIFOs are used as a buffer between systems operating at different frequencies. Our high-performance FIFO products provide the ideal solution to interconnect problems such as flow control, rate matching, and bus matching. Our FIFO portfolio is comprised of more than 100 synchronous and asynchronous memories in a variety of speeds, bus widths, densities and packages. Using industry-standard pinouts, these products are easily integrated into new and existing designs. Unidirectional, bidirectional, tri-bus and double sync configurations are available with built-in expansion logic and message-passing capabilities for various markets including video, data communications, telecommunications and network switching/routing.

Programmable Clocks. Programmable timing solutions such as our InstaClock device combine high performance with the flexibility and fast time to market of field-programmable devices at a cost that is competitive against custom clocks at equivalent volumes. Working with our easy-to-use CyberClocks™ software, designers can optimize device parameters such as drive strength, phased-lock loop bandwidth and crystal input capacitive loading. Our programmable clocks are ideal for devices requiring multiple frequencies including Ethernet, PCI, USB, HDTV, and audio applications. Additionally, the FleXO™ family of high-performance clock generators can be instantly programmed in the factory or field to any frequency up to 650 MHz, accelerating time to market and improving manufacturing quality.

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RoboClock™ Clock Buffers. Our RoboClock family of clock buffers features programmable output skew, programmable multiply/divide factor, and fault-tolerant, user-selectable, redundant reference clocks. Designers can control output skew and multiply and divide factors to help accommodate last-minute design changes. RoboClock offers a high-performance timing solution for designers of communications, computation and storage networking applications.

Data Communications Division (DCD):

The Data Communications Division delivers flexible connectivity solutions that form the nervous system within the most-advanced embedded systems. Today Cypress is enabling the world to migrate to SuperSpeed USB 3.0 with the flexible EZ-USB® FX3™ peripheral controller and SuperSpeed USB 3.0 hubs. Cypress is leading the industry with the world's first programmable USB Type-C and USB Power Delivery solutions, including the EZ-PD™ Type-C controllers. Cypress's PRoC™ BLE Bluetooth® Low-Energy wireless devices are enabling PC peripherals and smart remote control OEMs to upgrade to BLE. Additionally, Cypress offers certified BLE modules that streamline the design of IoT products and other wireless applications.

The following table summarizes the markets and applications related to our products in this segment:

Products	Markets	Applications
USB controllers	Industrial, handset, PC and peripherals, consumer electronics	Printers, cameras, machine vision and other industrial equipment, mice, keyboards, handheld devices, gamepads and joysticks, VoIP phones, headsets, presenter tools, dongles, point of sale devices and bar code scanners.
EZ-PD™ controllers for USB-C with Power Delivery	PC and peripherals, consumer electronics, IoT	USB-C power adapters, USB-C adapter cables, monitors, docking stations and many other applications
Bluetooth® Low Energy and WirelessUSB™ solutions	IoT, PC peripherals	Wearables, mice, keyboards, wireless headsets, consumer electronics, gamepads, remote controls, toys, presenter tools and many other applications.
Trackpad Solutions	PCs, consumer	Cypress has applied its capacitive sensing expertise to the trackpad market for laptop computers and consumer devices. Trackpads offer cursor control and other functions, and Cypress’s solution has been adopted by multiple PC manufacturers.

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USB controllers. Cypress is a market leader in USB with more than one billion devices shipped. USB provides the primary connection between a PC and peripherals, including keyboards, mice, printers, joysticks, scanners and modems. It is also used to connect non-PC systems, such as smartphones, handheld games, digital still cameras and portable media players. The USB standard facilitates a “plug-and-play” architecture that enables instant recognition and interoperability when a USB-compatible peripheral is connected to a system. We offer a full range of USB solutions, including low-speed (1.5 Mbps), full-speed (12 Mbps), high-speed (480 Mbps) and now “SuperSpeed” (up to 5 Gbps) USB products. We also offer a variety of USB hubs, transceivers, serial interface engines and embedded-host products for a broad range of applications.

Bluetooth Low Energy and Wireless USB solutions. Designed for short-range wireless connectivity, WirelessUSB enables personal computer peripherals, gaming controllers, remote controls, toys, and other point-to-point or multipoint-to-point applications to “cut the cord” with a low-cost, 2.4-GHz wireless solution. The WirelessUSB system acts as a USB human interface device, so the connectivity is transparent to the designer at the operating system level. WirelessUSB also operates as a simple, cost-effective wireless link in a host of other applications including industrial, consumer, and medical markets. Our PRoC™ BLE (Programmable Radio-on-a-Chip Bluetooth Low Energy) solution combines a Bluetooth Smart radio, an ARM Cortex-M0 processor and CapSense capacitive touch-sensing in a single chip. The highly-integrated PRoC BLE device provides a cost-effective, turnkey solution for wireless human interface devices, remote controls and toys. We also offer certified EZ-BLE PRoC and EZ-BLE PSoC modules that streamline wireless design even further.

Trackpad. We design and manufacture turnkey Trackpad sensor module solutions. By leveraging the flexibility and power of Cypress touch technologies, we provide solutions ranging from low power, two-finger gesture to feature-rich, true multi-touch solutions. Our design library contains solutions that can be used off-the-shelf; in addition, we offer custom product development for specific form factors and features based on customer requirements. These products are ideal for Windows laptop, Google Chromebook, PC peripheral, and remote control applications. Trackpad modules promote fast time-to-market and cost effective solutions for touch-enable end products.

Emerging Technologies and Other (ETD):

Cypress’s Emerging Technology Division consists of businesses outside our core semiconductor business. It includes majority-owned subsidiaries AgigA Tech, Inc., Deca Technologies Inc., foundry services, other development stage activities and certain corporate expenses.

AgigA Tech, Inc. AgigA Tech, a majority-owned and fully independent subsidiary of Cypress, is an industry pioneer in the development of high-speed, high-density, battery-free non-volatile memory solutions. Its flagship product, AGIGARAM^®, merges NAND Flash, DRAM and an ultracapacitor power source into a highly reliable non-volatile memory subsystem, delivering unlimited read/write performance at RAM speeds, while also safely backing up all data when power is interrupted. The patent-pending approach couples innovations in power management, high-speed data movement and systems knowledge, while leveraging high-volume, readily available memory technologies to provide a unique non-volatile solution scalable to very high densities. AGIGARAM earned an Edison Award for innovation. Cypress sampled the industry’s first DDR4 Nonvolatile DIMM, which operates in the standard DIMM sockets of next-generation, Intel-based server platforms.

Deca Technologies Inc. (“Deca”). Deca is a majority-owned and fully independent subsidiary of Cypress. Headquartered in Tempe, AZ., with global capabilities, Deca has pioneered a breakthrough approach to wafer level packaging and interconnect technology inspired by SunPower Corporation’s unique solar wafer fabrication methodology. Deca’s initial product offering includes a series of wafer level chip scale packaging (WLCSP) solutions serving several of the top 25 semiconductor producers. Deca’s approach enables industry-leading cycle times, flexibility and value for WLCSP, which is one of the semiconductor industry’s fastest growing electronic interconnect technologies. Sunpower Corporation is a minority investor in Deca. Deca shipped its 100-millionth component in 2014.

Cypress Foundry Solutions. Cypress Foundry Solutions provides both custom and standard foundry services out of the Cypress wafer fabrication facility in Bloomington, MN. This eight-inch wafer fab manufactures in high volume down to the 90nm node. It offers process technologies that integrate Silicon Oxide Nitride Oxide Silicon (SONOS)-based nonvolatile memory and precision analog/mixed-signal capabilities. The facility has been accredited as a Category 1A Trusted Fab for fabrication, design, and testing of U.S. Department of Defense (DoD) Trusted Microelectronics. Additionally, customers get access to Cypress’s vast design and technology IP portfolio to enable fast time to market.

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Mergers and Acquisitions

On March 12, 2015, we completed the merger with Spansion Inc. ("Spansion") pursuant to the Agreement and Plan of Merger and Reorganization, as of December 1, 2014 (the "merger agreement"), for a total consideration of approximately $2.8 billion. In accordance with the terms of the merger agreement, Spansion shareholders received 2.457 Cypress shares for each Spansion share they owned. The merger has been accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standard Topic 805, Business Combinations, with Cypress treated as the accounting acquirer. Spansion was a leading designer, manufacturer and developer of embedded systems semiconductors with flash memory, microcontrollers, analog and mixed-signal products. Spansion’s broad portfolio of ARM^TM-based microcontrollers complemented the flexible PSoC solutions from Cypress, and Spansion’s leadership in specialty memories enhanced the Cypress memory portfolio creating a global leader in embedded systems.

For additional information on this acquisition, see Note 2 of Notes to Consolidated Financial Statements under Item 8.

Divestitures

On August 1, 2015, we completed the sale of the TrueTouch^® mobile touchscreen business, which is a business unit within our Programmable Systems Division, to Parade Technologies (“Parade”) for total cash proceeds of $98.6 million pursuant to the definitive agreement signed on June 11, 2015. Of the total cash proceeds, $10.0 million are held in an escrow account until January 2017 subject to any indemnity claims on post-closing adjustments, per the terms of the agreement. Post-sale, Cypress will continue to provide TrueTouch^® solutions to its automotive, industrial and home appliance customers and to its mobile customers. In connection with the transaction, we sold certain assets associated with the disposed business mostly consisting of inventory with a net book value of $10.5 million and recognized a gain of $66.5 million in the third fiscal quarter of fiscal 2015. This gain has been presented as a separate line item "Gain on divestiture of TrueTouch^® mobile business" in the Consolidated Statements of Operations.

Also in connection with the transaction, we entered into a Manufacturing Service Agreement (MSA) in which we agreed to sell finished wafers and devices to Parade during the one-year period following the close of the transaction. The terms of the MSA indicated that we would sell finished products to Parade at agreed-upon prices that were considered below fair market value, indicating that there was an embedded fair value that would be realized by Parade through those terms. Accordingly, we have allocated $19.9 million from the $98.6 million proceeds to the fair value of the MSA based on the forecasted wafer sales to Parade for the subsequent one-year period. Such amount was deferred on our consolidated balance sheet initially and is being amortized to revenue as we sell products to Parade. During the fiscal year ended January 3, 2016 we recognized $5.7 million of revenue from amortization of such deferred revenue.

For additional information on this divestiture, see Note 3 of Notes to Consolidated Financial Statements under Item 8.

Manufacturing

Our core manufacturing strategy-“flexible manufacturing”-combines capacity from external foundries with output from our internal manufacturing facilities. This initiative allows us to meet rapid swings in customer demand while lessening the burden of high fixed costs, a capability that is particularly important with our rapidly evolving product portfolio.

We currently manufacture approximately 50% of our semiconductor products at our wafer manufacturing facilities in Bloomington, Minnesota and Austin, Texas. External wafer foundries, mainly in Asia, manufactured the balance of our products and we expect that our wafer foundry partners will continue to increase their manufacturing as a percentage of total output.

We conduct assembly and test operations at our facilities in the Philippines and Bangkok, Thailand. These facilities account for approximately 42% of the total assembly output and 52% of the total test output. Various subcontractors in Asia perform the balance of the assembly and test operations.

Our facilities in the Philippines and Bangkok, Thailand perform assembly and test operations, manufacturing volume products and packages where our ability to leverage manufacturing costs is high. The Philippines facility has ten fully integrated, automated manufacturing lines enabling complete assembly and test operations (Autolines). These autolines require fewer people to run and have shorter manufacturing cycle times than conventional assembly/test operations, which enable us to respond more rapidly to changes in demand.

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We have a strategic foundry partnership with HuaHong Grace Semiconductor Manufacturing Corporation (“Grace”), located in Shanghai, China. Our agreement with them transferred certain proprietary process technologies and provided additional production capacity to augment output from our manufacturing facilities. Since 2007, when we completed the transfer of our 0.35-micron SONOS, 0.13-micron SRAM and LOGIC processes and 0.09-micron SRAM, we have been purchasing products from Grace that are manufactured using these processes. In the fourth quarter of fiscal 2014, the Company, through a wholly-owned subsidiary, purchased 6.9 million ordinary shares of Hua Hong Semiconductor Limited (HHSL) for an aggregate price of $10.0 million in connection with their initial public offering. HHSL is the parent company of Grace Semiconductor Manufacturing Corporation.

We also have a strategic foundry partnership with United Microelectronics Corporation (“UMC”), located in Taiwan. We use UMC’s 65nm process to produce our leading edge SRAM products which we have been shipping since 2008. Since 2008, we have continuously introduced higher density SRAM products up to 144Mb. We have also utilized UMC’s 65nm baseline to create derivative processes and products including our USB3.0 controllers and Asynchronous SRAMs.  Additionally Cypress and UMC are collaborating on qualifying Cypress’s embedded non-volatile memory technology in UMC’s 55nm and 40nm flows under licensing agreement. These technologies will be used for Cypress’s future generation products and be offered as part of general foundry offering by UMC producing royalty revenue for Cypress.

As part of our acquisition of Ramtron, we acquired a commercial manufacturing agreement for F-RAM products with Texas Instruments (“TI”). Under that agreement, the Company provides certain design, testing and other activities associated with product development, and TI provides certain foundry and related services. As amended on November 30, 2012, the agreement provides for automatic renewals unless written notice of termination is given prior to the end of any renewal period. If notice of termination is given, the agreement terminates one year thereafter and the Company may place last orders and take delivery of product during the following year. The agreement contains various obligations of the parties, including our obligations regarding minimum orders and negotiated pricing of products we purchase.

As part of our merger with Spansion, we acquired agreements with Fujitsu Semiconductor Limited (“FSL”), XMC and SK Hynix Inc. (“SK Hynix”).  Agreements with FSL include agreements for the supply of product wafer foundry services, sort services and assembly and test services relating to the microcontroller and analog businesses. These agreements are at competitive market rates and enable us to leverage FSL’s existing manufacturing capabilities and relationships with its partners spanning across various technologies, processes, geometries and wafer sizes in their wafer fabrication facilities and package solutions in their back-end manufacturing facilities, until such time that we can either move these internally to our fabrication and back-end facilities or find alternative solutions. For FSL, the fabrication facilities are all located in Japan, while the back-end facilities are in Japan and other Asian countries. The supply agreements do not call for any minimum purchase commitments. The arrangement with XMC provides production support for advanced NOR technology products at 65, 45 and development of 32 nanometers. The arrangement with SK Hynix provides for the development and supply of SLC NAND products at the 4x and 3x nodes.

Research and Development

Research and development efforts are focused on the development and design of new semiconductor products, as well as the continued development of advanced software platforms primarily for our programmable solutions. Also included are the consolidated costs of research and development associated with our ETD division. Our goal is to increase efficiency in order to maintain our competitive advantage. Our research and development organization works closely with our manufacturing facilities, suppliers and customers to improve our semiconductor designs and lower our manufacturing costs. During fiscal 2015, 2014 and 2013, research and development expenses totaled $281 million, $164.5 million, and $190.9 million, respectively.

We have both central and division-specific design groups that focus on new product creation and improvement of design methodologies. These groups conduct ongoing efforts to reduce design cycle time and increase first pass yield through structured re-use of intellectual property blocks from a controlled intellectual property library, development of computer-aided design tools and improved design business processes. Design and related software development work primarily occurs at design centers located in the United States, Europe, India and China.

Customers, Sales and Marketing

We sell our semiconductor products through several channels: sales through global domestically-based distributors; sales through international distributors and manufacturing representative firms; and sales by our sales force to direct original equipment manufacturers and their suppliers. Our marketing and sales efforts are organized around five regions: North Americas, Europe, Japan, Korea and China.

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Our marketing activities target customers, reference design houses and our potential partners; and include a combination of direct marketing activities such as trade shows, events and marketing We augment our sales effort with field application engineers, specialists in our products, technologies and services who work with customers to design our products into their systems. Field application engineers also help us identify emerging markets and new products.

Outstanding accounts receivable from three of our distributors, accounted for 42%, 11% and 9%, respectively, of our consolidated accounts receivable as of January 3, 2016. Outstanding accounts receivable from two of our distributors, accounted for 12%, and 11% respectively, of our consolidated accounts receivable as of December 28, 2014 .

Revenue generated through Fujitsu Electronics Inc., Avnet, Inc., and Arrow electronics, three of our distributors, accounted for 25%, 10% and 7%, respectively, of our consolidated revenue for fiscal 2015. There were no end customers whose total purchases exceeded 10% of our consolidated revenue for fiscal 2015.

Revenue generated through Avnet, Inc., Weikeng Industrial Co. Ltd and Future, Inc., three of our distributors, accounted for 13%, 10% and 10%, respectively, of our consolidated revenue for fiscal 2014. There were no end customers whose total purchases exceeded 10% of our consolidated revenue for fiscal 2014.

Revenue generated through Avnet, Inc. and Macnica Inc., two of our distributors, accounted for 11% and 10% respectively, of our consolidated revenue for fiscal 2013. Samsung Electronics (“Samsung”), an end customer, purchased our products from our distributors and directly from Cypress and accounted for 12% of our consolidated revenue for fiscal 2013.

Backlog

Our sales typically rely upon standard purchase orders for delivery of products with relatively short delivery lead times. Customer relationships are generally not subject to long-term contracts. However, we have entered into long-term supply agreements with certain customers. These long-term supply agreements generally do not contain minimum purchase commitments. Products to be delivered and the related delivery schedules under these long-term contracts are frequently revised to reflect changes in customer needs. Accordingly, our backlog at any particular date is not necessarily representative of actual sales for any succeeding period and we believe that our backlog is not a meaningful indicator of future revenues.

Competition

The semiconductor industry is intensely competitive and continually evolving. This intense competition results in a challenging operating environment for most companies in this industry. This environment is characterized by the potential erosion of product sale prices over the life of each product, rapid technological change, limited product life cycles, greater brand recognition and strong domestic and foreign competition in many markets. Our ability to compete successfully depends on many factors, including:

· our success in developing new products and manufacturing technologies;

· delivery, performance, quality and price of our products;

· diversity of our products and timeliness of new product introductions;

· cost effectiveness of our design, development, manufacturing and marketing efforts;

· quality of our customer service, relationships and reputation;

· overall success with which our customers market their products and solutions that incorporate our products; and

· number and nature of our competitors and general economic conditions.

We face competition from domestic and foreign semiconductor manufacturers, many of which have advanced technological capabilities and have increased their participation in the markets in which we operate. We compete with a large number of companies primarily in the automotive, industrial, communications, consumer, computation, data communications, mobile handsets and military markets. Companies that compete directly with our semiconductor businesses include, but are not limited to, Intel, Analog Devices, Atmel, NXP Semiconductors NV, GSI Technology, Integrated Device Technology, Integrated Silicon Solution, Lattice Semiconductor, Linear Technology, Maxim Integrated Products, Microchip Technology, Renesas, Silicon Laboratories, ST Microelectronics, Synaptics, Texas Instruments and Xilinx.

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Environmental Regulations

We use, generate and discharge hazardous chemicals and waste in our research and development and manufacturing activities. United States federal, state and local regulations, in addition to those of other foreign countries in which we operate, impose various environmental rules and obligations, which are becoming increasingly stringent over time, intended to protect the environment and in particular regulate the management and disposal of hazardous substances. We also face increasing complexity in our product design as we adjust to new and future requirements relating to the materials composition of our products, including the restrictions on lead and other hazardous substances that apply to specified electronic products put on the market in the European Union (Restriction on the Use of Hazardous Substances Directive 2002/95/EC, also known as the “RoHS Directive”) and similar legislation in China and California. We are committed to the continual improvement of our environmental systems and controls. However, we cannot provide assurance that we have been, or will at all times be, in complete compliance with all environmental laws and regulations. Other laws impose liability on owners and operators of real property for any contamination of the property even if they did not cause or know of the contamination. While to date we have not experienced any material adverse impact on our business from environmental regulations, we cannot provide assurance that environmental regulations will not impose expensive obligations on us in the future, or otherwise result in the incurrence of liability such as the following:

· a requirement to increase capital or other costs to comply with such regulations or to restrict discharges;

· liabilities to our employees and/or third parties; and

· business interruptions as a consequence of permit suspensions or revocations or as a consequence of the granting of injunctions requested by governmental agencies or private parties.

Intellectual Property

We have an active program to obtain patent and other intellectual property protection for our proprietary technologies, products and other inventions that are aligned with our strategic initiatives. We rely on a combination of patents, copyrights, trade secrets, trademarks and proprietary information to maintain and enhance our competitive position in the domestic and international markets we serve. As of the end of fiscal 2015 we had approximately 7,000 issued patents and approximately 1,200 additional patent applications on file domestically and internationally. In addition, in fiscal 2016 we are preparing to file up to 90 new patent applications in the United States and up to 70 foreign applications in countries such as China, Taiwan, Korea, Europe and India. The average remaining life of our patent portfolio is approximately 10 years.

In addition to factors such as innovation, technological expertise and experienced personnel, we believe that patents are increasingly important to remain competitive in our industry, defend our position in existing markets and to facilitate the entry of our proprietary products, such as PSoC ®, into new markets. As our technologies are deployed in new applications and we face new competitors, we will likely subject ourselves to new potential infringement claims and discover third party infringement of our intellectual property. Patent litigation, if and when instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. We are committed to vigorously defending and protecting our investment in our intellectual property. Therefore, the strength of our intellectual property program, including the breadth and depth of our portfolio, will be critical to our success in the new markets we intend to pursue.

We perform an analysis of our intellectual property portfolio on an on-going basis to ensure we are deriving the full value of our assets. Accordingly, we continue to evaluate certain unaligned patents as well as other monetization models for our patent portfolio.

Financial Information about Segments and Geographic Areas

Financial information about segments and geographic area is incorporated herein by reference to Note 20 of Notes to Consolidated Financial Statements under Item 8.

International revenues have historically accounted for a significant portion of our total revenues. Our manufacturing and certain finance operations in the Philippines and Malaysia, as well as our sales and support offices and design centers in other parts of the world, face risks frequently associated with foreign operations, including, but not limited to:

· currency exchange fluctuations, including the weakening of the U.S. dollar;

· the devaluation of local currencies;

· political instability;

· labor issues;

· changes in local economic conditions;

· import and export controls;

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· potential shortage of electric power supply; and

· changes in tax laws, tariffs and freight rates.

· potential violations by our international employees or third party agents of international or U.S. laws relevant to foreign operations (such as FCPA) and.

· access to capital or credit at competitive rates

To the extent any such risks materialize, our business, financial condition or results of operations could be seriously harmed.

Employees

As of January 3, 2016 we had 6,279 employees. Geographically, 2,100 employees were located in the United States, 1,041 employees were located in the Philippines, 989 in Thailand, 757 in Japan, 257 employees were located in Malaysia, 472 employees were located in India and 663 employees were located in other countries. Of the total employees, 3,715 employees were associated with manufacturing, 1,149 employees were associated with selling, general and administrative functions and 1,415 employees were associated with research and development.

Approximately 475 employees are represented by a collective bargaining agreement. We have never experienced organized work stoppages.

Executive Officers of the Registrant as of March 1, 2016

Certain information regarding each of our executive officers is set forth below:

Name	Age	Position
T. J. Rodgers	67	President, Chief Executive Officer and Director
Thad Trent	48	Executive Vice President, Finance and Administration and Chief Financial Officer
Dana C. Nazarian	47	Executive Vice President, Memory Products Division
Hassane El-Khoury	35	Executive Vice President, Programmable Systems Division

T.J. Rodgers is a founder of Cypress and has been a Director and its President and Chief Executive Officer since 1982. Mr. Rodgers sits on the board of directors of Cypress’s internal subsidiaries as well as Bloom Energy, a privately held fuel cell company. Mr. Rodgers was also a member of the Board of Trustees of Dartmouth College until June 2012.

Thad Trent has been the Chief Financial Officer and Executive Vice President of Finance & Administration at Cypress Semiconductor Corporation since June 2014. Prior to his current position, Mr. Trent served as Cypress’s Vice President of Finance. Mr. Trent is a 22-year veteran of the technology industry. He held finance management roles at publicly traded companies Wind River Systems and Wyle Electronics, as well as two technology startups. Mr. Trent joined Cypress in 2005 and served as Vice President of Finance since 2010. Most recently, he has led the finance activities for business units, sales and marketing, and distribution groups, and he has supervised financial reporting, accounting, and planning and analysis.  Mr. Trent sits on the board of directors of Cypress’s internal subsidiaries.

Dana C. Nazarian was named Executive Vice President of Memory Products Division in February 2009. Mr. Nazarian started his career with Cypress in 1988. Prior to his current position, Mr. Nazarian held various management positions, which included oversight of significant operations in our former Round Rock, Texas facility and Vice President of our Synchronous SRAM business unit.

Hassane El-Khoury was named Executive Vice president of the Programmable Systems Division in 2012. Prior to his current position, Mr. El-Khoury served as Cypress’s Automotive Business Unit Senior Director since 2010. After working as an engineer at Continental Automotive Systems, he joined Cypress’s automotive business unit and expanded the Company’s presence in the Human-Machine Interface and Body Electronics segments of the automotive marketplace.

Available Information

We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, free of charge on our website at www.cypress.com , as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). Additionally, copies of materials filed by us with the SEC may be accessed at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or at www.sec.gov. For information about the SEC’s Public Reference Room, contact 1-800-SEC-0330.

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ITEM 1A. RISK FACTORS

Unfavorable economic and market conditions, domestically and internationally, may adversely affect our business, financial condition, results of operations and cash flows.

We have significant customer sales both in the U.S. and internationally. We are also reliant upon U.S. and international suppliers, manufacturing partners and distributors. We are therefore susceptible to adverse U.S. and international economic and market conditions. If any of our manufacturing partners, customers, distributors or suppliers experience serious financial difficulties or cease operations, our business will be adversely affected. In addition, the adverse impact of an unfavorable economy on consumers, including high unemployment rates, may adversely impact consumer spending, which will adversely impact demand for consumer products such as certain end products in which our products are embedded. In addition, prices of certain commodities, including oil, metals, grains and other food products, are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations and periodic delays in delivery. High or volatile commodity prices increase the cost of doing business and adversely affect consumers’ discretionary spending. As a result of the difficulty that businesses (including our customers) may have in obtaining credit, the increasing and/or volatile costs of commodities and the decreased consumer spending that may result from weakness in the general global economy, global economic and market turmoil are likely to have an adverse impact on our business, financial condition, results of operations and cash flows.

The trading price of our common stock has been and will likely continue to be volatile due to various factors, some of which are beyond our control, and each of which could adversely affect our stockholders’ value.

The trading price of our common stock has been and will likely continue to be volatile due to various factors, some of which are beyond our control, including, but not limited to:

· Revenue fluctuations due to unexpected shifts in customer orders;

· Announcements about our earnings or the earnings of our competitors that are not in line with analyst expectations;

· Our ability to achieve the planned synergies in the recent merger with Spansion;

· Credit conditions and our ability to refinance our existing debt at commercially reasonable terms, which may limit the Company’s working capital;

· Quarterly variations in our results of operations or those of our competitors;

· Announcements by us or our competitors of acquisitions, new products, significant contracts, design wins, commercial relationships or capital commitments;

· The perceptions of general market conditions in the semiconductor industry and global market conditions;

· Our ability to develop and market new and enhanced products on a timely basis;

· Any major change in our board or senior management;

· Changes in governmental regulations or in the status of our regulatory compliance that impact our business;

· Recommendations by securities analysts or changes in earnings estimates concerning us or our customers or competitors;

· The volume of short sales, hedging and other derivative transactions on shares of our common stock;

· Economic conditions and growth expectations in the markets we serve;

· Changes in our policy regarding dividends or our ability to declare a dividend; and

· Our ability to execute our lean inventory initiative to reduce excess inventory, which could lead to a disruption in the supply of our products and adversely affect our business.

Further, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Finally, our executive officers, who may hold a substantial number of shares of our common stock, may from time to time pledge all or a portion of their holdings as collateral or include such holdings in margin accounts. If our stock price were to drop suddenly, such margin accounts could be called and the shares in such accounts may be automatically sold by a third party in the open market, even during a blackout period.

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We may in the future incur impairments in the value of our goodwill, intangibles and property, plant and equipment.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.  We test goodwill for impairment annually, and more frequently when events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Additionally, our other long-lived assets which include intangibles and property, plant and equipment are evaluated for impairments whenever events or changes in circumstances indicate the carrying value may not be recoverable.  Either of these situations may occur for various reasons, including changes in actual or expected income or cash.  We continue to evaluate current conditions to assess whether any impairment exists.   Impairments could occur in the future if any of the following occur: market or interest rate environments deteriorate, significant adverse changes in business climate, unanticipated competition, loss of key customers, changes in technology, expected future cash flows of our reporting units decline, or reporting unit carrying values change materially compared with changes in respective fair values.

We utilize debt financing and such indebtedness could adversely affect our business, financial condition, results of operations, earnings per share and our ability to meet our payment obligations.

We routinely incur indebtedness to finance our operations and from time to time we have significant amounts of outstanding indebtedness and substantial debt service requirements. Our amended and restated senior secured credit facility with a group of lenders led by Morgan Stanley Senior Funding, Inc., provides for a $540 million revolving credit facility and a $100 million term loan. The credit facility contains customary affirmative, negative and financial covenants, including a maximum total leverage ratio and a minimum fixed charge coverage ratio. Our ability to meet our payment and other obligations and covenants under our indebtedness depends on our ability to generate significant cash flow. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. There is no assurance that our business will generate cash flow from operations, or that future borrowings will be available to us under our existing or any amended credit facilities or otherwise, in an amount sufficient to enable us to meet payment obligations under indebtedness we may under take from time to time. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. There is no assurance that we will be able to implement any of these alternatives on commercially reasonable terms, if at all.  If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under any indebtedness we owe. As of January 3, 2016, our outstanding debt included $449.0 million related to our Senior Secured Revolving Credit Facility, $150 million of 2% Senior Exchange notes assumed from Spansion, $97.2 million Term Loan A, net of costs, $7.2 million of capital leases and $3.0 million of equipment loans.  See Note 14 for more information on our Senior Secured Revolving Credit Facility, 2.0% Senior Exchange notes assumed from Spansion and our Term Loan A and Note 19 on our capital leases.

If we fail to compete successfully in our highly competitive industry and markets, our business, financial condition and results of operations will be seriously harmed.

The semiconductor industry is intensely competitive. This intense competition results in a difficult operating environment that is marked by erosion of average selling prices over the life of each product and rapid technological change resulting in limited product life cycles. In order to offset selling price decreases, we attempt to decrease the manufacturing costs of our products and to introduce new, higher priced products that incorporate advanced features. If these efforts are not successful or do not occur in a timely manner, or if our newly introduced products do not gain market acceptance, our business, financial condition and results of operations could be seriously harmed.

Our ability to compete successfully in the rapidly evolving semiconductor industry depends on many factors, including:

· our success in developing and marketing new products, software platforms and manufacturing technologies and bringing them to market on a timely basis;

· the quality and price of our products;

· the pace at which customers incorporate our products into their systems, as is sometimes evidenced by design wins;

· the diversity of our product lines;

· the cost effectiveness of our design, development, manufacturing, support and marketing efforts, especially as compared to our competitors;

· our success in developing and introducing firmware in a timely manner;

· our customer service and customer satisfaction;

· our ability to successfully execute our flexible manufacturing strategy;

· the number, strength and nature of our competitors, the markets they target and the rate and success of their technological advances;

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· the success of certain of our development activity which is a part of our Emerging Technologies business segment;

· our ability to get competitive terms with our vendors, manufacturing partners and suppliers;

· general economic conditions; and

· our access to and the availability of working capital.

Although we believe we currently compete effectively in the above areas to the extent they are within our control, given the pace of change in our industry, our current abilities are not guarantees of future success. If we are unable to compete successfully in this environment, our business, financial condition and results of operations will be seriously harmed.

We may fail to realize all of the anticipated benefits of our acquisition of Spansion

On March 12, 2015, we completed our acquisition of Spansion. The success of the transaction will depend, in part, on our ability to achieve the anticipated cost synergies and other strategic benefits from combining the businesses of Cypress and Spansion. We expect to benefit from operational synergies resulting from the consolidation of capabilities and elimination of redundancies as well as greater efficiencies from increased scale, market integration and more automation. However, to realize these anticipated benefits, we must successfully combine the businesses of Cypress and Spansion. If we are not able to achieve these objectives, the anticipated cost synergies and other strategic benefits of the transaction may not be realized fully or at all or may take longer to realize than expected. We may fail to realize some or all of the anticipated benefits of the transaction in the amounts and times projected for a number of reasons, including that the integration may take longer than anticipated or be more costly than anticipated.

The failure to integrate successfully the businesses and operations of Cypress and Spansion in the expected time frame may adversely affect our future results.

Prior to the completion of the transaction, Cypress and Spansion historically operated as independent companies. Our management may face significant challenges in consolidating the functions of Cypress and Spansion and their subsidiaries, integrating their technologies, organizations, ERP systems, procedures, policies and operations, as well as addressing differences in the business cultures of the two companies and retaining key personnel. In connection with the acquisition, we are integrating certain operations of Cypress and Spansion, including, among other things, back-office operations, information technology and regulatory compliance. The integration of the two companies will be complex and time consuming, and require substantial resources and effort. The integration process and other disruptions resulting from the transaction may disrupt each company’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with our members and other market participants, employees, regulators and others with whom we have business or other dealings. If we fail to manage the integration of these businesses effectively, our growth strategy and future profitability could be negatively affected, and we may fail to achieve the intended benefits of the transaction.

We have incurred costs in connection with our acquisition of Spansion and will continue to incur costs in connection with the transaction.

We have incurred significant costs associated with transaction fees, professional services and other costs related to the transaction and we will continue to incur additional costs, including restructuring costs, in connection with the integration of the business. Specifically, through January 3, 2016, we have incurred $84.6 million for costs in addition to restructuring and other items associated with the merger and integration. Although we expect that the realization of efficiencies related to the integration of the businesses will offset merger-related and restructuring costs over time, this net benefit may not be achieved in the near term, or at all.

We face significant volatility in supply and demand conditions for our products, and this volatility, as well as any failure by us to accurately forecast future supply and demand conditions, could materially and negatively impact our business.

The semiconductor industry has historically been characterized by wide fluctuations in the demand for, and supply of, semiconductors. Demand for our products depends in large part on the continued growth of various electronics industries that use our products, including, but not limited to:

· automotive applications including advanced driver assistance systems (ADAS), instrument clusters, infotainment systems, body electronics, HVAC controls, event data recorders, powertrains and electric vehicle/hybrid-electric vehicle systems;

· industrial systems including factory automation equipment, smart electric meters, aerospace, industrial controls, point-of-sale terminals and test equipment

· consumer electronics including wearable electronics, smartphones, gaming consoles, gamepads, remote controls, toys, presenter tools, TVs, set-top boxes and fitness equipment;

· wireless telecommunications equipment;

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· computers and computer-related peripherals;

· medical equipment; and

· networking equipment.

Any downturn, shift in product launch schedule or reduction in the growth of these industries could seriously harm our business, financial condition and results of operations. In particular, our TrueTouch family of products is highly concentrated in consumer handset markets which are susceptible to changes in the general economy, consumer acceptance, design wins, competition and price.

We order materials and build our products based primarily on our internal forecasts, customer and distributor forecasts and secondarily on existing orders, which may be cancelled under many circumstances. Because our markets can be volatile, are based on consumer demand and subject to rapid technological and price changes, our forecasts may be inaccurate, causing us to make too many or too few of certain products.

Also, our customers frequently place orders requesting product delivery almost immediately after the order is made, which makes forecasting customer demand even more difficult, particularly when supply is abundant. If we experience inadequate demand or a significant shift in the mix of product orders that makes our existing capacity and capability inadequate, our fixed costs per semiconductor produced will increase, which will harm our financial condition and results of operations. Alternatively, if we should experience a sudden increase in demand, we will need to quickly ramp our inventory and/or manufacturing capacity to adequately respond to our customers. If we or our manufacturing partners are unable to ramp our inventory or manufacturing capacity in a timely manner or at all, we risk losing our customers’ business, which could have a negative impact on our financial performance and reputation.

If we fail to develop, introduce and sell new products or fail to develop and implement new technologies, our ability to compete in our end markets will suffer and our financial results could be adversely impacted.

Like many semiconductor companies, which operate in a highly competitive, quickly changing environment marked by rapid obsolescence of existing products, our future success depends on our ability to develop and introduce new products that customers choose to buy. Our new products, for example PSoC^® products, BLE, USB-Type C, Traveo and our ETD companies are an important strategic focus for us and therefore, they tend to consume a significant amount of our resources. The new products the market requires tend to be increasingly complex, incorporating more functions and operating at faster speeds than old products. Increasing complexity generally requires smaller features on a chip. This makes manufacturing new generations of products substantially more difficult than prior generations.

Despite the significant amount of resources we commit to new products, there can be no guarantee that such products will perform as expected or at all, be introduced on time to meet customer schedules or gain market acceptance. If we fail to introduce new product designs or technologies in a timely manner or are unable to manufacture products according to the requirements of these designs, or if our customers do not successfully introduce new systems or products incorporating our products, or market demand for our new products does not materialize as anticipated, our business, financial condition and results of operations could be materially harmed.

The complex nature of our manufacturing activities, our broad product portfolio, and our increasing reliance on third-party manufacturers makes us highly susceptible to manufacturing problems and these problems can have a substantial negative impact on us if they occur.

Making semiconductors is a highly complex and precise process, requiring production in a tightly controlled, clean environment. Even very small impurities in our manufacturing materials, defects in the masks used to print circuits on a wafer or other problems in the wafer fabrication process can cause a substantial percentage of wafers to be rejected or numerous chips on each wafer to be non-functional. We and, similarly, our third party foundry partners, may experience problems in achieving an acceptable success rate in the manufacture of wafers and the likelihood of facing such difficulties is higher in connection with the transition to new manufacturing methods. The interruption of wafer fabrication or the failure to achieve acceptable manufacturing yields at any of our facilities, or the facilities of our third-party foundry partners, would seriously harm our business, financial condition and results of operations. We may also experience manufacturing problems in our assembly and test operations and in the introduction of new packaging materials.

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We are increasingly dependent upon third parties to manufacture, distribute, generate a significant portion of our product sales, fulfill our customer orders and transport our product. Problems in the performance or availability of these companies could seriously harm our financial performance.

Although many of our products are fabricated in our manufacturing facilities located in Minnesota, Austin, Malaysia and the Philippines, we rely to a significant extent on independent contractors to manufacture and assemble our products. In addition, if market demand for our products exceeds our internal manufacturing capacity and available capacity from our foundry partners, we may seek additional foundry manufacturing arrangements.

A shortage in foundry manufacturing capacity, which is more likely to occur at times of increasing demand, could hinder our ability to meet demand for our products and therefore adversely affect our operating results. In addition, greater demand for wafers produced by any such foundries without an offsetting increase in foundry capacity raises the likelihood of potential wafer price increases. Our operations would be disrupted if any of our foundry partners terminates its relationship with us or has financial issues and we are unable to arrange a satisfactory alternative to fulfill customer orders on a timely basis and in a cost-effective manner. There are also only a few foundry vendors that have the capabilities to manufacture our most advanced products. If we engage alternative sources of supply, we may encounter start-up difficulties, yield issues or incur additional costs. Shipments could be delayed significantly while these sources are qualified for volume production.

While a high percentage of our products are assembled, packaged and tested at our manufacturing facilities located in the Philippines and Malaysia, we rely on independent subcontractors to assemble, package and test the balance of our products. We cannot be certain that these subcontractors will continue to assemble, package and test products for us on acceptable economic and quality terms or at all and it might be difficult for us to find alternatives if they do not do so.

Our foundry partners and assembly and test subcontractors have operations in locations that may suffer the impact of certain natural disasters, which could impact their ability to provide us with our products. We monitor these events closely, but if one of our third party manufacturing partners were to suffer significant damage to its operations as a result of a natural disaster, our ability to timely meet consumer demand would suffer which would materially harm our results of operations.

Our channel partners include distributors and resellers. We continue to expand and change our relationships with our distributors. Worldwide sales through our distributors accounted for approximately 71% of our net sales in fiscal year 2015. We rely on many distributors to assist us in creating customer demand, providing technical support and other value-added services to our customers, filling customer orders and stocking our products. We face ongoing business risks due to our reliance on our channel partners to create and maintain customer relationships where we have a limited or no direct relationship. Should our relationships with our channel partners or their effectiveness decline, we face the risk of declining demand which could affect our revenue and results of operations. Our contracts with our distributors may be terminated by either party upon notice. In addition, our distributors are located all over the world and are of various sizes and financial conditions. Any disruptions to our distributors’ operations such as lower sales, lower earnings, debt downgrades, the inability to access capital markets and higher interest rates could have an adverse impact on our business.

We also rely on independent carriers and freight haulers to move our products between manufacturing plants and our customers’ facilities. Transport or delivery problems due to their error or because of unforeseen interruptions in their business due to factors such as strikes, political instability, terrorism, natural disasters or accidents could seriously harm our business, financial condition and results of operations and ultimately impact our relationship with our customers.

We may be unable to protect our intellectual property rights adequately.

The protection of our intellectual property rights, as well as those of our subsidiaries, is essential to keeping others from copying the innovations that are critical to our existing and future products. It may be possible for an unauthorized third party to reverse-engineer or decompile our software products. The process of seeking patent protection can be long and expensive and we cannot be certain that any currently pending or future applications will actually result in issued patents, or that, even if patents are issued, they will be respected by third parties. Furthermore, our flexible fab initiative requires us to enter into technology transfer agreements with external partners, providing third party access to our intellectual property and resulting in additional risk. In some cases, these technology transfer and/or license agreements are with foreign companies and subject our intellectual property to regulation in foreign countries which may afford less protection and/or result in increased costs to enforce such agreements or intellectual property rights. We anticipate that we will continue to enter into these kinds of licensing arrangements in the future. Consequently, we may become involved in litigation, in the United States or abroad, to enforce our patents or other intellectual property rights, to protect our trade secrets and know-how, to determine the validity or scope of the proprietary rights of others or to defend against claims of invalidity. We are also from time to time involved in litigation relating to alleged infringement by us of others’ patents or other intellectual property rights.

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Moreover, a key element of our strategy is to enter new markets with our products. If we are successful in entering these new markets, we will likely be subject to additional risks of potential infringement claims against us as our technologies are deployed in new applications and face new competitors. We may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights, particularly in certain international markets, making misappropriation of our intellectual property more likely. Patent litigation, if necessary or if and when instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

We also rely on trade secret protection for our technology, in part through confidentiality and other written agreements with our employees, consultants and third parties. Through these and other written agreements, we attempt to control access to and distribution of our intellectual property documentation and other proprietary technology information. Despite our efforts to protect our proprietary rights, former employees, consultants or third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property rights or technology or otherwise develop a product with the same functionality as our technology. Policing unauthorized use of our intellectual property rights is difficult, and nearly impossible on a worldwide basis. Therefore, we cannot be certain that the steps we have taken or will take in the future will prevent misappropriation of our technology or intellectual property rights, particularly in foreign countries where we do business or where our technology is sold or used, where the laws may not protect proprietary rights as fully as do the laws of the United States or where the enforcement of such laws is not common or effective.

We may be involved in intellectual property litigation and face significant expenses as a result of ongoing or future litigation.

Other companies or entities also have commenced, and may again commence, actions seeking to establish the invalidity of our patents. While we intend to defend these actions vigorously, there is no guarantee of success, and such effort takes significant financial and time resources from the Company. In the event that one or more of our patents are challenged, a court or the United States Patent and Trademark Office may invalidate the patent(s) or determine that the patent(s) is not enforceable, which could harm our competitive position. If our patents are invalidated, or if the scope of the claims in any of these patents is limited by a court or USPTO decision, we could be prevented from pursuing certain litigation matters or licensing the invalidated or limited portion of such patents. Such adverse decisions could negatively impact our future, expected revenue.

Intellectual property litigation is frequently expensive to both the winning party and the losing party and could take up significant amounts of management’s time and attention. In addition, if we lose such a lawsuit, a court could find that our intellectual property rights are invalid, enabling our competitors to use our technology, or require us to pay substantial damages and/or royalties or prohibit us from using essential technologies. For these and other reasons, this type of litigation could seriously harm our business, financial condition and results of operations. Also, although in certain instances we may seek to obtain a license under a third party’s intellectual property rights in order to bring an end to certain claims or actions asserted against us, we may not be able to obtain such a license on reasonable terms or at all. We believe we have meritorious defenses and claims in our current litigation and we intend to defend and pursue such claims vigorously. Unfortunately, such litigation and other claims are subject to inherent uncertainties.

We face additional problems and uncertainties associated with international operations that could seriously harm us.

International revenues historically accounted for a significant portion of our total revenues. Our manufacturing, assembly, test operations and certain finance operations located in outside of the United States, as well as our international sales offices and design centers, face risks frequently associated with foreign operations including but not limited to:

· currency exchange fluctuations;

· the devaluation of local currencies;

· political instability;

· labor issues;

· the impact of natural disasters on local infrastructures and economies;

· changes in local economic conditions;

· import and export controls;

· potential shortage of electric power supply;

· potential violations by our international employees or third party agents of international or U.S. laws relevant to foreign operations (such as FCPA) and

· changes in tax laws, tariffs and freight rates.

To the extent any such risks materialize, our business, financial condition or results of operations could be seriously harmed.

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We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel would harm us.

To a greater degree than most non-technology companies, we depend on the efforts and abilities of certain key members of management and technical personnel to execute on the strategic initiatives of our business. Our future success depends, in part, upon our ability to retain such personnel and to attract and retain other highly qualified personnel, particularly product and process engineers. We compete for these individuals with certain of our competitors, other companies, academic institutions, government entities and other organizations. Competition for such personnel is intense and we may not be successful in hiring or retaining new or existing qualified personnel. Equity awards are critical to our ability to hire and retain such key personnel. In addition, we may also need to significantly increase our cash based compensation to retain such personnel.

Our financial results could be adversely impacted if our Emerging Technologies businesses fail to develop and successfully bring to market new and proprietary products.

We have made a financial and personnel commitment to our Emerging Technologies businesses. Despite the significant amount of resources we commit to our Emerging Technologies businesses, there can be no guarantee that such Emerging Technologies businesses will perform as expected or at all, launch new products and solutions as expected or gain market acceptance. If our Emerging Technologies businesses’ fail to introduce new product and solutions or successfully develop new technologies, or if our customers do not successfully introduce new systems or products incorporating the products or solutions offered by our Emerging Technologies businesses or market demand for the products or solutions offered by our Emerging Technologies businesses do not materialize as anticipated, our business, financial condition and results of operations could be materially harmed.

Any guidance that we may provide about our business or expected future results may differ significantly from actual results.

From time to time we have shared our views in press releases or SEC filings, on public conference calls and in other contexts about current business conditions and our expectations as to our future results of operations. Correctly identifying the key factors affecting business conditions and predicting future events is inherently an uncertain process, especially in uncertain economic times. Given the complexity and volatility of our business, our analyses and forecasts have in the past and will likely in the future, prove to be materially incorrect. We offer no assurance that such predictions or analyses will ultimately be accurate, and investors should treat any such predictions or analyses with appropriate caution. Any analysis or forecast that we make which ultimately proves to be inaccurate may adversely affect our stock price.

We are subject to many different environmental, health and safety laws, regulations and directives, and compliance with them may be costly.

We are subject to many different international, federal, state and local governmental laws and regulations related to, among other things, the storage, use, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing process, conflict mineral and data privacy legislation, as well as the health and safety regulations related to our employees. Compliance with these regulations can be costly. We cannot assure you that we have been, or will be at all times in complete compliance with such laws and regulations. If we violate or fail to comply with these laws and regulations, we could be fined or otherwise sanctioned by the regulators. Under certain environmental laws, we could be held responsible, without regard to fault, for all of the costs relating to any contamination at our or our predecessors’ past or present facilities and at third party waste disposal sites. We could also be held liable for any and all consequences arising out of human exposure to such substances or other environmental damage.

Over the last several years, there has been increased public awareness of the potentially negative environmental impact of semiconductor manufacturing operations. This attention and other factors may lead to changes in environmental regulations that could force us to purchase additional equipment or comply with other potentially costly requirements. If we fail to control the use of, or to adequately restrict the discharge of, hazardous substances under present or future regulations, we could face substantial liability or suspension of our manufacturing operations, which could seriously harm our business, financial condition and results of operations.

We face increasing complexity in our product design as we adjust to new and future requirements relating to the material composition of our products, including the restrictions on lead and other hazardous substances that apply to specified electronic products put on the market in the European Union, China and California. Other countries, including at the federal and state levels in the United States, are also considering similar laws and regulations. Certain electronic products that we maintain in inventory may be rendered obsolete if they are not in compliance with such laws and regulations, which could negatively impact our ability to generate revenue from those products. Although we cannot predict the ultimate impact of any such new laws and regulations, they will likely result in additional costs, or in the worst case decreased revenue, and could even require that we redesign or change how we manufacture our products. Such redesigns result in additional costs and possible delayed or lost revenue.

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Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our worldwide operations could be adversely affected if disrupted for any reason, including natural disasters such as earthquakes, tsunamis, floods, hurricanes, typhoons, telecommunication or information technology system failures, regulatory or political issues, power or water shortages, fires, extreme weather conditions, medical epidemics or pandemics or other man- made disasters or catastrophic events. While we maintain business interruption insurance for our primary foreign manufacturing operations, we are self-insured for any loss or damage to our primary manufacturing facility. As such, the occurrence of any of these business disruptions for us or our third party manufacturers, partners or customers could result in significant losses, seriously harm our revenue and financial condition, adversely affect our competitive position, increase our costs and expenses, and require substantial expenditures and recovery time in order to fully resume operations. Our corporate headquarters, and a portion of our research and development activities, are located in California, and other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults known for seismic activity. The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including the Philippines, Malaysia, China and India. We also rely on major logistics hubs primarily in Asia to manufacture and distribute our products. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults and being consolidated in certain geographical areas is unknown. However in the event of a major earthquake or other natural disaster or catastrophic event, our revenue, profitability and financial condition could suffer.

System security risks, data protection or privacy breaches, cyber-attacks and systems integration issues could disrupt our internal operations and/or harm the reputation of the Company, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution or other critical functions.

We manage and store various proprietary information and sensitive or confidential data relating to our business on the cloud. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time consuming, disruptive and resource-intensive. Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed sales, lower margins or lost customers resulting from these disruptions have adversely affected us in the past, and in the future could adversely affect our financial results, stock price and reputation.

We maintain self-insurance for certain indemnities we have made to our officers and directors, and if a significant payment were to arise out of such liabilities, it could harm our financial condition and results of operation.

Our certificate of incorporation, by-laws and indemnification agreements require us to indemnify our officers and directors for certain liabilities that may arise in the course of their service to us. We self-insure with respect to these indemnifiable claims. If we were required to pay a significant amount on account of these liabilities for which we self-insure, our business, financial condition and results of operations could be seriously harmed.

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New regulations related to “conflict minerals” may force us to incur additional expenses, may make our supply chain more complex and may result in damage to our reputation with customers.

On August 22, 2012, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the SEC adopted new requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties. These requirements require companies to do diligence, disclose and report whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries. We have undertaken the necessary diligence to determine whether such minerals are used in the manufacture of our products. However, the implementation of these new requirements could adversely affect the sourcing, availability and pricing of such minerals if they are found to be used in the manufacture of our products. In addition, regardless of our findings, we will incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the due diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in satisfying customers who require that all of the components of our products are certified as conflict mineral free. The next report is due on May 31, 2016 for the 2015 calendar year.

Changes in U.S. and International tax legislation regarding our foreign earnings could materially impact our business.

A majority of our revenue is generated from customers located outside the U.S. and a substantial portion of our assets, including employees, are located outside the U.S. United States income tax has not been provided on a portion of earnings of our non-U.S. subsidiaries to the extent that such earnings are considered to be indefinitely reinvested. In the past, the administration has considered initiatives which could substantially reduce our ability to defer U.S. taxes including: limitations on deferral of U.S. taxation of foreign earnings eliminate utilization or substantially reduce our ability to claim foreign tax credits, and eliminate various tax deductions until foreign earnings are repatriated to the U.S. If any of these proposals are constituted into law, they could have a negative impact on our financial position and results of operations.

We are subject to examination by the U.S. Internal Revenue Service (the “IRS”), and from time to time we are subject to income tax audits or similar proceedings in other jurisdictions in which we do business, and as a result we may incur additional costs and expenses or owe additional taxes, interest and penalties which will negatively impact our operating results.

We are subject to income taxes in the U.S. and certain foreign jurisdictions, and our determination of our tax liability is subject to review by applicable domestic and foreign tax authorities. The results of these US and certain foreign jurisdiction examinations may result in a decrease of our current estimate of unrecognized tax benefits or increase of actual tax liabilities which could negatively impact our financial position, results of operations and cash flows.

Tax bills are introduced from time to time to reform U.S. taxation of international business activities. The Organization for Economic Co-operation and Development, or OECD, also recently released guidance covering various topics, including country-by-country reporting, definitional changes to permanent establishment and Base Erosion and Profit Shifting, or BEPS, an initiative that aims to standardize and modernize global tax policy. Depending on the final guidance and legislation ultimately enacted, if any, there may be significant consequences for us due to the large scale of our international business activities.

In addition, policies regarding corporate income taxes in numerous jurisdictions are under heightened scrutiny. As a result, decisions by tax authorities regarding treatments and positions of corporate income taxes could be subject to legislative investigation and inquiry, which could result in changes in tax policies or prior tax rulings. There can be no assurance as to the outcome of these investigations and inquiries. As such, the taxes we previously paid may be subject to change and our taxes may increase in the future, which could have an adverse effect on our results of operations, financial condition and our corporate reputation.

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If the tax incentive or tax holiday arrangements we have negotiated in Malaysia, Philippines and Thailand change or cease to be in effect or applicable, in part or in whole, for any reason, or if our assumptions and interpretations regarding tax laws and incentive or holiday arrangements prove to be incorrect, the amount of corporate income taxes we have to pay could significantly increase.

We have structured our operations to maximize the benefit from various tax incentives and tax holidays extended to us in various jurisdictions to encourage investment or employment. Each such tax incentive is separate and distinct from the others, and may be granted, withheld, extended, modified, truncated, complied with or terminated independently without any effect on the other incentives. The tax incentives are presently scheduled to expire at various dates generally beginning in 2018, subject in certain cases to potential extensions, which we may or may not be able to obtain. Absent these tax incentives, the corporate income tax rate in these jurisdictions that would otherwise apply to us would be between 20% to 30%. The tax incentives that we have negotiated are also subject to our compliance with various operating and other conditions. If we cannot, or elect not to, comply with the operating conditions included in any particular tax incentive, we will lose the related tax benefits and we could be required to refund previously realized material tax benefits. Depending on the incentive at issue, we could also be required to modify our operational structure and tax strategy, which may not be as beneficial to us as the benefits provided under the present tax concession arrangements. Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and adversely affect our cash flows.

The accumulation of changes in our shares by “5-percent stockholders” could trigger an ownership change for U.S. income tax purposes, in which case our ability to utilize our net operating losses would be limited and therefore impact our future tax benefits.

Cypress is a publicly traded company whose stockholders can change on a daily basis. These changes are beyond our control. The U.S. Internal Revenue Code (Section 382) restricts a company’s ability to benefit from net operating losses if a “Section 382 Ownership Change” occurs. An ownership change for purposes of U.S. tax law Section 382 may result from ownership changes that increase the aggregate ownership of “5-percent stockholders,” by more than 50 percentage points over a testing period, generally three years (“Section 382 Ownership Change”). We experienced a Section 382 Ownership Change upon the acquisition of Spansion. The resulting limitations accompanying the ownership change are reflected in our deferred tax assets with no permanent limitation in our ability to utilize our tax attributes.

Acquisition and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.

Acquisitions are an important element of our overall corporate strategy and use of capital. These transactions could be material to our financial condition and results of operations. We expect to continue to evaluate and enter into discussions regarding a wide array of potential strategic transactions. The process of integrating an acquired company, business, or technology has created, and will continue to create, unforeseen operating difficulties and expenditures. The areas where we face risks include, but are not limited to:

· Diversion of management time and focus from operating our business to integration challenges;

· Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire;

· Successfully transitioning the current customer, supplier, foundry and other partnering relationships of the acquired company;

· Implementation or remediation of controls, procedures, and policies at the acquired company;

· Integration of the acquired company’s accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales and marketing functions;

· In the case of acquired companies with global operations, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries;

· Failure to successfully further develop the acquired business or technology;

· Liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and

· Pending litigation or other known or unknown claims in connection with the acquired company, including claims by stockholders for breach of fiduciary duties, terminated employees, customers, former stockholders, or other third parties.

Our failure to address these and other risks or other problems encountered in connection with our past or current acquisitions and investments could cause us to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities, and harm our business generally. Current and future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition or results. As a result, the anticipated benefit of many of our acquisitions may not be realized.

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We invest in companies for strategic reasons and may not realize a return on our investments.

We make investments in companies to further our strategic objectives and support our key business initiatives. Such investments include equity instruments of private companies, and many of these instruments are non-marketable at the time of our initial investment. These companies range from early-stage companies that are often still defining their strategic direction to more mature companies with established revenue streams and business models. The success of these companies is dependent on product development, market acceptance, operational efficiency, and other key business factors as well as their ability to secure additional funding, obtain favorable investment terms for future financings, or participate in liquidity events such as public offerings, mergers, and private sales. If any of these companies fail, we could lose all or part of our investment in that company. If we determine that other-than-temporary decline in the fair value exists for an equity investment in a company in which we have invested, we write down the investment to its fair value and recognize the related write-down as an investment loss.

When the strategic objectives of an investment have been achieved, or if the investment or business diverges from our strategic objectives, we may decide to dispose of the investment. We may incur losses on the disposal of our investments. Additionally, for cases in which we are required under equity method accounting to recognize a proportionate share of another company's income or loss, such income or loss may impact our earnings. Gains or losses from equity securities could vary from expectations depending on gains or losses realized on the sale or exchange of securities, gains or losses from equity method investments, and impairment charges for equity and other investments.

We may have fluctuations in the amount and frequency of our stock repurchases.

On October 20, 2015, our Board of Directors approved a new share repurchase plan pursuant to which we are authorized to repurchase our common stock in an aggregate amount not to exceed $450 million. Although our Board of Directors has approved a share repurchase program, the share repurchase program does not obligate us to repurchase any specific dollar amount or number of shares.  The stock repurchase could affect the price of our stock and increase volatility and may be suspended or terminated at any time without prior notice and in compliance with legal and regulatory requirements, which may result in a decrease in the trading price of our common stock.  

There can be no assurance we will continue to declare dividends and that our cash distributions on common stock will continue to be considered a return of capital.

In the second quarter of fiscal 2011, our Board of Directors adopted a policy pursuant to which the Company would pay quarterly cash distributions on our common stock. We intend to continue to pay such distributions subject to capital availability and periodic determinations by our Board of Directors that cash distributions are in the best interest of our shareholders and are in compliance with all laws and agreements of Cypress applicable to the declaration and payment of cash distributions. Based upon our lack of current earnings and profits, in the United States, prior to 2016, these distributions have been treated for income tax purposes as a return of capital.

Future distributions may be affected by, among other factors:

· our views on potential future capital requirements for investments in acquisitions and the funding of our research and development;

· stock repurchase programs;

· changes in federal and state income tax laws or corporate laws;

· changes to our business model; and

· debt payments.

Our distribution payments may change from time to time, and we cannot provide assurance that we will continue to declare distributions in any particular amounts or at all. In addition, we cannot provide assurance that the cash distributions will continue to be treated for income tax purposes as a return of capital. A reduction in our distribution payments or a change in the tax treatment of future distributions could have a negative effect on our stock price.

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If we are unable to obtain stockholder approval of additional shares for our share-based compensation award programs in the future, we could be at a competitive disadvantage in the marketplace for qualified personnel.

Our compensation program, which includes cash and share-based compensation award components, has been instrumental in attracting, hiring, motivating, and retaining qualified personnel. Competition for qualified personnel in our industry is extremely intense, particularly for engineering and other technical personnel. Our success depends on our continued ability to attract, hire, motivate, and retain qualified personnel and our share-based compensation award programs provide us with a competitive compensatory tool for this purpose. The continued use of our share-based compensation program is necessary for us to compete for engineering and other technical personnel and professional talent. In the future, if we are unable to obtain stockholder approval of additional shares for our share-based compensation award programs, we could be at a competitive disadvantage in the marketplace for qualified personnel.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our executive offices are located in San Jose, California. The following tables summarize our primary properties as of the end of fiscal 2015:

Location	Square Footage	Primary Use
Owned:
United States :
Bloomington, Minnesota	337,000	Manufacturing, research and development
San Jose, California	171,000	Administrative offices, research and development
Austin, Texas	1,514,000	Manufacturing, research and development and administrative offices
Colorado Springs, Colorado	70,400	Administrative offices, research and development
Lynnwood, Washington	67,000	Administrative offices, research and development
Asia :
Cavite, Philippines	253,000	Manufacturing, research and development
Bangkok	253,000	Manufacturing, research and development
Penang, Malaysia	175,000	Manufacturing, research and development and administrative offices

We have an additional 760,000 square feet of leased space for research and development, administrative, sales offices and design centers located in the United States, Asia and Europe. We believe that our current properties are suitable and adequate for our foreseeable needs. We may need to exit facilities as we continue to evaluate our business model and cost structure.  

ITEM 3. LEGAL PROCEEDINGS

Information with respect to this item may be found in Note 19 of Notes to Consolidated Financial Statements under Item 8, which is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information, Holders of Common Equity, Dividends and Performance Graph

On November 12, 2009, our common stock was listed on the NASDAQ Global Select Market under the trading symbol “CY.” Prior to November 12, 2009, our common stock was listed on the New York Stock Exchange. The following table sets forth the high and low per share prices for our common stock:

	Low		High
Fiscal 2015:
Fourth quarter	$	8.11	$	10.96
Third quarter	$	8.55	$	12.46
Second quarter	$	11.65	$	14.46
First quarter	$	13.39	$	16.25
Fiscal 2014:
Fourth quarter	$	14.42	$	14.68
Third quarter	$	9.96	$	10.23
Second quarter	$	10.42	$	10.66
First quarter	$	10.00	$	10.27
Fiscal 2013:
Fourth quarter	$	8.97	$	10.34
Third quarter	$	9.05	$	13.10
Second quarter	$	9.60	$	11.55
First quarter	$	9.84	$	11.37

As of February 26, 2016, there were approximately 1,550 registered holders of record of our common stock.

Dividends

During fiscal 2015, we paid dividends of $128.0 million, at a rate of $0.11 per share of common stock paid in each quarter of the fiscal year.

During fiscal 2014, we paid dividends of $69.2 million, at a rate of $0.11 per share of common stock paid in each quarter of the fiscal year.

During fiscal 2013, we paid dividends of $64.8 million, at a rate of $0.11 per share of common stock paid in each quarter of the fiscal year.

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The following line graph compares the yearly percentage change in the cumulative total stockholder return on our common stock against the cumulative total return of the Standard and Poor (“S&P”) 500 Index and the S&P Semiconductors Index for the last five fiscal years:

*$100 invested on 1/2/11 in stock or 12/31/10 in index, including reinvestment of dividends.
Indexes calculated on month-end basis. Indexes calculated on month-end basis.

	January 1, 2012	December 30, 2012	December 29, 2013	December 28, 2014	January 3, 2016
Cypress**	91.88	59.52	60.86	89.78	62.70
S&P 500 Index	102.11	118.45	156.82	178.29	180.75
S&P Semiconductors Index	102.24	98.75	134.24	181.05	182.64
Peer Group	86.90	82.79	108.54	133.55	147.18

 ** All closing prices underlying this table have been adjusted for cash dividends, stock splits and stock dividends.

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Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information:

The following table summarizes certain information with respect to our common stock that may be issued under the existing equity compensation plans as of January 3, 2016:

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)			Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
	(In millions, except per-share amounts)
Equity compensation plans approved by shareholders		16.8	(1)	$	10.4	(3)		26.7	(6)
Equity compensation plans not approved by shareholders		11.1	(2)	$	5.6	(4)		10.1	(7)
Total		27.9		$	7.99	(5)		36.8

(1) Includes 8.3 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units)

(2) Includes 2.7 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units)

(3) Excludes the impact of 8.3 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) which have no exercise price.

(4) Excludes the impact of 2.7 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) which have no exercise price.

(5) Excludes the impact of 11.1 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) which have no exercise price.

(6) Includes 25 million shares available for future issuance under Cypress’s 2013 Stock Plan and 1.7 million shares available for future issuance under Cypress’s Employee Stock Purchase Plan.

(7) Includes two thousand shares available for future issuance under the assumed Ramtron Plan and 10.1 million shares available for future issuance under the assumed Spansion Plan.

See Note 8 of Notes to Consolidated Financial Statements under Item 8 for further discussion of Cypress’s stock plans.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Stock Buyback Programs:

Approval of a New $450 Million Stock Buyback Program

On October 20, 2015, our Board of Directors (the “Board”) approved a new share repurchase plan pursuant to which we are authorized to repurchase our common stock in an aggregate amount not to exceed $450 million. In connection with the approval of the new share repurchase plan, the share repurchase plan previously approved in September 2011 was terminated.  The new share repurchase plan may be funded all or in part by term loans under the Amended Credit Facility. The share repurchase program does not obligate us to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice and in compliance with legal and regulatory requirements.  

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The table below sets forth information with respect to repurchases of our common stock made during fiscal 2013, 2014 and 2015 under these programs:

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Total Dollar Value of Shares That May Yet Be Purchase Under the Plans or Programs
	(In thousands, except per-share amounts)
Authorized fund under 2011 Repurchase program:		—	$	—		—	$	400,000
Repurchases in fiscal 2013:
December 31, 2012—March 31, 2013		411	$	10.49		411	$	84,059
April 1, 2013—June 30, 2013		10	$	10.71		10	$	83,952
July 1, 2013—September 29, 2013		9	$	11.41		9	$	83,856
September 30, 2013—December 29, 2013		23	$	9.46		23	$	83,675
Total repurchases in fiscal 2013		453				453	$	83,675
Repurchases in fiscal 2014:
December 30, 2013—March 30, 2014		18	$	10.23		18	$	83,490
March 31, 2014—June 29, 2014		7	$	9.72		7	$	83,425
June 30, 2014—September 28, 2014		3	$	10.53		3	$	83,398
September 29, 2014—December 28, 2014		5	$	10.27		5	$	83,341
Total repurchases in fiscal 2014		33				33	$	83,341
Repurchases in fiscal 2015:
December 29, 2014—March 29, 2015		6	$	14.66		6	$	83,252
March 30, 2015—June 28, 2015		818	$	12.75		818	$	72,672
June 29, 2015—September 27, 2015		2	$	10.62		2	$	72,648
Total repurchases in fiscal 2015		826				826	$	72,648
Total repurchases under this program		1,312				1,312
Authorized fund under 2015 Repurchase program:							$	450,000
September 28, 2015—January 3, 2016		5,658	$	9.99		5,658	$	393,475
Total repurchases in fiscal 2015		5,658				5,658	$	393,475
Total repurchases under this program		5,658				5,658

Yield Enhancement Program (“YEP”):

In fiscal 2009, the Audit Committee approved a yield enhancement strategy intended to improve the yield on our available cash. As part of this program, the Audit Committee authorized us to enter into short-term yield enhanced structured agreements, typically with maturities of 90 days or less, correlated to our stock price. Under the agreements we have entered into to date, we pay a fixed sum of cash upon execution of an agreement in exchange for the financial institution’s obligations to pay either a pre-determined amount of cash or shares of our common stock depending on the closing market price of our common stock on the expiration date of the agreement. Upon expiration of each agreement, if the closing market price of our common stock is above the pre-determined price, we will have our cash investment returned plus a yield substantially above the yield currently available for short-term cash investments. If the closing market price is at or below the pre-determined price, we will receive the number of shares specified at the agreement’s inception. As the outcome of these arrangements is based entirely on our stock price and does not require us to deliver either shares or cash, other than the original investment, the entire transaction is recorded in equity. The shares received upon the maturing of a yield enhancement structure are included in our “shares of common stock held in treasury” in the Consolidated Balance Sheets under Item 8.

We have entered into various yield enhanced structured agreements based upon a comparison of the yields available in the financial markets for similar maturities against the expected yield to be realized per the structured agreement and the related risks associated with this type of arrangement. We believe the risk associated with these types of agreements is no different than alternative investments available to us with equivalent counterparty credit ratings. All counterparties to a yield enhancement program have a credit rating of at least Aa2 or A as rated by major independent rating agencies. For all such agreements that matured to date, the yields of the structured agreements were far superior to the yields available in the financial markets primarily due to the volatility of our stock price and the pre-payment aspect of the agreements. The counterparty is willing to pay a premium over the yields available in the financial markets due to the structure of the agreement.

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The following table summarizes the activity of our settled yield enhanced structured agreements during fiscal 2015 and 2014:

Periods	Aggregate Price Paid		Total Cash Proceeds Received Upon Maturity		Yield Realized		Total Number of Shares Received Upon Maturity		Average Price Paid per Share
Fiscal 2015:	(in thousands)
Settled through cash proceeds	$	28,966	$	29,353	$	387		—	$	—
Settled through issuance of common stock		9,601		—		—		1,000,000	$	9.60
Total for fiscal 2015	$	38,567	$	29,353	$	387		1,000,000		9.60
Fiscal 2014:
Settled through cash proceeds	$	19,415	$	19,733	$	318		—	$	—
Settled through issuance of common stock		—		—		—		—		—
Total for fiscal 2014	$	19,415	$	19,733	$	318		—	$	—

There was no activity of our yield enhanced structured agreements during fiscal 2013.

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ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data is not necessarily indicative of results of future operations, and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7, and the Consolidated Financial Statements and Notes to Consolidated Financial Statements under Item 8:

	Year Ended
	January 3, 2016 (2)			December 28, 2014 (2)			December 29, 2013			December 30, 2012			January 1, 2012
				(In thousands, except per-share amounts)
Consolidated Statement of Operations Data:
Revenues	$	1,607,853		$	725,497		$	722,693		$	769,687		$	995,204
Cost of revenues	$	1,207,850		$	361,820		$	384,121		$	376,887		$	448,602
Operating income (loss)	$	(336,905	)	$	22,873		$	(58,195	)	$	(18,915	)	$	153,719
Income (loss) attributable to Cypress (3)	$	(378,867	)	$	17,936		$	(48,242	)	$	(23,444	)	$	167,839
Noncontrolling interest, net of income taxes	$	(2,271	)	$	(1,418	)	$	(1,845	)	$	(1,614	)	$	(882	)
Net income (loss) (3)	$	(381,138	)	$	16,518		$	(50,087	)	$	(25,058	)	$	166,957
Adjust for net loss (income) attributable to noncontrolling    interest	$	2,271		$	1,418		$	1,845		$	1,614		$	882
Net income (loss) attributable to Cypress	$	(378,867	)	$	17,936		$	(48,242	)	$	(23,444	)	$	167,839
Net income (loss) per share—basic:
attributable to Cypress	$	(1.25	)	$	0.11		$	(0.32	)	$	(0.16	)	$	1.02
Net income (loss) per share—basic	$	(1.25	)	$	0.11		$	(0.32	)	$	(0.16	)	$	1.02
Net income (loss) per share—diluted:
attributable to Cypress	$	(1.25	)	$	0.11		$	(0.32	)	$	(0.16	)	$	0.90
Net income (loss) per share—diluted	$	(1.25	)	$	0.11		$	(0.32	)	$	(0.16	)	$	0.90
Dividends per share:
Declared	$	0.44		$	0.44		$	0.44		$	0.44		$	0.27
Paid	$	0.44		$	0.44		$	0.44		$	0.42		$	0.18
Shares used in per-share calculation:
Basic		302,036			159,031			148,558			149,266			164,495
Diluted		302,036			169,122			148,558			149,266			186,895

	As of
	January 3, 2016		December 28, 2014		December 29, 2013		December 30, 2012		January 1, 2012
			(In thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments	$	227,561	$	118,812	$	104,462	$	117,210	$	166,330
Working capital (3)	$	322,376	$	37,479	$	13,871	$	20,060	$	79,190
Total assets (3)	$	4,004,261	$	743,281	$	762,884	$	830,554	$	810,090
Debt (1)	$	688,265	$	243,250	$	248,230	$	264,942	$	45,767
Stockholders’ equity (3)	$	2,712,685	$	201,865	$	175,683	$	175,786	$	397,842

(1) The debt in fiscal year 2015 primarily included $449.0 million related to our Senior Secured Revolving Credit Facility, $150 million of 2% Senior Exchange notes assumed from Spansion, $97.2 million Term Loan A, net of costs, $7.2 million of capital leases and $3.0 million of equipment loans.  The debt in fiscal year 2014 primarily included $227.0 million related to our revolving credit facility, $10.3 million of capital leases, and $5.9 million of equipment loans. The debt in fiscal year 2013 primarily included $227.0 million related to our revolving credit facility, $12.5 million of capital leases, and $8.7 million of equipment loans. The debt in fiscal year 2012 included $232.0 million related to our revolving credit facility, $15.0 million of capital leases, $11.5 million of equipment loans, $3.3 million of a mortgage note related to Ramtron, and $3.1 million of advances received for the sale of certain of our auction rate securities. See Note 14 for more information on revolving credit facility, equipment loans and mortgage note and Note 19 for more information on capital leases.

(2) During the fourth quarter of fiscal 2014, the Company changed from recognizing revenue for sales to certain distributors at the time of shipment, as compared to when resold by the distributor to the end customer, as it determined it could reliably estimate returns and pricing concessions on certain product families and with certain distributors. This change increased fiscal 2014 revenues by $12.3 million, net income by $6.2 million and net income per share, basic and diluted, by $0.04. The change increased 2015 revenue by $40.9 million and decreased net loss by $25 million and net income per share, basic and diluted, by $0.07. See additional disclosures on this change in revenue recognition in Footnote 1 to the consolidated financial statements.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    

The Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that involve risks and uncertainties, which are discussed under Item 1A.

EXECUTIVE SUMMARY

General

Cypress Semiconductor Corporation (“Cypress”) delivers high-performance, high-quality solutions at the heart of today’s most advanced embedded systems, from automotive, industrial and networking platforms to highly interactive consumer and mobile devices. With a broad, differentiated product portfolio that includes NOR flash memories, F-RAM™ and SRAM, Traveo™ microcontrollers, the industry’s only PSoC® programmable system-on-chip solutions, analog and PMIC Power Management ICs, CapSense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth Low-Energy and USB connectivity solutions, Cypress is committed to providing its customers worldwide with consistent innovation, best-in-class support and exceptional system value.

Merger with Spansion

On March 12, 2015, we completed the merger (“Merger”) with Spansion Inc. (“Spansion”) pursuant to the Agreement and Plan of Merger and Reorganization, as of December 1, 2014 (the “Merger Agreement”), for a total consideration of approximately $2.8 billion. In accordance with the terms of the Merger Agreement, Spansion shareholders received 2.457 Cypress shares for each Spansion share they owned. The Merger has been accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standard Topic 805, Business Combinations, with Cypress treated as the accounting acquirer. The post-Merger company is expected to realize more than $160 million in cost synergies on an annualized basis within two years, and create a leading global provider of microcontrollers and specialized memories needed in today's embedded systems.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations includes the financial results of legacy Spansion beginning March 12, 2015. The comparability of our operating results for the year ended January 3, 2016 to the same period in fiscal 2014 is significantly impacted by our Merger. In our discussion and analysis of comparative periods, we have quantified the contribution of additional revenue or expense resulting from this transaction wherever such amounts were material and identifiable. While identified amounts may provide indications of general trends, the analysis cannot completely address the effects attributable to integration efforts.

Divestiture of TrueTouch^® Business

On August 1, 2015, we completed the sale of the TrueTouch^® mobile touchscreen business, which is a business unit within our Programmable Systems Division, to Parade Technologies (“Parade”) for total cash proceeds of $98.6 million pursuant to the definitive agreement signed on June 11, 2015. Of the total cash proceeds, $10.0 million are held in an escrow account until January 2017 subject to any indemnity claims on post-closing adjustments, per the terms of the agreement.   Post-sale, Cypress will continue to provide TrueTouch^® solutions to its automotive, industrial and home appliance customers and to its mobile customers. In connection with the transaction, we sold certain assets associated with the disposed business mostly consisting of inventory with a net book value of $10.5 million and recognized a gain of $66.5 million in the third fiscal quarter of fiscal 2015. This gain has been presented as a separate line item “Gain on divestiture of TrueTouch^® mobile business” in the Consolidated Statements of Operations.

Also in connection with the transaction, we entered into a Manufacturing Service Agreement (MSA) in which we agreed to sell finished wafers and devices to Parade during the one-year period following the close of the transaction.  The terms of the MSA indicated that we would sell finished products to Parade at agreed-upon prices that were considered below fair market value, indicating that there was an embedded fair value that would be realized by Parade through those terms.  Accordingly, we have allocated $19.9 million from the $98.6 million proceeds to the fair value of the MSA based on the forecasted wafer sales to Parade for the subsequent one-year period.  Such amount was deferred on our consolidated balance sheet initially and is being amortized to revenue as we sell products to Parade.  During the year ended January 3, 2016, we recognized $5.7 million of revenue from amortization of such deferred revenue.

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As of the end of fiscal 2015, our organization included the following business segments:

Business Segments	Description
PSD: Programmable Systems Division	PSD focuses on high-performance, programmable solutions. The programmable portfolio includes high-performance Traveo™ automotive microcontrollers, PSoC® programmable system-on-chip products, ARM® Cortex®-M4, -M3, -M0+ microcontrollers and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive-sensing controllers, TrueTouch® touchscreen and fingerprint reader products, and PSoC Bluetooth Low Energy solutions for the IoT. PSD added Spansion’s microcontroller and analog products starting March 12, 2015.
MPD: Memory Products Division	MPD focuses on high-performance parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), and high-reliability F-RAM™ ferroelectric memory devices. Its purpose is to enhance our position in these products and invent new products and derivatives. MPD added Spansion’s Flash memory products starting March 12, 2015.
DCD: Data Communications Division	DCD focuses on USB controllers, Bluetooth® Low Energy solutions that leverage Cypress’s PRoC™ programmable radio-on-chip technology, WirelessUSB™ solutions, module solutions such as trackpads and Bluetooth Low Energy modules, and controllers for the new USB Type-C standard, which enables data transmission and power delivery over a single cable with a slimmer plug. DCD focuses primarily on industrial, handset and consumer electronics markets and applications.
ETD: Emerging Technologies Division	Also known as our “startup” division, ETD includes subsidiaries AgigA Tech Inc. and Deca Technologies Inc., as well as our foundry business and other development-stage activities.

Our primary focus is profitable growth in our key markets. With the addition of the legacy Spansion business, we plan to capitalize on our expanded product portfolio and leadership positions in embedded processing and specialized memories to significantly extend our penetration of global markets such as automotive, industrial, communications, consumer, computation, data communications, mobile handsets and military. Our revenue model is based on the following product and market strategies: (a) increasing market share in our memory products by leveraging our market position and expanding our portfolio with new and complementary products, (b) growing revenue from our high-performance, programmable solutions and derivatives including PSoC programmable system-on-chip products and microcontrollers in the automotive and industrial markets, (c) increasing our DCD revenue through the introduction of new products such as USB Type-C solutions, SuperSpeed USB 3.0 peripheral controllers and Bluetooth® Low Energy solutions that leverage Cypress’s PRoC™ programmable radio-on-chip technology for the IoT and other applications, and (d) revenue growth from ETD, which includes our internal startup companies. For profitability, our focus is to integrate the acquired Spansion business successfully and realize the anticipated product cost and operational cost synergies. Our integration effort includes the re-focusing of portions of legacy Spansion business to higher-margin opportunities, particularly in the Flash memory business. We monitor our operating expenses closely to improve our operating leverage as driven by various company-wide initiatives, including our World Class Cost program to continuously reduce cost line items as well as a Human Resources effort to reduce redundancy and improve efficiency across the company.

In order to achieve our goals on revenue growth and profitability, Cypress will continue to pursue the following strategies:

· Successfully integrate our business with Spansion. We are committed to integrating the business of Cypress and Spansion successfully to realize the anticipated cost synergies and improve the bottom line.

· Cross-sell products from Cypress’s expanded product portfolio in the wake of the Spansion Merger. We will continue to take advantage of product and business synergies and grow our top-line revenue.

· Focus on large and growing markets. We will continue to pursue business opportunities in large and growing markets, particularly the automotive and industrial markets.

· Drive profitability. Cypress has implemented and maintained a tight, corporate wide focus on gross margin and operating expenses. We are committed to maintaining our current strong operating expense management without compromising our new product development and investments in our Emerging Technologies Division.

· Drive programmable technologies, extend our leadership in programmable products and drive PSoC and microcontroller proliferation. We will continue to define, design and develop new programmable products and solutions that offer our customers increased flexibility and efficiency, higher performance, and higher levels of integration with a focus on analog functionality. We will continue to drive PSoC and microcontroller adoption in our key market segments.

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· Collaborate with customers to build system-level solutions. We work closely with our customers from initial product design through manufacturing and delivery to optimize their design efforts, help them achieve product differentiation, improve their time-to-market and help them to develop whole product solutions.

· Leverage flexible manufacturing. Our manufacturing strategy combines capacity from leading foundries with output from our internal manufacturing facilities. This enables us to meet rapid swings in customer demand while reducing the burden of high fixed costs.

· Identify and exit legacy or non-strategic, underperforming businesses. We will continue to monitor and, if necessary, to exit certain business units that are inconsistent with our future initiatives and long-term financial plans so that we can focus our resources and efforts on our core programmable and proprietary business model. The sale of our TrueTouch^® mobile touchscreen business to Parade Technologies, Ltd. during the third quarter of 2015 is an example of this business strategy.

· Pursue complementary strategic relationships. We will continue to assess opportunities to develop strategic relationships through acquisitions, investments, licensing and joint development projects. We also will continue to make significant investments in current ventures as well as new ventures.

As we continue to implement our strategies, there are many internal and external factors that could impact our ability to meet any or all of our objectives. Some of these factors are discussed under Item 1A.

Manufacturing Strategy

Our core manufacturing strategy—”flexible manufacturing”—combines capacity from foundries with output from our internal manufacturing facilities. This strategy is intended to allow us to meet rapid swings in customer demand while lessening the burden of high fixed costs, a capability that is particularly important in high-volume consumer markets that we serve with our leading programmable product portfolio.

RESULTS OF OPERATIONS

Revenues

Our total revenues increased by $882.4 million or 121.6% to $1,607.9 million for the year ended January 3, 2016 compared to the prior year. For the year ended January 3, 2016, $962.3 million of the increase was attributable to revenue contributions from the acquired Spansion business which is included in the PSD and MPD divisions. The overall increase was partially offset by decrease in revenue from TrueTouch^® mobile business as a result of divestiture of the business on August 1, 2015. The overall average selling price of our products, including Spansion products, for the year ended January 3, 2016 was $1.09. Excluding Spansion products, our ASP for the year ended January 3, 2016 was $1.14, which increased by $0.05 compared with the same period in the prior year.

The Company operates on a 52 or 53 week year ending on the Sunday nearest to December 31. Fiscal 2014 and 2013 were each 52 weeks and fiscal 2015 was a 53-week year, with the extra week in the fourth fiscal quarter. The additional week in 2015 did not materially affect the Company's results of operations or financial position.

We have experienced, and expect to continue to experience, moderate pricing pressure in certain product lines, primarily due to competitive conditions. We have in the past been able to, and expect in the future to be able to, moderate average selling price declines in our product lines by introducing new products with more features and higher prices.  We may be unable to maintain average selling prices for our products as a result of increased pricing pressure in the future, which could adversely affect our operating results.

Consistent with our accounting policies and generally accepted accounting principles, we have historically recognized a significant portion of revenue through distributors at the time the distributor resold the product to its end customer (also referred to as the sell-through basis of revenue recognition) given the difficulty in estimating the ultimate price of these product shipments and amount of potential returns. We continually reassess our ability to reliably estimate the ultimate price of these products and, over the past several years, we have made investments in our systems and processes around our distribution channel to improve the quality of the information we receive from our distributors. Given these ongoing investments, and based on the financial framework we use for estimating potential price adjustments, beginning in the fourth quarter of 2014, we concluded that we have become able to reasonably estimate returns and pricing concessions on certain product families and with certain distributors, and recognized revenue at the time we shipped these specific products to the identified distributors, less our estimate of future price adjustments and returns. During the year ended January 3, 2016, we recognized an incremental $40.9 million of revenue on additional product families for which revenue was previously recognized on a sell-through basis as we determined that we could reasonably estimate returns and pricing concessions at the time of shipment to distributors. This change resulted in a decrease to the net loss of $25.0 million for the year ended January 3, 2016 or $0.07 per basic and diluted share.

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The following table summarizes our consolidated revenues by segments:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Programmable Systems Division	$	613,884	$	283,206	$	292,707
Memory Products Division		871,640		347,887		338,986
Data Communications Division		72,791		70,378		79,410
Emerging Technologies and Other		49,538		24,026		11,590
Total revenues	$	1,607,853	$	725,497	$	722,693

Programmable Systems Division:

Revenues from the Programmable Systems Division in fiscal 2015 increased by $330.7 million or 116.8% compared to fiscal 2014.  The increase in fiscal 2015 was primarily due to the $402.3 million of revenue contribution from the Spansion microcontroller and analog business for fiscal 2015. Excluding the impact of Spansion revenues, PSD decreased by $71.6 million for fiscal 2015, or 25.3%, compared to the prior year primarily due to weakness in our end customers’ handset/mobile business demand, decrease in revenue from TrueTouch^® mobile business as a result of divestiture of the business on August 1, 2015 and incremental revenue in fiscal 2014 as a result of the change in accounting for certain distributor revenues. The decrease was partially offset by an increase in sales of PSD products to the automotive applications, where we experienced a ramp in volume from recent design wins.  

Revenues from the Programmable Systems Division in fiscal 2014 decreased by $9.5 million or 3.2% compared to fiscal 2013. The revenue decrease in fiscal 2014 was primarily attributable to declines in sales of our TrueTouch® touchscreen products due to a decrease in revenue from our handset customers and lower average selling prices. The decrease was partially offset by an increase in sales of PSD products to industrial and automotive customers where we experienced a ramp in volume from new design wins. Fiscal 2014 revenue also included $8.2 million of incremental revenue as a result of the change in accounting for certain distributor revenues as discussed above.

Memory Products Division:

Revenues from the Memory Products Division increased in fiscal 2015 by $523.8 million or 150.6% compared to fiscal 2014. The increase was primarily due to $560.0 million of revenue contribution from the Spansion flash memory business for fiscal 2015. Excluding the impact of Spansion revenues, MPD decreased by $36.2 million or 10.4% in fiscal 2015 compared to the prior year primarily driven by sales decrease in the communication market segment.

Revenues from the Memory Products Division in fiscal 2014 increased by $8.9 million or 2.6% as compared to fiscal 2013, primarily due to an increase in sales of nonvolatile products associated with our acquisition of Ramtron in fiscal 2012, offset by a decrease in SRAM products driven by a continuing decrease in demand from wireless and wireline end customers. Fiscal 2014 revenue also included $4.1 million of incremental revenue as a result of the change in accounting for certain distributor revenues as discussed above.

Data Communications Division:

Revenue for the Data Communication Division in fiscal 2015 increased by $2.4 million or 3.4% compared to fiscal 2014 due to increasing revenue in our super speed USB products, offset by a decline in our trackpad products..

Revenue for the Data Communication Division in fiscal 2014 decreased by $9.0 million or 11.4% compared to fiscal 2013 due to declining revenue in our legacy high-speed USB controllers, optical navigation and trackpad products.

Emerging Technologies and Other:

Revenues from the Emerging Technologies Division increased by $25.5 million or 106.2% in fiscal 2015 compared to the prior year primarily due to the overall increase in demand at all of our Emerging Technologies companies. The increase was also attributable to increase in our Foundry revenues as we began selling products to Parade Technologies in August 2015 under the Manufacturing Services Agreement, which was signed in connection with our disposition of TrueTouch^® mobile business.

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Revenue from the Emerging Technologies Division in fiscal 2014 increased by $12.4 million or 107.3% compared to fiscal 2013 due to increased revenue in all three business - Deca Tech, Agiga Tech and our foundry business. The increase is due to the overall increase in demand as certain of our Emerging Technologies companies begin to ramp production with new customer design wins.

Cost of Revenues/Gross Margin

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(Inthousands)
Cost of revenues	$	1,207,850		$	361,820		$	384,121
Gross margin percentage		24.9	%		50.1	%		46.8	%

Gross margin consists of Revenues less Cost of revenues, and gross margin percentage is percentage of gross margin to revenue. Our gross margin can vary in any period depending on factors such as the mix of types of products sold and the impact of changes to inventory provisions, such as the write-down of inventory. Our gross margin is significantly impacted by the mix of products we sell, which is often difficult to estimate with accuracy. Therefore, if we achieve significant revenue growth in our lower margin product lines, or if we are unable to earn as much revenue as we expect from higher margin product lines, our gross margin may be negatively impacted.

Gross margin percentage declined to 24.9% in fiscal 2015 from 50.1% in fiscal 2014. The decrease in gross margin for fiscal 2015 was primarily due to impact of the merger with Spansion, which historically had lower gross margins than Cypress, and $133.0 million of additional inventory reserves which were recorded on inventory assumed as a part of the Merger. The additional reserves on inventory were recognized as part of our strategy to focus on high margin, profitable business as a combined company. Total charges to cost of sales for inventory provisions, including reserves on inventory assumed as part of the Merger, totaled $152.5 million for fiscal 2015 and $19.8 million for fiscal 2014, unfavorably impacting our gross margin by 9.5% and 3.0%, respectively. Sales of inventory that was previously written-off or written-down totaled $6.4 million for fiscal 2015 and $3.7 million for fiscal 2014, favorably impacting our gross margin by 0.4% and 1.0%, respectively. Our gross margin for fiscal 2015 was also impacted by $84.4 million of amortization of fair value adjustments, net of reserves, relating to acquired legacy Spansion inventory.

Gross margin percentage increased to 50.1% in fiscal 2014 from 46.8% in fiscal 2013 primarily driven by lower cost of revenue expenses associated with the inventory acquired in the Ramtron acquisition, higher factory absorption and product and customer mix. Charges to cost of revenue for inventory reserve provisions were $19.8 million during fiscal 2014 and $12.8 million for fiscal 2013, unfavorably impacting our gross margin by 3% and 2%, respectively. The benefit realized from sales of inventory previously reserved were $3.7 million and $5.1 million for fiscal year 2014 and fiscal 2013, favorably impacting our gross margin by 1% and 1%, respectively.

Research and Development (“R&D”)  

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(Inthousands)
R&D expenses	$	281,391		$	164,560		$	190,906
As a percentage of revenues		17.5	%		22.7	%		26.4	%

R&D expenditures increased by $116.8 million in fiscal 2015 compared to fiscal 2014. The increase was mainly attributable to $108.3 million of additional expenses due to the Merger, primarily comprised of $63.0 million of labor costs due to additional headcount, $24.0 million of building, repairs and other overhead expenses, $7.7 million of material costs on R&D projects, $8.5 million of professional services related to Information technology and other outside services and $9.5 million of increase in stock-based compensation expense.

R&D expenditures decreased by $26.3 million in fiscal 2014 compared to fiscal 2013. The decrease was primarily attributable to a decrease of $9.9 million in stock-based compensation and a decrease of $1.0 million in deferred compensation expense. There was an additional decrease in consulting fees and other outside services of $2.9 million and $10.0 million, respectively, as a result of a worldwide cost cutting effort. As a percentage of revenues, R&D expenses were lower in fiscal 2014 driven by the decrease in total expense in the same period.

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Selling, General and Administrative (“SG&A”)

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(Inthousands)
SG&A expenses	$	323,570		$	170,741		$	182,671
As a percentage of revenues		20.1	%		23.5	%		25.3	%

SG&A expenses increased by $152.8 million in fiscal 2015 compared to fiscal 2014. The increase was mainly due to $99.6 million of expenses from the Merger, primarily comprised of $50.0 million of labor costs due to additional headcount, $39.0 million of building, supplies, repairs and other overhead expenses, and $15.0 million of professional services expense related to information technology, legal and finance. Additionally, we also incurred $17.4 million of costs for professional fees for legal and audit services related to the Merger integration activities, $5.0M of termination costs on legacy Spansion patent license agreement and $30.6 million of increase in stock-based compensation expense primarily related to the 2015 PARS grants.

SG&A expenses decreased by $11.9 million in fiscal 2014 or 6.5% compared to fiscal 2013. The decrease was primarily attributable to a decrease in stock-based compensation of $13.4 million, a $7.9 million decrease in headcount related expenditures, a $2.0 million decrease in deferred compensation expense, a $1.6 million decrease in variable bonus-related expense, offset by $7.3 million of acquisition related expenditures associated with our proposed merger with Spansion, an increase of $2.7 million in legal fees and $1.3 million in accrued estimated legal settlements.

Amortization of Acquisition-Related Intangible Assets

During fiscal 2015, amortization of acquisition-related intangible assets increased by $101.7 million compared to fiscal 2014. The increase is primarily due to the amortization on the intangibles acquired in connection with the Merger.

During fiscal 2014, amortization of acquisition-related intangible assets decreased by $1.1 million compared to fiscal 2013. The decrease is primarily related to certain intangible assets acquired during fiscal 2012 that were fully amortized during fiscal 2013.

Restructuring

In March 2015, we began the implementation of planned cost reduction and restructuring activities in connection with the Merger. As part of this Spansion integration-related restructuring plan, we expect to eliminate approximately 1,000 positions from the combined workforce across all business and functional areas on a global basis. The restructuring charge of $90.1 million recorded for the year ended January 3, 2016 primarily consists of severance costs, lease termination costs and impairment of property, plant and equipment. The lease termination costs include approximately $18 million relating to the buildings Spansion had leased prior to the Merger, which we decided not to occupy in the post-Merger period. The initial term of the lease commenced on January 1, 2015 and will expire on December 31, 2026.

The following table summarizes the restructuring charges recorded in our Consolidated Statements of Operations for the periods presented pursuant to the Spansion Integration-Related Restructuring Plan:

	Year Ended
	January 3, 2016
	(In thousands)
Personnel costs	$	58,972
Lease termination costs and other related charges		18,016
Impairment of property, plant and equipment		12,531
Other		565
Total restructuring and other charges (benefit)	$	90,084

We anticipate that the remaining restructuring accrual balance will be paid out in cash through 2016 for employee terminations and over the remaining lease term through 2026 for the excess lease obligation.

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In the fourth quarter of fiscal 2015, we have realized approximately $137.7 million of synergy savings on an annualized basis from the restructuring actions taken. Upon completion of all of our actions, we anticipate our annualized synergy savings in the fourth quarter of fiscal 2016 to be approximately $160 million. When complete, we estimate approximately 40% of the savings will impact cost of goods sold and the remaining 60% will impact operating expenses. There can be no assurance that we will achieve these anticipated savings.

Gain on Divestiture of TruTouch® Mobile Business

In connection with the sale of the TrueTouch® mobile touchscreen business to Parade for total cash proceeds of $98.6 million, we sold certain assets associated with the disposed business mostly consisting of inventory with a net book value of $10.5 million and recognized a gain of $66.5 million in fiscal 2015, net of the amount of gain deferred in connection with an ongoing manufacturing service agreement we entered into with Parade in connection with the divestiture.      

Interest expense

Interest expense for fiscal 2015 was $16.4 million and represents accretion of interest expense on 2.00% Senior Exchangeable Notes, interest expense incurred on our revolving line of credit, Term Loan A and other debt.

Interest expense for fiscal 2014 and fiscal 2013 was $5.8 million and $8.1 million, respectively, and represents interest expense incurred on our revolving line of credit and other term debt.

Refer to Note 14 of Notes to Consolidated Financial Statements under Item 8 for more information about our credit facilities.

Other Income (expense), Net

The following table summarizes the components of other income (expense), net:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Interest income	$	885		$	362		$	301
Changes in fair value of investments under the deferred    compensation plan		(1,354	)		3,014			6,371
Impairment of investments		—			—			25
Foreign currency exchange gains (losses), net		744			1,382			2,791
Unrealized loss on marketable securities		(4,655	)		(1,495	)		—
Gain on sale of equity investments		276			—			908
Others		335			40			(59	)
Other income (expense), net	$	(3,769	)	$	3,303		$	10,337

Employee Deferred Compensation Plan

We have a deferred compensation plan, which provides certain key employees, including our executive management, with the ability to defer the receipt of compensation in order to accumulate funds for retirement on a tax-deferred basis. We do not make contributions to the deferred compensation plan and we do not guarantee returns on the investments. Participant deferrals and investment gains and losses remain as our liabilities and the underlying assets are subject to claims of general creditors. In fiscal 2015, 2014 and 2013, we recognized changes in fair value of the assets under the deferred compensation plan in “Other income (expense), net” of $1.4 million of interest expense, $3.0 million and $6.4 million of interest income, respectively. The increase or decrease in the fair value of the investments relates to the increased or decreased performance of the portfolio on a year over year basis. Refer to Note 17 of Notes to Consolidated Financial Statements under Item 8 for more information about our deferred compensation plan.

Gain on Sale of Investments in Marketable Equity Securities

In the second quarter of fiscal 2013, we sold our investment in a certain marketable equity security for $2.2 million, which resulted in a realized gain of $1.1 million.

In connection with the acquisition of Ramtron, we recognized a gain of $1.7 million on our initial investment in Ramtron of $3.4 million. For more information about our acquisition, refer to Note 2 of Notes to Consolidated Financial Statements under Item 8.

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Unrealized loss on marketable securities

In the fourth quarter of fiscal 2014, the Company, through a wholly-owned subsidiary, purchased 6.9 million ordinary shares of Hua Hong Semiconductor Limited (HHSL) for an aggregate price of $10.0 million in connection with their initial public offering. HHSL is the parent company of Grace Semiconductor Manufacturing Corporation, which is one of our strategic foundry partners.  We recorded an unrealized loss on our investment in HHSL’s ordinary shares of $4.7 million and $1.5 million in fiscal 2015 and 2014, respectively, as a result of the decline in the fair market value of the investment.

Equity in Net Loss of Equity Method Investee

During fiscal 2015, we invested an additional $28.0 million in a battery company. The additional investment in this company increased our ownership interest in the company’s outstanding stock from 26.2% as of December 28, 2014 to 38.7% as of January 3, 2016.  We have accounted for our investment in this entity under the equity method of accounting since the fourth quarter of fiscal 2014, when we changed from the cost method of accounting to the equity method of accounting. Under the equity method of accounting, we are required to record our interest in the investee's reported net income or loss for each reporting period. Additionally, we are required to present our prior period financial results to reflect the equity method of accounting from the date of the initial investment in the company. Our results of operations include charges of $7.1 million, $5.1 million and $1.9 million, respectively, for the fiscal years ended 2015, 2014 and 2013. Refer to Note 15 of Notes to Consolidated Financial Statements under Item 8 for more detailed discussion.

Income Taxes

Our income tax expense was $16.9 million in fiscal 2015.  Our income tax benefit was $1.2 million and $7.8 million for fiscal 2014 and 2013, respectively. The tax expense for fiscal 2015 was primarily a result of non-U.S. income taxes on income earned in foreign jurisdictions. The tax benefit in fiscal 2014 was primarily attributable to a release of previously accrued taxes of approximately $8.3 million related to settlements with taxing authorities and the lapsing of statutes of limitations, primarily offset by income taxes associated with our non-U.S. operations. The tax benefit in fiscal 2013 was primarily attributable to a release of previously accrued taxes of approximately $13.8 million related to settlements with taxing authorities and the lapsing of statutes of limitation, primarily offset by income taxes associated with our non-U.S. operations.

Our effective tax rate varies from the U.S. statutory rate primarily due to earnings of foreign subsidiaries taxed at different rates and a full valuation allowance on net operating losses incurred in the U.S. The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. We regularly assess our tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the many countries in which we and our affiliates do business.

Non-U.S. tax authorities have completed their income tax examinations of our subsidiary in Israel for fiscal years 2008-2013 and our branch in Germany for fiscal years 2010 to 2013. Both Israel and Germany examinations did not result in material adjustments to our tax liabilities. Income tax examinations of our Malaysian subsidiary for the fiscal years 2007 to 2012 and our Thailand subsidiary for fiscal year 2010 are in progress. We do not believe the ultimate outcome of these examinations will result in a material increase to our tax liability.

International revenues account for a significant portion of our total revenues, such that a material portion of our pretax income is earned and taxed outside the U.S. at rates ranging from 0% to 25%. The impact on our provision for income taxes of foreign income being taxed at rates different than the U.S. federal statutory rate was an expense of approximately $22.4 million, and benefit of $37.5 million and $15.4 million in 2015, 2014 and 2013, respectively. The foreign jurisdictions with lower tax rates as compared to the U.S. statutory federal rate that had the most significant impact on our provision for foreign income taxes in the periods presented include the Cayman Islands, Malaysia, Philippines and Thailand.

On July 27, 2015, in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. On February 19, 2016, the Internal Revenue Service appealed the decision. A final decision has yet to be issued. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation from its regulations. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential impact, and the risk of the Tax Court’s decision being overturned upon appeal, we have not recorded any impact related to this issue as of January 3, 2016.

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LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes our consolidated cash, cash equivalents and short-term investments and working capital:

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Cash, cash equivalents and short-term investments	$	227,561	$	118,812
Working capital	$	322,376	$	37,479

Key Components of Cash Flows

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Net cash provided by operating activities	$	8,801		$	103,336		$	67,568
Net cash provided by (used in) investing activities	$	(79,087	)	$	(42,156	)	$	261
Net cash used in financing activities	$	193,240		$	(43,453	)	$	(45,023	)

Fiscal 2015:

Operating Activities

In fiscal 2015, net cash provided by operating activities was $8.8 million compared to net cash provided by operating activities of $103.3 million in fiscal 2014.  Net cash provided by operating activities in fiscal 2015 was primarily due to a net loss of $378.9 million adjusted for a net non-cash items of $293.6 million and a net cash provided by change in operating assets and liabilities of $96.4 million. The non-cash adjustments primarily consisted of depreciation and amortization of $243.8 million, stock based compensation expense of $93.5 million, non-cash restructuring charges of $8.6 million and, gain on the sale of our TrueTouch^® mobile business of $66.5 million. The net cash provided by changes in operating assets and liabilities was due a decrease in inventories of $228.3 million offset by an increase in accounts receivables of $117.4 million, increase in other assets of $6.0 million, decrease in accounts payable, accrued and other liabilities of $54.3 million and a decrease in deferred income of $14.2 million. The decrease in inventory was primarily due to $133.0 million of reserves recorded to write down inventory assumed from the Merger and was recognized as part of the Company's strategy to focus on high margin, profitable business as a combined company and to move away from the production and sale of inventory associated with non-strategic businesses.

Investing Activities

In fiscal 2015, we used $79.1 million of cash in our investing activities compared to $42.2 million in fiscal 2014.  The cash we used in investing activities in fiscal 2015 was primarily due to $105.1 million in net cash paid on the Merger as part of purchase consideration, $47.2 million of cash used for property and equipment expenditures $28.0 million cash paid for equity investments and $6.1 million paid for a cost method investment. These increases were partially offset by $17.4 million of proceeds from the sales or maturities of investments and $98.6 million of cash proceeds from the sale of our TrueTouch^® Mobile business, of the total cash proceeds received from the sale of our TrueTouch^® mobile business, $10.0 million are held in an Escrow account until January 2017.

Financing Activities

In fiscal 2015, we generated $193.2 million of cash from our financing activities compared to $43.4 million in fiscal 2014.  The cash we used in our financing activities in fiscal 2015 was primarily related our net borrowings on the revolving credit facility of $537.0 million, borrowings of $97.2 million on Term Loan A, net of costs, proceeds from settlement of capped calls which were assumed as part of the Merger of $25.3 million and net proceeds from the issuance of common shares under our employee stock plans of $52.3 million. The increases were offset by $315.0 million repayment of line of credit facility, $128.0 million of dividend payments, $55.1 million of repurchase of treasury stock and $9.6 million cash used for yield enhanced structured agreements settled in common stock.

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Fiscal 2014:

Operating Activities

In fiscal 2014, net cash provided by operating activities was $103.3 million compared to $67.6 million in fiscal 2013. The increase in operating cash flows for fiscal 2014 was primarily due to an increase in net income of $66.2 million compared to fiscal 2013. Our operating cash flow for 2014 of $103.3 million was primarily due to our net income of $16.5 million, net favorable non-cash adjustments to our net income including stock-based compensation of $50.2 million and depreciation and amortization of $46.7 million, and a net change in working capital of $15.7 million.

Investing Activities

In fiscal 2014, net cash used in investing activities was $42.2 million compared to net cash used in investing activities of $0.3 million in fiscal 2013. The net cash used in our investing activities in fiscal 2014 was primarily due to investment purchases of $23.4 million, purchases of property and equipment of $20.9 million and investments made in other entities accounted for under the cost or equity method of accounting of $18.4 million, offset by the proceeds from sales of investments of $16.6 million.

Financing Activities

In fiscal 2014, net cash used in financing activities was $43.4 million compared to $45.0 million in fiscal 2013. The cash we used in our financing activities in fiscal 2014 was primarily due to payment of dividends of $69.2 million and the repayment of debt and obligations under capital leases of $6.3 million, offset by net proceeds of $32 million from the issuance of common shares under our employee stock plans.

Fiscal 2013:

Operating Activities

In fiscal 2013, net cash provided by operating activities was $67.6 million compared to $135 million in fiscal 2012. The decrease in operating cash flows for fiscal 2013 was primarily due to an increase in net loss of $24.8 million compared to fiscal 2012. Our operating cash flow for fiscal 2013 of $67.6 million was primarily due to our net loss of $50.1 million, offset by net favorable non-cash adjustments to our net loss including stock-based compensation of $73.0 million, depreciation and amortization of $48.4 million, and a net change in working capital of $20.1 million.

Investing Activities

In fiscal 2013, net cash provided by investing activities was $0.3 million compared to net cash used in investing activities of $113.0 million in fiscal 2012. The cash provided by our investing activities in fiscal 2013 was primarily due to sales of investments of $64.4 million offset by investment purchases of $23.1 million, and purchases of property and equipment of $36.6 million primarily for our Emerging Technologies Division.

Financing Activities

In fiscal 2013, net cash used in financing activities was $45.0 million compared to $58.5 million in fiscal 2012. The cash we used in our financing activities in fiscal 2013 was primarily due to payment of dividends of $64.8 million, repayment on our long term revolving credit facility (Credit facility) of $145.0 million and repayment of other debt of $17.1 million, partially offset by net proceeds of $38.7 million from the issuance of common shares under our employee stock plans, and borrowings of $140.0 million on our Credit facility.

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Liquidity and Contractual obligations

Stock Repurchase Programs:

On October 20, 2015, our Board authorized a new $450 million stock buyback program. In connection with the approval of the new share repurchase plan, the share repurchase plan previously approved in September 2011 was terminated.  The program allows us to purchase our common stock or enter into equity derivative transactions related to our common stock. The timing and actual amount expended with the new authorized funds will depend on a variety of factors including the market price of our common stock, regulatory, legal, and contractual requirements, alternatives uses of cash, availability of on shore 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 our discretion. From September 2011 through the termination of the program, we used $327.4 million from the program to repurchase 24.4 million shares at an average share price of $13.4. Under the new program authorized in October, 2015 through the end of fiscal 2015, we used $56.5 million to repurchase 5.7 million share at an average price of $10.0.

As of February 26, 2016, we repurchased a total of 29.3 million shares for a total cost of $237.8 million under the new program. As of February 26, 2016, the total dollar value of shares that may yet be purchased under the program is approximately $212.2 million.

Yield Enhancement Program (“YEP”):

As discussed under Item 5 above and in Note 14 of the Notes to Consolidated Financial Statements under Item 8, we have periodically entered into short term yield enhanced structured agreements since fiscal 2009.

In fiscal 2014, we entered into short-term yield enhanced structured agreements with maturities ranging from 30 to 45 days at an aggregate price of $19.4 million. Upon settlement of these agreements, we received $19.7 million in cash. In fiscal 2013 we didn’t enter into any short-term yield enhanced structured agreements.

In fiscal 2015, we entered into a short-term yield enhanced structured agreements with maturities ranging from 10 to 30 days at an aggregate price of $38.6 million. Upon settlement of these agreements, we received $29.4 million in cash and one million shares at an average price of $9.60.

Senior Secured Revolving Credit Facility

On October 17, 2013, we amended our credit facility to reduce the revolving commitments to $300 million. In connection with the reduction, certain financial covenants were amended. The amended financial covenants include the following conditions: 1) maximum senior secured leverage ratio of 2.50 to 1.00 through January 1, 2017 and 2.25 to 1.00 thereafter, 2) maximum total leverage ratio of 4.25 to 1.00 through January 3, 2015, 3.5 to 1.00 through January 1, 2017 and 3.00 to 1.00 thereafter, 3) minimum fixed charge coverage ratio of 1.00 to 1.00, and 4) minimum liquidity of at least $100 million. Borrowings are collateralized by substantially all assets of the company.

On March 12, 2015, we amended and restated our existing senior secured revolving credit facility (“Credit Facility”) and increased the size of the Credit Facility from $300 million to $450 million. The restated agreement also contains an option permitting us to arrange additional commitments of $250 million (“Incremental Availability”) and specifies that the proceeds of these loans may be used for working capital, acquisitions, stock repurchases and general corporate purposes. The borrowings under the Credit Facility will bear interest, at the Company's option, at an adjusted base rate plus a spread of 1.25%, or an adjusted LIBOR rate plus a spread of 2.25%. The borrowings under the Credit Facility are collateralized by substantially all of the Company's assets. The financial covenants were amended to include the following conditions: 1) maximum total leverage ratio of 3.50 to 1.00 through January 1, 2017, and 3.00 to 1.00 thereafter, 2) minimum fixed charge coverage ratio of 1.00 to 1.00. At January 3, 2016, the Company's outstanding borrowings of $449.0 million were recorded as part of long-term liabilities and are presented as “Long-term revolving credit facility and long term debt” on the Consolidated Balance Sheet.  We incurred financing costs of $2.3 million to the new lenders of the Credit Facility which has been capitalized and recognized in other long-term assets on the Consolidated Balance Sheet. These costs will be amortized over the life of the Credit Facility.

As per the terms of the Credit Facility, we entered into a Joinder Agreement on December 22, 2015 under which we borrowed an additional $97.2 million (“Term Loan A”), net of costs. Term Loan A is subject to, at the Company’s option, either an interest rate equal to (i) 3.25% over LIBOR or (ii) an interest rate equal to 2.25% over the greater of (x) the prime lending rate published by the Wall Street Journal, (y) the federal funds effective rate plus 0.50%, and (z) the LIBOR rate for a one month interest period plus 1%. The Company paid a 1.00% upfront fee in connection with the Term Loan A.  

46

The Credit Facility, as amended, provides for a $450 million revolving credit facility and generally contains the same representations and warranties, covenants, and events of default that it contained prior to the effectiveness of the Amendment. The Amendment did not change the interest rate or maturity applicable to the Credit Facility and the Credit Facility remains guaranteed by certain present and future wholly-owned material domestic subsidiaries (the “Guarantors”) and secured by a security interest in substantially all of our assets and the Guarantors.

On January 6, 2016, we entered into an Incremental Revolving Joinder Agreement to our Credit Facility to increase the amount of revolving commitments under our Credit Facility by an additional $90 million. The total aggregate amount of revolving commitments under the Credit Facility starting January 6, 2016 is $540 million.

The proceeds of the loans made under the Credit Facility may be used for working capital, acquisitions, stock repurchases and general corporate purposes. As of the filing date of this Form 10-K, $449.5 million aggregate principal amount of loans and letters of credit are outstanding under the Credit Facility and none of the Incremental Availability has been used.

As of January 3, 2016, we were in compliance with all of the financial covenants under the Credit Facility.

Refer to Note 14 of Notes to Consolidated Financial Statements under Item 8 for more information on our senior secured revolving credit facility.

Contractual Obligations

The following table summarizes our contractual obligations as of January 3, 2016:

	Total		2016		2017and 2018		2019 and 2020		After 2020
	(In thousands)
Purchase obligations (1)	$	167,415	$	160,532	$	6,883	$	—	$	—
Equipment loan		3,003		3,003		—		—		—
Operating lease commitments (2)		74,815		16,171		22,240		12,569		23,835
Capital lease commitments		7,314		6,715		599		—		—
2.00% Senior Exchangeable Notes		149,990		—		—		149,990		—
Term Loan A		100,000		5,000		15,000		80,000		—
Interest payments on debt		79,915		18,817		36,598		24,500		—
Senior Secured Revolving Credit Facility		449,000		—		—		449,000		—
License fee commitments (3)		5,880		5,880		—		—		—
Total contractual obligations	$	1,037,332	$	216,118	$	81,320	$	716,059	$	23,835

(1) Purchase obligations primarily include 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 includes payments relating to Spansion's lease for office space in San Jose for a new headquarters entered on May 22, 2014, which is no longer required. 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 January1, 2015 and expires on December 31, 2026.

(3) On April 30, 2012, we entered into a patent license agreement whereby we paid a total patent license fee of $14.0 million in fiscal 2012 and committed to pay another $5.9 million on or before April 30, 2016 representing fees for future purchases of patents and patent related services. In June 2015, the Company paid an additional license fee of $18.5 million under the existing license agreement due to the merger with Spansion in March 2015.

As of January 3, 2016 our unrecognized tax benefits were $28.4 million, which were classified as long-term liabilities. We believe it is possible that we may recognize approximately $7 million of our existing unrecognized tax benefits within the next twelve months as a result of the lapse of statutes of limitations and the resolution of agreements with domestic and various foreign tax authorities.

47

Sale of Spansion's Sunnyvale property

On January 23, 2014, Spansion sold its property in Sunnyvale, California, consisting of 24.5 acres of land with approximately 471,000 square feet of buildings that included its headquarters building and submicron development center, a Pacific Gas & Electric transmission facility and a warehouse building, for net consideration of $59.0 million. Spansion concurrently leased back approximately 170,000 square feet of the headquarters building on a month-to-month basis with the option to continue the lease for up to 24 months; thereafter either party could terminate the lease. The first six months of the lease were rent free; thereafter the rents were lower than the market rates. For accounting purposes, these rents were deemed to have been netted against the sale proceeds and represent prepaid rent. As such, the use of the property after its sale constituted continuing involvement, and recognition of the sale of the property was deferred until the lease period ended. In the third quarter of fiscal 2015, we terminated the lease on the Sunnyvale building and recognized an immaterial gain.

Equity Investment Commitments

As disclosed in Note 19 of the Notes to the Consolidated Financial Statements, we have committed to purchase additional preferred stock from a company that operates in the area of advanced battery storage. During the fiscal year ended January 3, 2016, we purchased $28.0 million of preferred stock which was recorded as part of our investments in non-marketable securities. Subject to the attainment of certain milestones, we may purchase additional preferred stock of this company.

Capital Resources and Financial Condition

Our long-term strategy is to maintain a minimum amount of cash for operational purposes and to invest the remaining amount of our cash in interest-bearing and highly liquid cash equivalents and debt securities, the purchase of our stock through our stock buyback program and payments of regularly scheduled cash dividends. In addition we may use excess cash to invest in our ETD, enter into strategic investments and partnerships and pursue acquisitions. As of January 3, 2016 in addition to $226.7 million in cash and cash equivalents, we had $0.9 million invested in short-term investments for a total cash and short-term investment position of $227.6 million that is available for use in current operations.

As of January 3, 2016, approximately 63.0% of our cash and cash equivalents and available-for-sale investments are held outside of the United States. While these amounts are primarily invested in U.S. dollars, a portion is held in foreign currencies. All offshore balances are exposed to local political, banking, currency control and other risks. In addition, these amounts, if repatriated may be subject to tax and other transfer restrictions.

We believe that liquidity provided by existing cash, cash equivalents and investments and our borrowing arrangements will provide sufficient capital to meet our requirements for at least the next twelve months. However, should prevailing economic conditions, debt covenants constraints, and/or financial, business and other factors beyond our control adversely affect our estimates of our future cash requirements, we could be required to fund our cash requirements by alternative financing. There can be no assurance that additional financing, if needed, would be available on terms acceptable to us or at all. We may also choose at any time to raise additional capital or debt to strengthen our financial position, facilitate growth, enter into strategic initiatives including the acquisition of other companies, repurchases of shares of stock or increase our dividends or pay a special dividend and provide us with additional flexibility to take advantage of other business opportunities that arise.

Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, Cypress uses non-GAAP measures to assess the following financial measures which are adjusted from the most directly comparable GAAP financial measures:

· Revenue

· Gross margin

· Research and development expenses

· Selling, general and administrative expenses

· Operating income (loss)

· Net income (loss)

· Diluted net income (loss) per share

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The non-GAAP measures set forth above exclude charges primarily related to Spansion merger costs and related amortization, which represented approximately 83% of total adjustments for the year ended January 3, 2016 as well as stock-based compensation, restructuring charges, acquisition-related expenses and other adjustments. Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of Cypress’s operations that, when viewed in conjunction with Cypress’s GAAP results, provide a more comprehensive understanding of the various factors and trends affecting Cypress’s business and operations. Management uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting and resource allocation processes. In addition, these non-GAAP financial measures facilitate management’s internal comparisons to Cypress’s historical operating results and comparisons to competitors’ operating results. Pursuant to the requirements of Regulation G and to make clear to our investors the adjustments we make to GAAP measures, we have provided a reconciliation of the non-GAAP measures to the most directly comparable GAAP financial measures.

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands, except per shares amounts)
Non-GAAP revenue	$	1,626,603	$	725,497	$	722,693
Non-GAAP gross margin	$	573,518	$	381,716	$	377,261
Non-GAAP research and development expenses	$	252,244	$	147,098	$	161,764
Non-GAAP selling, general and administrative expenses	$	231,198	$	137,858	$	143,071
Non-GAAP operating income	$	90,075	$	96,759	$	72,426
Non-GAAP pretax profit	$	78,213	$	91,187	$	66,013
Non-GAAP net income attributable to Cypress	$	70,532	$	87,291	$	63,221
Non-GAAP diluted net income per share attributable to    Cypress	$	0.21	$	0.52	$	0.39

We believe that providing these Non-GAAP financial measures, in addition to the GAAP financial results, are useful to investors because they allow investors to see our results “through the eyes” of management as these Non-GAAP financial measures reflect our internal measurement processes. Management believes that these Non-GAAP financial measures enable investors to better assess changes in each key element of our operating results across different reporting periods on a consistent basis and provides investors with another method for assessing our operating results in a manner that is focused on the performance of our ongoing operations.

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CYPRESS SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per-share data)

(Unaudited)

	Twelve Months Ended
	January 3,			% of			December28,			% of			December29,			% of
	2016			Revenue			2014			Revenue			2013			Revenue
GAAP Revenues	$	1,607,853					$	725,497					$	722,693
Revenue from intellectual property license (1)		18,750						—						—
Non-GAAP Revenues	$	1,626,603					$	725,497					$	722,693
GAAP gross margin	$	400,003			24.9	%	$	363,677			50.1	%	$	338,572			46.8	%
Stock-based compensation expense		16,459			1.0	%		13,209			1.8	%		12,789			1.8	%
Changes in value of deferred compensation plan		(37	)		0.0	%		427			0.1	%		854			0.1	%
Ramtron acquisition related expense		—			0.0	%		(86	)		0.0	%		24,805			3.4	%
Impairment of assets, restructuring and other charges		(687	)		0.0	%		4,489			0.6	%		241			0.0	%
Effect of Non-GAAP revenue from intellectual property license		18,750			0.8	%		—			0.0	%		—			0.0	%
Spansion merger costs and related amortization		139,030			8.6	%		—			0.0	%		—			0.0	%
Non-GAAP gross margin	$	573,518			35.3	%	$	381,716			52.6	%	$	377,261			52.2	%
GAAP research and development expenses	$	281,391					$	164,560					$	190,906
Stock-based compensation expense		(25,719	)					(16,187	)					(26,042	)
Changes in value of deferred compensation plan		233						(793	)					(1,744	)
Ramtron acquisition related expense		—						—						(252	)
Impairment of assets, restructuring and other charges		(980	)					(482	)					(1,104	)
Spansion merger costs and related amortization		(2,681	)					—						—
Non-GAAP research and development expenses	$	252,244					$	147,098					$	161,764
GAAP selling, general and administrative expenses	$	295,477					$	176,244					$	182,671
Stock-based compensation expense		(51,350	)					(20,774	)					(34,187	)
Changes in value of deferred compensation plan		260						(1,855	)					(3,795	)
Ramtron acquisition related expense		—						(14,330	)					(1,168	)
Impairment of assets, restructuring and other charges		(177	)					(97	)					(450	)
Legal and other		(1,198	)					(1,330	)					—
Spansion merger costs and related amortization		(11,814	)					—						—
Non-GAAP selling, general and administrative expenses	$	231,198					$	137,858					$	143,071
GAAP operating income (loss)	$	(336,905	)				$	22,873					$	(58,195	)
Stock-based compensation expense		93,527						50,170						73,020
Gain from divestiture transaction		(66,472	)					—						—
Ramtron acquisition-related expense		5,220						14,244						34,056
Changes in value of deferred compensation plan		(531	)					3,075						6,393
Impairment of assets, restructuring and other charges		184						5,067						17,152
Legal and other		1,450						1,330						—
Effect of Non-GAAP revenue from intellectual property license		18,750						—						—
Spansion merger costs and related amortization		374,852						—						—
Non-GAAP operating income (loss)	$	90,075					$	96,759					$	72,426
GAAP pretax profit (loss)	$	(364,178	)		(22.6	)%	$	15,345			2.1	%	$	(57,847	)		(8.0	)%
Stock-based compensation expense		93,527			5.8	%		50,170			6.9	%		73,020			10.1	%
Gain from divestiture transaction		(66,472	)		(4.1	)%					0.0	%					0.0	%
Ramtron acquisition-related expense		5,220			0.3	%		14,244			2.0	%		34,056			4.7	%
Changes in value of deferred compensation plan		820			0.1	%		61			0.0	%		22			0.0	%
Impairment of assets, restructuring and other charges		458			0.0	%		3,737			0.5	%		17,152			2.4	%
Legal and other		1,450			0.1	%		1,330			0.2	%		—			0.0	%
Effect of Non-GAAP revenue from intellectual property license		18,291			1.1	%					0.0	%					0.0	%
Investment related losses (gains)		4,058			0.3	%		1,495			0.2	%		—			0.0	%
Tax-related, interest income, interest expense and    other expenses		3,039			0.2	%		(263	)		0.0	%		(2,267	)		(0.3	)%
Losses from equity method investment		7,148			0.3	%		5,068			0.7	%		1,877			0.3	%
Spansion merger costs and related amortization		374,852			23.3	%		—			0.0	%		—			0.0	%
Non-GAAP pretax profit (loss)	$	78,213			4.8	%	$	91,187			12.6	%	$	66,013			9.2	%

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	Twelve Months Ended
	January 3,			% of	December28,			% of	December29,			% of
	2016			Revenue	2014			Revenue	2013			Revenue
GAAP net income (loss) attributable to Cypress	$	(378,867	)		$	17,936			$	(48,242	)
Stock-based compensation expense		93,527				50,170				73,020
Gain from divestiture transaction		(66,472	)			-				-
Ramtron acquisition-related expense		5,220				14,244				34,056
Changes in value of deferred compensation plan		820				61				22
Impairment of assets, restructuring and other charges		458				3,737				17,151
Legal and other		1,450				1,330				-
Effect of Non-GAAP revenue from intellectual property license		18,291				-				-
Investment related losses (gains)		4,058				1,495				(2,266	)
Tax-related, interest income, interest expense and other    expenses		10,047				(6,750	)			(12,398	)
Losses from equity method investment		7,148				5,068				1,878
Spansion merger costs and related amortization		374,852				—				—
Non-GAAP net income attributable to Cypress	$	70,532			$	87,291			$	63,221
GAAP net income (loss) per share attributable to    Cypress - diluted	$	(1.25	)		$	0.11			$	(0.31	)
Stock-based compensation expense		0.31				0.30				0.45
Gain from divestiture transaction		(0.22	)			—				—
Ramtron acquisition-related expense		0.02				0.08				0.21
Changes in value of deferred compensation plan		—				—				—
Impairment of assets, restructuring and other charges		—				0.02				0.11
Effect of Non-GAAP revenue from intellectual property license		0.06				—				—
Investment related losses (gains)		0.01				0.01				(0.01	)
Tax-related, interest income, interest expense and other    expenses		0.02				(0.04	)			(0.08	)
Losses from equity method investment		0.02				0.03
Legal and other		—				0.01				—
Non-GAAP share count adjustment		—				—				0.02
Spansion merger costs and related amortization		1.24				—				—
Non-GAAP net income per share attributable to    Cypress - diluted	$	0.21			$	0.52			$	0.39

(1) Non-GAAP revenue includes for the three and twelve months ended January 3, 2016 includes $6.25 million and $17.5 million of Samsung intellectual property licensing revenue, not included in GAAP revenue as a result of the effect of purchase accounting for the Spansion Merger.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Annual Report on Form 10-K and the data used to prepare them. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and we are required to make estimates, judgments and assumptions in the course of such preparation. Note 1 of Notes to Consolidated Financial Statements under Item 8 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. On an ongoing basis, we re-evaluate our judgments and estimates including those related to revenue recognition, allowances for doubtful accounts receivable, inventory valuation, valuation of long-lived assets, goodwill and financial instruments, stock-based compensation, and settlement costs, and income taxes. We base our estimates and judgments on historical experience, knowledge of current conditions and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies that are affected by significant estimates, assumptions and judgments used in the preparation of our consolidated financial statements are as follows:

Revenue Recognition:

We generate revenues by selling products to distributors, various types of manufacturers including original equipment manufacturers (“OEMs”) and electronic manufacturing service providers (“EMSs”). We recognize revenue on sales to OEMs and EMSs provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations.

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Sales to certain distributors are made under agreements which provide the distributors with price protection, stock rotation and other allowances under certain circumstances. When we determine that the uncertainties associated with the rights given to these distributors, revenues and costs related to distributor sales are deferred until products are sold by the distributors to the end customers. In those circumstances, revenues are recognized upon receiving notification from the distributors that products have been sold to the end customers. In these cases, at the time of shipment to distributors, we record a trade receivable for the selling price since there is a legally enforceable right to receive payment, relieves inventory for the value of goods shipped since legal title has passed to the distributors, and defers the related margin and price adjustment as deferred income on sales to distributors on the Consolidated Balance Sheets. Any effects of distributor price adjustments are recorded as a reduction to deferred income at the time the distributors sell the products to the end customers and the distributor submits a valid claim for the price adjustment.

We have historically recognized a significant portion of revenue through distributors at the time the distributor resold the product to its end customer (also referred to as the sell-through basis of revenue recognition) given the difficulty in estimating the ultimate price of these product shipments and amount of potential returns. We continuously reassesses our ability to reliably estimate the ultimate price of these products and, over the past several years, have made investments in our systems and process around our distribution channel to improve the quality of the information it receives from our distributors. Given these ongoing investments, and based on the financial framework for estimating potential price adjustments, beginning the fourth quarter of 2014, we concluded that we were able to reasonable estimate returns and pricing concessions on certain product families and with certain distributors, and we recognized revenue at the time it shipped these specific products to the identified distributors, less its estimate of future price adjustments and returns. As a result of this change, we recognized an incremental $12.3 million of revenue during the fourth quarter of fiscal 2014. The impact of this change resulted in an increase of $6.2 million to net income attributable to Cypress for fiscal 2014, or $0.04 per basic and diluted share. During fiscal 2015, we recognized $40.9 million of incremental revenue from this change, which resulted in a decrease in net loss of $25.0 million or $0.07 per basic and diluted shares. During fiscal 2015, we recognized $780.8 million or 68% of distribution revenue on a sell-in basis.

We record as a reduction to revenues reserves for sales returns, price protection and allowances, based upon historical experience rates and for any specific known customer amounts. We also provide certain distributors and EMSs with volume-pricing discounts, such as rebates and incentives, which are recorded as a reduction to revenues at the time of sale. Historically these volume discounts have not been significant.

Our revenue reporting is highly dependent on receiving pertinent, accurate and timely data from our distributors. Distributors provide us periodic data regarding the product, price, quantity, and end customer when products are resold as well as the quantities of our products they still have in stock. Because the data set is large and complex and because there may be errors in the reported data, we must use estimates and apply judgments to reconcile distributors’ reported inventories to their activities. Actual results could vary materially from those estimates.

Business Combinations:

We apply the provisions of Accounting Standards Codification 805, Business Combinations (“ASC 805”), in the accounting for acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our Consolidated Statements of Operations. Accounting for business combinations requires the Company's management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, restructuring liabilities, pre-acquisition contingencies and contingent consideration, where applicable. Although we believe the assumptions and estimates it has made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets we have acquired include but are not limited to: future expected cash flows from product sales, customer contracts and acquired technologies, expected costs to develop in-process research and development into commercially viable products and estimated cash flows from the projects when completed and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

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Allowances for Doubtful Accounts Receivable:

We maintain an allowance for doubtful accounts for losses that we estimate will arise from our customers’ inability to make required payments. We make estimates of the collectability of our accounts receivable by considering factors such as historical bad debt experience, specific customer creditworthiness, the age of the accounts receivable balances and current economic trends that may affect a customer’s ability to pay. If the data we use to calculate the allowance for doubtful accounts does not reflect the future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and our results of operations could be materially affected.

Valuation of Inventories:

Management periodically reviews the adequacy of our inventory reserves. We record a write-down for our inventories which have become obsolete or are in excess of anticipated demand or net realizable value. We perform a detailed review of inventories each quarter that considers multiple factors including demand forecasts, product life cycle status, product development plans and current sales levels. Inventory reserves are not relieved until the related inventory has been sold or scrapped. Our inventories may be subject to rapid technological obsolescence and are sold in a highly competitive industry. If there were a sudden and significant decrease in demand for our products, or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements, we could be required to record additional write-downs, and our gross margin could be adversely affected. In fiscal 2015, we recorded approximately $133 million of inventory reserves to write down inventory assumed as part of the merger.

Valuation of Long-Lived Assets:

Our business requires heavy investment in manufacturing facilities and equipment that are technologically advanced but can quickly become significantly under-utilized or rendered obsolete by rapid changes in demand. In addition, we have recorded intangible assets with finite lives related to our acquisitions.

We evaluate our long-lived assets, including property, plant and equipment and purchased intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors considered important that could result in an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for our business, significant negative industry or economic trends, and a significant decline in our stock price for a sustained period of time. Impairments are recognized based on the difference between the fair value of the asset and its carrying value, and fair value is generally measured based on discounted cash flow analysis. If there is a significant adverse change in our business in the future, we may be required to record impairment charges on our long-lived assets.

Valuation of Goodwill:

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. We assess our goodwill for impairment on an annual basis and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. In accordance with ASU 2011-08, Testing Goodwill for Impairment, qualitative factors can be assessed to determine whether it is necessary to perform the current two-step test for goodwill impairment. If we believe, as a result of our qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required.

We have four reporting units of which two, Memory Products division (MPD) and Programmable Systems Division (PSD), have goodwill. Determining the number of reporting units and the fair value of a reporting unit requires us to make judgments and involves the use of significant estimates and assumptions. We also make judgments and assumptions in allocating assets and liabilities to each of our reporting units. We base our fair value estimates on assumptions we believe to be reasonable but that are also unpredictable and inherently uncertain.

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The changes in the carrying amount of goodwill for the year ended January 3, 2016 were as follows:

	MPD			PSD		Total
	(in thousands)
Goodwill as of December 28, 2014	$	33,860		$	31,836	$	65,696
Goodwill from merger with Spansion (1)		739,036			937,000		1,676,036
Measurement period adjustments		(2,850	)		—		(2,850	)
Goodwill as of January 3, 2016	$	770,046		$	968,836	$	1,738,882

(1) Refer Note 2 for further details.

On the first day of our fourth quarter of fiscal 2015, we performed our annual goodwill impairment assessment using the two-step quantitative goodwill impairment test. The first step of the quantitative goodwill impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.  

We estimated the fair values of our reporting units using a combination of the income and market approach.  These valuation approaches consider a number of factors that include, but are not limited to, forecasted financial information, growth rates, terminal or residual values, discount rates and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and the future profitability of our business.

The income approach utilizes estimates of discounted future cash flows. Key assumptions used in the market approach include the selection of appropriate benchmark companies and the selection of an appropriate market value multiple for each reporting unit based on a comparison of the reporting unit with the benchmark companies as of the impairment testing date.

In performing our 2015 assessment, we applied a weighting of 75% to the income approach and 25% to the market approach. Given that the reporting units are transitioning out of a period of declining revenue and profit, we believe the income approach is a better indication of the going concern value of the reporting units as it better captures the expected improvement in revenue and profit. As such, we placed more weighing on the income approach.  Furthermore, as the market approach reflected general macroeconomic concerns that were evidenced in valuations for multiple publicly traded companies, the Company concluded this approach was not as relevant to the impairment calculation.

Based on our goodwill impairment testing, we determined that there was no impairment of our goodwill.  The fair value of our MPD reporting unit exceeded its carrying value by 53% and the fair value of our PSD reporting unit exceeded its carrying value by 9%.  As a result, if we applied a hypothetical 10% decrease to the fair value of each reporting unit, it would have resulted in the fair value of our PSD reporting unit being less than its carrying value. As an overall test of the reasonableness of estimated fair values of our two reporting units, we reconciled the combined fair value estimates of our reporting units to our market capitalization as of the valuation date. The reconciliation confirmed that the fair values were relatively representative of the market views when applying a reasonable control premium to the market capitalization. However, any significant reductions in the actual amount of future cash flows realized by our reporting units, reductions in the value of market comparables, or reductions in our market capitalization could impact future estimates of the fair values of our reporting units. Such events could ultimately result in a material charge to our results of operations in future periods due to the potential for a write-down of the goodwill associated with our reporting units.

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Based on our testing, we determined that there was a risk of our PSD reporting unit failing the first step of goodwill impairment test in future periods.  For this reporting unit, the underlying assumptions we used in assessing fair value include, but are not limited to, declines in our stock price or our peers’ stock prices, relatively small declines in the future performance and cash flows of the reporting unit or small changes in other key assumptions, such as revenue growth rates and discount rates. Specifically, the income approach valuation for PSD included the following assumptions for 2015:

	Year Ended
	January 3, 2016
Discount rate		9%
Long-term growth rate		4%
Tax rate		28%
Risk free rate		4%
Peer company beta		0.97

Our PSD reporting unit is highly sensitive to management’s plans for increasing sales and gross margins by expanding PSOC 3/4/5 and the Automotive business as well as the achievement of our cost reduction initiatives.  If the actual revenue growth and profitability improvements forecasted for the PSD reporting unit do not achieve the levels we estimated in assessing the fair value of the PSD reporting unit, the fair value of the PSD reporting unit may decline.  A future decline in the fair value of the PSD reporting unit may result in the recognition of an impairment charge to our earnings as a result of a write-down of the value of the goodwill associated with that reporting unit.

Our next annual evaluation of the goodwill by reporting unit will be performed on the first day of the fourth quarter of fiscal year 2016, or earlier if indicators of potential impairment exist.  Such indicators include, but are not limited to, challenging economic conditions, such as a decline in our operating results, an unfavorable industry or macroeconomic environment, a substantial decline in our stock price, or any other adverse change in market conditions.  Such conditions could have the effect of changing one of the critical assumptions or estimates we use to calculate the fair value of our reporting units, which could result in a decrease in fair value and require us to record goodwill impairment charges.

In fiscal 2014, we elected to perform a qualitative analysis for impairment on goodwill rather than to perform the two-step quantitative goodwill impairment test. We assessed qualitative factors to determine whether it was necessary to perform the two-step goodwill impairment test. After assessing many qualitative factors pertinent to our Company we determined that it was more likely than not that the fair value of our reporting unit exceeds its carrying amount. In assessing the qualitative factors, we considered the impact of these key factors: 1) change in the industry and competitive environment, 2) market capitalization, 3) stock price and 4) overall financial performance. Based on the results of the testing, no goodwill impairment was recognized in fiscal 2014.

In fiscal 2013, we elected to perform the two-step quantitative goodwill impairment test. Based on the results of the testing, no goodwill impairment was recognized in 2013.

Fair Value of Financial Instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Our financial assets and financial liabilities that require recognition under the guidance generally include available-for-sale investments, employee deferred compensation plan and foreign currency derivatives. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. As such, fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

· Level 1 includes instruments for which quoted prices in active markets for identical assets or liabilities that we have the ability to access. Our financial assets utilizing Level 1 inputs include U.S. treasuries, money market funds, marketable equity securities and our employee deferred compensation plan assets with the exception of our stable value funds which are considered Level 2 instruments.

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· Level 2 includes instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 2 assets consist of certain marketable debt instruments for which values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Our Level 2 instruments include certain U.S. government securities, commercial paper, corporate notes and bonds, assets held-for-sale and our employee deferred compensation plan liabilities and our stable value funds included in our deferred compensation plan assets.

· Level 3 includes valuations based on inputs that are unobservable and significant to the overall fair value measurement. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Financial assets utilizing Level 3 inputs primarily include auction rate securities. We do not have any financial assets or liabilities utilizing Level 3 inputs.

Cash Flow Hedges:

The Company enters into cash flow hedges to protect non-functional currency revenues, inventory purchases and certain other operational expenses 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 nine 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 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 other income (expense), net in the 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 other income (expense), net in its Consolidated Statements of Operations at that time.

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 other income (expense), net in its Consolidated Statements of Operations.  Refer Note 11 for further details on cash flow and balance sheet hedges.

Stock-Based Compensation:

Under the fair value recognition provisions of the guidance, we recognize stock-based compensation net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest over the requisite service period of the awards. Determining the appropriate fair value model and calculating the fair value of share-based payment awards require the input of highly subjective assumptions, including measurement of level of achievement of performance milestones, the expected life of the share-based payment awards and stock price volatility. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, our future stock-based compensation expense could be significantly different from what we have recorded.

Employee Benefit Plans:

In connection with the Merger, we assumed the Spansion Innovates Group Cash Balance Plan (a defined benefit pension plan) in Japan. A defined benefit pension plan is accounted for on an actuarial basis, which requires the selection of various assumptions such as turnover rates, discount rates and other factors. The discount rate assumption is determined by comparing the projected benefit payments to the Japanese corporate bonds yield curve as of end of the most recently completed fiscal year. The benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement. This liability is recorded in other long term liabilities on the Consolidated Balance Sheets. Net periodic pension cost is recorded in the Consolidated Statements of Operations and includes service cost. Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money associated with the passage of time on the PBO. Gains or losses resulting from a change in the PBO if actual results differ from actuarial assumptions will be accumulated and amortized over the future life of the plan participants if they exceed 10% of the PBO, being the corridor amount. If the amount of a net gain or loss does not exceed the corridor amount, it will be recorded to other comprehensive income (loss). See Note 17 for further details of the pension plans.

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Accounting for Income Taxes:

Our global operations involve manufacturing, research and development and selling activities. Profits from non-U.S. activities are subject to local country taxes but are not subject to U.S. tax until repatriated to the U.S. United States income tax has not been provided on a portion of earnings of our non-U.S. subsidiaries to the extent that such earnings are considered to be indefinitely reinvested. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We consider historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. Should we determine that we would be able to realize deferred tax assets in the future in excess of the net recorded amount, we would record an adjustment to the deferred tax asset valuation allowance. This adjustment would increase income in the period such determination is made.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. We recognize potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate tax assessment, a further charge to expense would result.

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 1 of Notes to Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risks

Our investment portfolio consists of a variety of financial instruments that expose us to interest rate risk, including, but not limited to, money market funds, certificate of deposit and corporate securities. These investments are generally classified as available-for-sale and, consequently, are recorded on our balance sheets at fair market value with their related unrealized gain or loss reflected as a component of accumulated other comprehensive income in stockholders’ equity. Due to the relatively short-term nature of our investment portfolio, we do not believe that an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio. Since we believe we have the ability to liquidate this portfolio, we do not expect our operating results or cash flows to be materially affected to any significant degree by a sudden change in market interest rates on our investment portfolio.

Foreign Currency Exchange Risk

We operate and sell products in various global markets and purchase capital equipment using foreign currencies but predominantly the U.S. dollar. Pursuant to our Merger, we are exposed to certain risks associated with changes in foreign currency exchange rates in Japanese yen and other foreign currencies and are exposed to foreign currency exchange rate fluctuations.

For example,

· sales of our products to Fujitsu are denominated in U.S. dollars, Japanese yen and Euro;

· some of our manufacturing costs are denominated in Japanese yen, and other foreign currencies such as the Thai baht and Malaysian ringgit;

· some of our operating expenses are denominated in Japanese yen and

· some fixed asset purchases and sales are denominated in other foreign currencies.

Consequently, movements in exchange rates could cause our net sales and our expenses to fluctuate, affecting our profitability and cash flows. We use foreign currency forward contracts to reduce our foreign exchange exposure on our foreign currency denominated assets and liabilities. We also hedge a percentage of our forecasted revenue denominated in Japanese yen with foreign currency forward contracts. The objective of these contracts is to mitigate impact of foreign currency exchange rate movements to our operating results on a short term basis. We do not use these contracts for speculative or trading purposes.

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We recognize derivative instruments from hedging activities as either assets or liabilities on the balance sheet and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. We record changes in the intrinsic value of these cash flow hedges in accumulated other comprehensive loss on the Consolidated Balance Sheets, until the forecasted transaction occurs. When the forecasted transaction occurs, we reclassify the related gain or loss on the cash flow hedge to the appropriate revenue or expense line of the Consolidated Statements of Operations. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we will reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive loss to other income (expense), net in our Consolidated Statements of Operations at that time.

We evaluate hedge effectiveness at the inception of the hedge prospectively as well as retrospectively and record any ineffective portion of the hedging instruments in other income (expense), net in our Consolidated Statements of Operations.

We analyzed our foreign currency exposure, including our hedging strategies, to identify assets and liabilities denominated in other currencies. For those assets and liabilities, we evaluated the effects of a 10% shift in exchange rates between those currencies and the U.S. dollar. We have determined that there would be an immaterial effect on our results of operations from such a shift. Please see Note 11 of Notes to Consolidated Financial Statements under Item 8 for details on the contracts.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated Balance Sheets	60
Consolidated Statements of Operations	61
Consolidated Statement of Comprehensive Income (Loss)	62
Consolidated Statements of Stockholders’ Equity	63
Consolidated Statements of Cash Flows	64
Notes to Consolidated Financial Statements	66
Report of Independent Registered Public Accounting Firm	108
Schedule II—Valuation and Qualifying Accounts	117

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CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED BALANCE SHEETS

	January 3, 2016			December 28, 2014
	(In thousands, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	226,690		$	103,736
Short-term investments		871			15,076
Accounts receivable, net		292,736			75,984
Inventories		243,595			88,227
Other current assets		86,880			29,288
Total current assets		850,772			312,311
Property, plant and equipment, net		425,003			237,763
Goodwill		1,738,882			65,696
Intangible assets, net		789,195			33,918
Other long-term assets		200,409			93,593
Total assets	$	4,004,261		$	743,281
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	143,383		$	42,678
Accrued compensation and employee benefits		54,850			35,182
Deferred margin on sales to distributors		73,370			75,569
Dividends payable		36,520			17,931
Income taxes payable		3,262			2,710
Current portion of long-term debt		14,606			6,143
Other current liabilities		202,405			94,619
Total current liabilities		528,396			274,832
Deferred income taxes and other tax liabilities		51,737			18,784
Revolving credit facility and long-term debt		673,659			237,107
Other long-term liabilities		37,784			10,693
Total liabilities		1,291,576			541,416
Commitments and contingencies (Note 19)		—			—
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; 481,912 and    306,167 shares issued; 332,276 and 163,013 shares outstanding at January 3, 2016    and December 28, 2014, respectively		4,637			3,039
Additional paid-in-capital		5,623,411			2,675,170
Accumulated other comprehensive loss		(227	)		(46	)
Accumulated deficit		(758,780	)		(379,913	)
Stockholders’ equity before treasury stock		4,869,041			2,298,250
Less: shares of common stock held in treasury, at cost; 149,636 and 143,154 shares    at January 3, 2016 and  December 28, 2014, respectively		(2,148,193	)		(2,090,493	)
Total Cypress stockholders’ equity		2,720,848			207,757
Non-controlling interest		(8,163	)		(5,892	)
Total equity		2,712,685			201,865
Total liabilities and equity	$	4,004,261		$	743,281

The accompanying notes are an integral part of these consolidated financial statements.

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CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands, except per-share amounts)
Revenues	$	1,607,853		$	725,497		$	722,693
Costs and expenses:
Cost of revenues		1,207,850			361,820			384,121
Research and development		281,391			164,560			190,906
Selling, general and administrative		323,570			170,741			182,671
Amortization of acquisition-related intangible assets		108,335			6,683			7,833
Restructuring costs (benefit)		90,084			(1,180	)		15,357
Gain on divestiture of TrueTouch® Mobile business		(66,472	)		—			—
Total costs and expenses, net		1,944,758			702,624			780,888
Operating income (loss)		(336,905	)		22,873			(58,195	)
Interest expense		(16,356	)		(5,763	)		(8,112	)
Other income (expense), net		(3,769	)		3,303			10,337
Income (loss) before income taxes and non-controlling interest		(357,030	)		20,413			(55,970	)
Income tax benefit (provision)		(16,960	)		1,173			7,761
Equity in net loss of equity method investee		(7,148	)		(5,068	)		(1,878	)
Net Income (loss)		(381,138	)		16,518			(50,087	)
Net income (loss) attributable to non-controlling interest, net of taxes		2,271			1,418			1,845
Net income (loss) attributable to Cypress		(378,867	)		17,936			(48,242	)
Net income (loss) per share attributable to Cypress:
Basic	$	(1.25	)	$	0.11		$	(0.32	)
Diluted	$	(1.25	)	$	0.11		$	(0.32	)
Cash dividends declared per share	$	0.44		$	0.44		$	0.44
Shares used in net income (loss) per share calculation:
Basic		302,036			159,031			148,558
Diluted		302,036			169,122			148,558

The accompanying notes are an integral part of these consolidated financial statements

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CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Twelve Months Ended
	January 3, 2016			December 28, 2014		December 29, 2013
	(In thousands)
Net income (loss)	$	(381,138	)	$	16,518	$	(50,087	)
Other comprehensive income (loss), net of taxes:
Net change in unrealized gains (losses) on available-for-sale securities		28			131		267
Reclassification of net realized (gains) losses on available-for-sale    securities included in net income (loss)		—			171		885
Net unrecognized gain on the Defined Benefit Plan		26			—		—
Net unrealized gain (loss) on cash flow hedges:
Net unrealized gain (loss) arising during the period		(1,651	)		—		—
Net (gain) reclassified into earnings for revenue hedges    (effective portion)		(1,678	)		—		—
Net loss reclassified into earnings for expense hedges    (ineffective portion)		80					—
Net loss reclassified into earnings for expense hedges    (effective portion)		3,014			—		—
Net unrealized gain (loss) on cash flow hedges		(235	)		—		—
Other comprehensive gain (loss)		(181	)		302		1,152
Comprehensive income (loss)		(381,319	)		16,820		(48,935	)
Comprehensive loss attributable to non-controlling interest		2,271			1,418		1,845
Comprehensive income (loss) attributable to Cypress	$	(379,048	)	$	18,238	$	(47,090	)

The accompanying notes are an integral part of these consolidated financial statements.

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CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Treasury Stock					Noncontrolling			Total
	Shares		Amount			Capital			Income (Loss)			Deficit			Shares		Amount			Interest			Equity
	(In thousands)
Balances at January 2, 2013		286,903	$	2,868		$	2,612,579		$	(444	)	$	(349,607	)	$	142,679	$	(2,085,570	)	$	(4,039	)	$	175,787
Comprehensive income:
Net income attributable to Cypress		—		—			—			—			(48,242	)		—		—			—			(48,242	)
Net unrealized gain on available-for-sale    investments		—		—			—			267			—			—		—			—			267
Issuance of common shares under employee    stock plans		9,443		95			43,249			—			—			—		—			—			43,344
Withholding of common shares for tax    obligations on vested restricted shares		—		—			—			—			—			453		(4,663	)		—			(4,663	)
Stock-based compensation		—		—			75,447			—			—			—		—			—			75,447
Dividends		—		—			(65,822	)		—			—			—		—			—			(65,822	)
Noncontrolling interest		—		—			—			—			—			—		—			(435	)		(435	)
Balances at December 29, 2013		296,346	$	2,963		$	2,665,453		$	(177	)	$	(397,849	)	$	143,132	$	(2,090,233	)	$	(4,474	)	$	175,683
Comprehensive income:
Net income attributable to Cypress		—		—			—			—			17,936			—		—			—			17,936
Net unrealized gain on available-for-sale    investments		—		—			—			131			—			—		—			—			131
Yield enhancement structured agreements, net		—		—			318			—			—			—		—			—			318
Issuance of common shares under employee    stock plans		9,821		76			33,071			—			—			—		—			—			33,147
Withholding of common shares for tax    obligations on vested restricted shares		—		—			—			—			—			22		(260	)		—			(260	)
Stock-based compensation		—		—			46,663			—			—			—		—			—			46,663
Dividends		—		—			(70,335	)		—			—			—		—			—			(70,335	)
Noncontrolling interest		—		—			—			—			—			—		—			(1,418	)		(1,418	)
Balances at December 28, 2014		306,167	$	3,039		$	2,675,170		$	(46	)	$	(379,913	)		143,154	$	(2,090,493	)	$	(5,892	)	$	201,865
Comprehensive income:
Net income attributable to Cypress		—		—			—			—			(378,867	)		—		—			—			(378,867	)
Net unrealized gain on available-for-sale    investments		—		—			—			(181	)		—					—			—			(181	)
Changes in employee deferred compensation    plan assets		—		—			—			—			—			—		(227	)		—			(227	)
Yield enhancement structured agreements, net		—		(96	)		(9,118	)		—			—			1,000		—			—			(9,214	)
Assumption of stock options and awards    related to Spansion Merger		163,932		—			2,666,865			—			—			—		—			—			2,666,865
Assumption of 2.00% Senior Exchangeable    Notes related to Spansion Merger		—		—			287,362			—			—			—		—			—			287,362
Issuance of common shares under employee    stock plans		11,813		1,694			53,863			—			—			—		—			—			55,557
Withholding of common shares for tax    obligations on vested restricted shares		—		—			—			—			—			234		(2,455	)		—			(2,455	)
Repurchase of common shares																5,248		(55,018	)					(55,018	)
Stock-based compensation		—		—			95,814			—			—			—		—			—			95,814
Dividends		—		—			(146,545	)		—			—			—		—			—			(146,545	)
Noncontrolling interest		—		—			—			—			—			—		—			(2,271	)		(2,271	)
Balances at January 3, 2016		481,912	$	4,637		$	5,623,411		$	(227	)	$	(758,780	)		149,636	$	(2,148,193	)	$	(8,163	)	$	2,712,685

The accompanying notes are an integral part of these consolidated financial statements.

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CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	(381,138	)	$	16,518		$	(50,087	)
Adjustments to reconcile income (loss) to net cash provided by operating    activities:
Stock-based compensation expense		93,527			50,170			73,020
Depreciation and amortization		241,584			46,734			48,393
Restructuring costs		8,581			(1,180	)		15,357
(Gain) loss on sale or retirement of property and equipment, net		424			(196	)		—
Gain on divestiture of TrueTouch® Mobile business		(66,472	)		—			—
Equity in loss of equity method investee		7,148			5,068			1,878
Accretion of interest expense on convertible notes		2,537			—			—
Unrealized loss from trading securities		3,191			1,667			—
Other		3,042			272			(718	)
Changes in operating assets and liabilities, net of effects of an    acquisition and divestiture:
Accounts receivable		(117,371	)		5,099			1,837
Inventories		288,264			9,140			29,419
Other current and long-term assets		(5,977	)		10,560			8,354
Accounts payable and other liabilities		(54,294	)		(13,126	)		(51,270	)
Deferred margin on sales to distributors		(14,245	)		(27,390	)		(8,615	)
Net cash provided by operating activities		8,801			103,336			67,568
Cash flows from investing activities:
Proceeds from maturities of available-for-sale investments		800			16,556			58,684
Proceeds from sales of available-for-sale investments		16,584			—			5,730
Purchases of marketable securities		(1,530	)		(23,425	)		(23,137	)
Business acquisition, net of cash acquired		(105,130	)		—			—
Acquisition of property, plant and equipment		(47,206	)		(20,947	)		(36,627	)
Proceeds from divestiture		88,635			3,240			—
Proceeds from sales of property and equipment		—			—			6,661
Cash paid for cost and equity method investments		(34,126	)		(18,400	)		(11,961	)
Contributions to (distributions from) deferred compensation plan		1,511			(1,283	)		(1,247	)
Proceeds from sales of equity investments		—			—			2,158
Other		1,375			2,103			—
Net cash provided by (used in) investing activities		(79,087	)		(42,156	)		261

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CYPRESS SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Cash flows from financing activities:
Repurchase of treasury stock		(55,018	)		—			—
Issuance of common shares under employee stock plans		52,857			31,755			38,681
Yield enhancement structured agreements settled in cash, net		387			318			—
Yield enhancement structured agreements settled in common stock,    net		(9,601	)		—			—
Payments of dividends		(127,995	)		(69,248	)		(64,819	)
Proceeds from settlement of capped calls		25,293			—			—
Repayment of equipment leases, loans and others		(9,420	)		(6,278	)		(8,880	)
Borrowings under revolving credit facility and line of credit		537,000			264,000			140,000
Borrowings under Term Loan A		97,228			—			—
Repayments of revolving credit facility and line of credit loan		(315,000	)		(264,000	)		(145,000	)
Financing costs		(2,491	)		—			(3,276	)
Repayments of other financing agreements		—			—			(3,140	)
Proceeds from sale of shares to noncontrolling interest		—			—			1,411
Net cash provided by (used in) financing activities		193,240			(43,453	)		(45,023	)
Net increase in cash and cash equivalents		122,954			17,727			22,806
Cash and cash equivalents, beginning of year		103,736			86,009			63,203
Cash and cash equivalents, end of year	$	226,690		$	103,736		$	86,009
Supplemental disclosures:
Dividends payable	$	36,549		$	17,931		$	16,850
Cash paid for income taxes	$	8,736		$	4,598		$	6,921
Cash paid for interest	$	9,670		$	5,774		$	4,825
Unpaid purchases of property, plant and equipment	$	6,663		$	1,688		$	—

The accompanying notes are an integral part of these consolidated financial statements.

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CYPRESS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Cypress Semiconductor Corporation (“Cypress” or the “Company”) designs, develops, manufactures and markets high-performance, high quality, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. The Company’s offerings include the NOR flash memories, F-RAM^TM and SRAM, Traveo^TM microcontrollers, the industry’s only PSoC^® programmable system-on-chip solutions, analog and PMIC Power Management ICs, Capsense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth Low-Energy and universal serial bus (“USB”) connectivity solutions. The Company serves numerous markets including industrial, mobile handsets, consumer, computation, data communications, automotive, and military markets.

The Company’s operations outside of the United States include its assembly and test plants in Malaysia and the Philippines, and sales offices and design centers located in various parts of the world.

On March 12, 2015, the Company completed the merger (“Merger”) with Spansion Inc. ("Spansion") pursuant to the Agreement and Plan of Merger and Reorganization, as of December 1, 2014 (the "Merger Agreement"), for a total consideration of approximately $2.8 billion. In accordance with the terms of the Merger Agreement, Spansion shareholders received 2.457 Cypress shares for each Spansion share they owned. The shareholders of each company initially owned approximately 50% of the post-merger company. The Merger has been accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standard Topic 805, Business Combinations, with Cypress treated as the accounting acquirer. See Note 2 for a detailed discussion of the Merger with Spansion. 

Basis of Preparation

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 2015 ended on January 3, 2016, Fiscal 2014 ended on December 28, 2014 and fiscal 2013 ended on December 29, 2013. Fiscal 2015 contained 53 weeks. Fiscal years 2014 and 2013 each contained 52 weeks.   The additional week in 2015 did not materially affect the Company's results of operations or financial position.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and include the accounts of Cypress and all of its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The following reclassifications have been made in the presentation of Cypress’s Consolidated Balance Sheet as of December 28, 2014 to conform to current year classification:

·$6.1 million reclassified from other current liabilities to current portion of long-term debt,

·$10.1 million reclassified from other long-term liabilities to revolving credit facility and long-term debt, and

·$19.6 million reclassified from deferred margin on sales to distributors to other current liabilities.

During fiscal 2014, the Company recorded out-of-period correcting adjustments to write off certain manufacturing and subcontractor costs that were capitalized within other current assets in previous periods. These corrections resulted in a decrease of net income of $2.6 million for the twelve months ended December 28, 2014. The Company recorded these corrections in the aggregate totaling $2.6 million in cost of revenues in the twelve months ended December 28, 2014. Management assessed the impact of these errors and concluded that the amounts were not material, either individually or in the aggregate, to any prior periods.

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Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these items. See Note 5 for a detailed discussion of fair value measurements.

Cash and Cash Equivalents

Highly liquid investments with original or remaining maturities of ninety days or less at the date of purchase are considered cash equivalents.

Investments

All of the Company’s investments in equity securities in publicly traded companies are classified as trading securities. All of the Company’s investments in debt securities are classified as available-for-sale securities. Available-for-sale debt securities with maturities greater than twelve months are classified as short-term when they are intended for use in current operations. Investments in available-for-sale securities are reported at fair value with unrealized gains and losses, net of tax, as a component of “Accumulated other comprehensive income (loss)” in the Consolidated Balance Sheets. The Company also has minority equity investments in privately-held companies. Minority equity investments in which the Company’s ownership interest is less than 20% are carried at cost less any other than temporary impairment write-downs. Minority equity investments in which the Company’s ownership interest is 20% or greater are accounted for using the equity method of accounting. Under the equity method of accounting, the Company is required to record its interest in the investee's reported net income or loss for each reporting period. None of the Company’s equity investments are a variable interest entity. The Company’s minority equity investments are included in “Other assets” in the Consolidated Balance Sheets.

The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary. See Note 5 for a detailed discussion of the impairment losses recorded on the Company’s investments.

Inventories

Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market. Market is based on estimated net realizable value. The Company writes down its inventories which have become obsolete or are in excess of anticipated demand or net realizable value based upon assumptions about demand forecasts, product life cycle status, product development plans and current sales levels. Inventory reserves are not relieved until the related inventory has been sold or scrapped.

Long-Lived Assets

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. Leasehold improvements and leasehold interests are amortized over the shorter of the estimated useful lives of the assets or the remaining term of the lease. Estimated useful lives are as follows:

Equipment	3 to 10 years
Buildings and leasehold improvements	5 to 20 years
Furniture and fixtures	3 to 7 years

The Company evaluates its long-lived assets, including property, plant and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors considered important that could result in an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of assets, significant negative industry or economic trends, and a significant decline in the Company’s stock price for a sustained period of time. Impairment is recognized based on the difference between the estimated fair value of the asset and its carrying value. Estimated fair value is generally measured based on quoted market prices, if available, appraisals or discounted cash flow analyses.

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Goodwill and Intangible Assets

Goodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

The Company assesses goodwill for impairment on an annual basis on the first day of the fourth quarter of our fiscal year and if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. In accordance with ASU 2011-08, Testing Goodwill for Impairment, qualitative factors can be assessed to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required.

Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and are reviewed for impairment as discussed above. See Note 4 for more information.

Revenue Recognition

The Company generates revenues by selling products to distributors, various types of manufacturers including original equipment manufacturers (“OEMs”) and electronic manufacturing service providers (“EMSs”). The Company recognizes revenues on sales to OEMs and EMSs upon shipment provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no significant remaining obligations.

Sales to certain distributors are made under agreements which provide the distributors with price protection, stock rotation and other allowances under certain circumstances. When the Company determines that the uncertainties exist for the rights given to these distributors, revenues and costs related to distributor sales are deferred until products are sold by the distributors to the end customers. In those circumstances, revenues are recognized upon receiving notification from the distributors that products have been sold to the end customers. In these cases, at the time of shipment to distributors, the Company records a trade receivable for the selling price since there is a legally enforceable right to receive payment, relieves inventory for the value of goods shipped since legal title has passed to the distributors, and defers the related margin and price adjustment as deferred income on sales to distributors on the Consolidated Balance Sheets. Any effects of distributor price adjustments are recorded as a reduction to deferred income at the time the distributors sell the products to the end customers and the distributor submits a valid claim for the price adjustment.

The Company has historically recognized a significant portion of revenue through distributors at the time the distributor resold the product to its end customer (also referred to as the sell-through basis of revenue recognition) given the difficulty in estimating the ultimate price of these product shipments and amount of potential returns. The Company continuously reassesses its ability to reliably estimate the ultimate price of these products and, over the past several years, has made investments in its systems and process around the distribution channel to improve the quality of the information it receives from its distributors. Given these ongoing investments, and based on the financial framework for estimating potential price adjustments, beginning the fourth quarter of 2014, the Company concluded that it was able to reasonably estimate returns and pricing concessions on certain product families and with certain distributors, and recognized revenue at the time it shipped these specific products to the identified distributors, less its estimate of future price adjustments and returns. As a result of this change, the Company recognized an incremental $12.3 million of revenue during the fourth quarter of fiscal 2014. The impact of this change resulted in an increase of $6.2 million to net income attributable to Cypress for fiscal 2014, or $0.04 per basic and diluted share. During fiscal 2015, the Company recognized $40.9 million of incremental revenue from this change on additional product families, which resulted in a decrease to the net loss of $25.0 million or $0.07 per basic and diluted shares.

The Company records as a reduction to revenues reserves for sales returns, price protection and allowances based upon historical experience rates and for any specific known customer amounts. The Company also provides certain distributors and EMSs with volume-pricing discounts, such as rebates and incentives, which are recorded as a reduction to revenues at the time of sale. Historically these volume discounts have not been significant.

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Employee Benefit Plans

In connection with the Merger, the Company assumed the Spansion Innovates Group Cash Balance Plan (a defined benefit pension plan) in Japan. A defined benefit pension plan is accounted for on an actuarial basis, which requires the selection of various assumptions such as turnover rates, discount rates and other factors. The discount rate assumption is determined by comparing the projected benefit payments to the Japanese corporate bonds yield curve as of end of the most recently completed fiscal year. The benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement. This liability is recorded in other long term liabilities on the Consolidated Balance Sheets. Net periodic pension cost is recorded in the Consolidated Statements of Operations and includes service cost. Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money associated with the passage of time on the PBO. Gains or losses resulting from a change in the PBO if actual results differ from actuarial assumptions will be accumulated and amortized over the future life of the plan participants if they exceed 10% of the PBO, being the corridor amount. If the amount of a net gain or loss does not exceed the corridor amount, it will be recorded to other comprehensive income (loss). See Note 17 for further details of the pension plans.

Cash Flow Hedges

The Company enters into cash flow hedges to protect non-functional currency inventory purchases and certain other operational expenses and has an 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 does not enter into derivative securities for speculative purposes. The Company’s foreign currency forward contracts that were designated as cash flow hedges have maturities between three and nine months. The maximum original duration of any contract allowable under the Company’s hedging policy is 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 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 other income (expense), net in the 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 other income (expense), net in its Consolidated Statements of Operations at that time.

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 other income (expense), net in its Consolidated Statements of Operations.

See Note 11 for further details of the contracts.

Shipping and Handling Costs

The Company records costs related to shipping and handling in cost of revenues.

Advertising Costs

Advertising costs consist of development and placement costs of the Company’s advertising campaigns and are charged to expense when incurred. Advertising expense was $5.0 million, $3.7 million and $2.9 million for fiscal years  2015, 2014 and 2013, respectively.

Foreign Currency Transactions

The Company uses the United States dollar as the functional currency for all of its foreign entities. Assets and liabilities of these entities are remeasured into the United States dollar using exchange rates in effect at the end of the period, except for non-monetary assets and liabilities, such as property, plant and equipment, which are remeasured using historical exchange rates. Revenues and expenses are remeasured using average exchange rates in effect for the period, except for items related to assets and liabilities, such as depreciation, that are remeasured using historical exchange rates. The total gains (losses) from foreign currency re-measurement for fiscal years 2015, 2014 and 2013 were $0.7 million, $1.4 million and $2.8 million, respectively and are included in “Other income (expense), net” in the Consolidated Statements of Operations. For additional details related to items included in “Other income (expense), net,” see Note 13.

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Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash equivalents, debt investments and trade accounts receivable. The Company’s investment policy requires cash investments to be placed with high-credit quality institutions and limits the amount of credit risk from any one issuer. The Company performs ongoing credit evaluations of its customers’ financial condition whenever deemed necessary and generally does not require collateral. The Company maintains an allowance for doubtful accounts based upon the expected collectability of all accounts receivable.

Outstanding accounts receivable from three of the Company’s distributors, accounted for 42%, 11% and 9%, respectively, of the consolidated accounts receivable as of January 3, 2016. Outstanding accounts receivable from three of the Company’s distributors, accounted for 12%, 11% and 9%, of the consolidated accounts receivable as of December 28, 2014.

Revenue generated through three of the Company’s distributors accounted for 25%, 10%, and 7%, respectively, of the consolidated revenue for fiscal 2015 . No end customer accounted for 10% of the consolidated revenue for fiscal 2015.

Revenue generated through three of the Company’s distributors, accounted for 13%, 10% and 10% respectively, of the consolidated revenue for fiscal 2014. No end customers accounted for 10% or more of the consolidated revenue for fiscal 2014.

Revenue generated through two of the Company’s distributors accounted for 11% and 10%, respectively, of the consolidated revenue for fiscal 2013. One end customer purchased the Company’s products both from the Company’s distributors and directly from the Company. Shipments to this end customer accounted for 12% of the consolidated revenue for fiscal 2013.

Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when management cannot conclude that it is more likely than not that a tax benefit will be realized.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The Company recognizes potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

Impact ofRecently Issued Accounting Pronouncements

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2015-02, Amendments to the Consolidation Analysis, which is intended to improve upon and simplify the consolidation assessment required to evaluate whether organizations should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. The new accounting guidance is effective for interim and fiscal years beginning after December 15, 2015. The Company does not believe that the adoption of this guidance will have any material impact on its financial condition or results of operations.

In May 2014, the FASB issued an ASU on revenue from contracts with customers, ASU No. 2014-09, "Revenue from Contracts with Customers." This standard update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The guidance is effective for annual reporting periods including interim reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods including interim reporting periods beginning after December 15, 2016. As the new standard will supersede substantially all existing revenue guidance affecting the Company under GAAP, it could impact revenue and cost recognition on sales across all the Company's business segments, in addition to its business processes and its information technology systems. The Company is currently evaluating the impact, if any, the adoption of this standard will have on its Consolidated Financial Statements.

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In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact the pronouncement will have on the Company’s financial statements and related disclosures.

In February 2016, the FASB issued an ASU 2016-02, “Leases (Topic 842).” The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases.  This ASU is effective for annual and interim periods beginning after December 15, 2018.  Early adoption is permitted. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  The Company is currently evaluating the impact the pronouncement will have on the Company’s financial statements and related disclosures.

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Recently Adopted Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in the financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The new accounting guidance is effective for interim and fiscal years beginning after December 15, 2015. The Company early adopted ASU 2015-03 for the fiscal year 2015 and presented the debt issuance costs related to the new Term Loan debt as a direct deduction from the related debt liability.

In August 2015, FASB issued ASU No. 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting”. FASB ASU No. 2015-15 amends subtopic 835-30 to include that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  The Company early adopted ASU 2015-15 for the fiscal year ended January 3, 2016.  The Company has chosen to continue presentation of debt issuance costs as an asset for its revolving line of credit borrowings.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This ASU simplifies the treatment of adjustments to provisional amounts recognized in the period for items in a business combination for which the accounting is incomplete at the end of the reporting period. The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU are effective for fiscal years beginning after December 15, 2015 and for interim periods therein. The Company early adopted ASU 2015-16 standard for the fiscal year ended January 3, 2016.  

In November 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. The standard is effective in the annual reporting periods beginning after December 15, 2018. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. The Company early adopted ASU 2015-17 and prospectively applied ASU 2015-17 to fiscal year 2015.

NOTE 2. MERGER WITH SPANSION

On March 12, 2015, Cypress completed its merger with Spansion ("the Merger") pursuant to the Agreement and Plan of Merger and Reorganization, as of December 1, 2014 ("the Merger Agreement") for a total purchase consideration of approximately $2.8 billion. In accordance with the terms of the Merger Agreement, Spansion shareholders received 2.457 Cypress shares for each Spansion share they owned. The Merger has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations, with Cypress treated as the accounting acquirer. The Company incurred $37.5 million in Merger costs for the fiscal year ended January 3, 2016, which were recorded in the selling, general and administrative expense line of the Consolidated Statements of Operations.

The total purchase consideration of approximately $2.8 billion consists of the following:

	Purchase Consideration
	(In thousands)
Fair value of Cypress common stock issued to Spansion shareholders	$	2,570,458
Fair value of partially vested Spansion equity awards assumed by Cypress		6,825
Fair value of vested Spansion options assumed by Cypress		89,582
Cash provided by Cypress to repay Spansion term loan		150,000
Total purchase consideration	$	2,816,865

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In connection with the Merger, the Company assumed stock options and RSUs originally granted by Spansion and converted them into Cypress stock options and RSUs. The fair value of the stock options assumed were determined using a Black-Scholes valuation model with market-based assumptions. The fair value of partially vested Spansion equity awards is $15.68 per share, the Cypress closing stock price on March 12, 2015. The fair value of unvested equity awards relating to future services, and not yet earned, will be recorded as operating expenses over the remaining service periods. Option pricing models require the use of highly subjective market assumptions, including expected stock price volatility, which if changed can materially affect fair value estimates.

The table below represents the final allocation of the purchase price to the net assets acquired based on their estimated fair values as of March 12, 2015.

	Fair Values as of March 12, 2015			Changes through January 3, 2016				Final allocation as of January 3, 2016
	(In thousands)
Cash and cash equivalents	$	44,870			—			$	44,870
Short-term investments		1,433			—				1,433
Accounts receivable, net		99,977			(590	)	(2)		99,387
Inventories		450,634			—				450,634
Other current assets		58,959			(2,329	)	(3)		56,630
Property, plant and equipment, net		356,908			—				356,908
Intangible assets, net		860,700			—				860,700
Goodwill (2)		1,676,036			(2,850	)			1,673,186
Other long-term assets		63,497			—				63,497
Total assets acquired		3,613,014			(5,769	)			3,607,245
Accounts payable		(155,336	)		—				(155,336	)
Accrued compensation and benefits		(44,669	)		—				(44,669	)
Income taxes payable		(1,399	)		—				(1,399	)
Other current liabilities		(158,083	)		(30	)	(4)		(158,113	)
Deferred income taxes and other long term liabilities		(24,001	)		5,799		(5)		(18,202	)
Other non current liabilities		(21,477	)		—				(21,477	)
Long-term debt (1)		(391,184	)		—				(391,184	)
Total liabilities assumed		(796,149	)		5,769				(790,380	)
Fair value of net assets acquired	$	2,816,865		$	—			$	2,816,865

(1)        Includes the fair value of the debt and equity components of Spansion's Exchangeable 2.00% Senior Notes assumed by the   Company.

(2)       The Company determined that one customer account receivable balance that the Company assessed as collectible at the time of the Merger was determined uncollectible which led to a decrease of $0.6 million in the fair value of accounts receivables with a corresponding increase in goodwill.

(3)       The Company obtained new information regarding the valuation of other receivables as of the acquisition date which led to a decrease in the fair value of current assets of $2.3 million, and a corresponding increase in goodwill.

(4)       The Company obtained new information regarding the valuation of accrued liabilities as of the acquisition date which led to a net increase in the fair value of other current liabilities of $30 thousand, and a corresponding increase in goodwill.

(5)       The Company obtained additional information related to its deferred income taxes which led to an increase in the deferred income taxes and other long term liabilities and a corresponding decrease in goodwill.

The Company does not believe that the measurement period adjustments had a material impact on the Consolidated Statement of Operations, Balance Sheet or Cash Flows in any period previously reported and, therefore, no retrospective adjustment was made to the Company's previously issued Consolidated Financial Statements.

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The table below shows the valuation of the intangible assets acquired from Spansion Inc. along with their estimated remaining useful lives:.

	As of March 12, 2015		Estimated range of lives (in years)
	Gross
	(In thousands)
Existing Technology	$	507,100	4 to 6
In-Process Research and Development Technology		212,300	N/A
Backlog		14,500	1
Customer/Distributor Relationships		97,300	9
License Agreements		9,400	3
Trade Name / Trademarks		20,100	10
Total intangible assets	$	860,700

In-process research and development ("IPR&D") consists of 21 projects, primarily relating to the development of process technologies to manufacture NOR, NAND, Analog, and MCU products. The projects are expected to be completed over the next 2 years. The estimated remaining costs to complete the IPR&D projects were $15.3 million as of the acquisition date. The acquired IPR&D will not be amortized until completion of the related products which is determined by when the underlying projects reach technological feasibility and commence commercial production. Upon completion, each IPR&D project will be amortized over its useful life; useful lives for IPR&D are expected to range between 4 years and 6 years.

As of January 3, 2016 five out of 21 projects originally identified, representing $36.2 million of the total capitalized IPR&D of $212.3 million, had reached technological feasibility and were transferred to developed technology. Refer to Note 4 for further details. No impairments have been identified as of January 3, 2016.

The purchase price has been allocated based on the estimated net tangible and intangible assets of Spansion that existed on the date of the Merger. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the Merger. During the fourth quarter of 2015, as additional information became available, the Company finalized its purchase price allocation that resulted in change in values allocated to identifiable assets and liabilities.  

Identifiable intangible assets

Developed technologies acquired primarily consist of Spansion's existing technologies related to embedded systems semiconductors, which include flash memory, microcontroller, mixed-signal and analog products. An income approach was used to value Spansion’s developed technologies. Using this approach, the estimated fair value was calculated using expected future cash flows from specific products discounted to their net present values at an appropriate risk-adjusted rate of return. A discount rate of 7.5% was used to discount the cash flows to the present value.

Customer relationships represent the fair value of projected cash flows that will be derived from the sale of products to Spansion’s existing customers based on existing, in-process, and future versions of the existing technology. Customer relationships were valued utilizing a form of the income approach known as the “distributor” method since the primary income producing asset of the business was determined to be the technology assets. Under this premise, the margin a distributor owns is deemed to be the margin attributable to the customer relationships. This isolates the cash flows attributable to the customer relationships that a market participant would be willing to pay for.

IPR&D represents the estimated fair values of incomplete Spansion research and development projects that had not reached technological feasibility as of the date of Merger. In the future, the fair value of each project at the Merger date will be either amortized or impaired depending on whether the projects are completed or abandoned. The fair value of IPR&D was determined using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the IPR&D less charges representing the contribution of other assets to those cash flows. A discount rate of 10.5% was used to discount the cash flows to the present value.

Trade names and trademarks are considered a type of guarantee of a certain level of quality or performance represented by the Spansion brand. Trade names and trademarks were valued using the “relief-from-royalty income” approach. This method is based on the assumption that in lieu of ownership, a market participant would be willing to pay a royalty in order to exploit the related benefits of this asset. A discount rate of 9.0% was used to discount the cash flows to the present value.

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License agreements represent the estimated fair value of Spansion’s existing license agreements under which Spansion generates revenue by licensing its intellectual property to third parties and assists its customers in developing and prototyping their designs by providing software and hardware development tools, drivers and simulation models for system-level integration. License agreements were valued using a form of the income approach known as the of “multi-period excess earnings” approach. Under this approach, the expected cash flows associated with the License agreements were projected then discounted to present value at a rate of return that considers the relative risk of achieving the cash flows and the time value of money. A discount rate of 5.0% was used to discount the cash flows to the present value.

Goodwill

The excess of the fair value of the Merger consideration over the fair values of these identifiable assets and liabilities was recorded as goodwill. The goodwill recognized is primarily attributable to the assembled workforce, a reduction in costs and other synergies, and an increase in product development capabilities. The goodwill resulting from the Merger is not expected to be deductible for tax purposes. Goodwill has been allocated to the reporting units expected to benefit from the Merger.

Pro forma consolidated results of operations

The following unaudited pro forma consolidated results of operations for the fiscal year ended January 3, 2016 assume as if the Merger had occurred at the beginning of fiscal year 2014. The pro forma information includes adjustments to amortization and depreciation for intangible assets and property, plant and equipment, adjustments to stock-based compensation expense, and interest expense for the incremental indebtedness incurred. The pro forma results for the year ended January 3, 2016 also include utilization of the net increase in the cost basis of acquired inventory and the Merger related expenses. The pro forma data are for informational purposes only and are not necessarily indicative of the consolidated results of operations of the combined business had the Merger actually occurred at the beginning of fiscal year 2014 or of the results of future operations of the combined business. Consequently, actual results will differ from the unaudited pro forma information presented below.

	Years Ended
	January 3, 2016			December 28, 2014
	(In thousands)
Revenues	$	1,796,266		$	1,977,352
Net loss	$	(340,465	)	$	(597,980	)
Net loss per share attributable to Cypress
Basic	$	(0.76	)	$	(2.72	)
Diluted	$	(0.76	)	$	(2.72	)

NOTE 3. DIVESTITURES

Sale of TrueTouch® mobile touchscreen business

On August 1, 2015, the Company completed the sale of the TrueTouch® Mobile touchscreen business to Parade Technologies (“Parade”) for total cash proceeds of $98.6 million pursuant to the definitive agreement signed on June 11, 2015. Of the total cash proceeds, $10.0 million are held in an escrow account until January 2017 subject to any indemnity claims on post-closing adjustments, per the terms of the agreement. In connection with the transaction, the Company sold certain assets associated with the disposed business mostly consisting of inventory with a net book value of $10.5 million and recognized a total gain of $66.5 million in the third fiscal quarter of 2015. This gain has been presented as a separate line item "Gain on divestiture of TrueTouch^® mobile business" in the Consolidated Statements of Operations.

Also in connection with the transaction, the Company entered into a Manufacturing Service Agreement (MSA) in which the Company agreed to sell finished products and devices to Parade during the one-year period following the close of the transaction. The terms of the MSA indicated that the Company would sell finished wafers to Parade at agreed-upon prices that were considered below fair market value, indicating that there was an embedded fair value that would be realized by Parade through those terms. Accordingly, the Company has allocated $19.9 million out of the $98.6 million proceeds to the fair value of the MSA based on the forecasted wafer sales to Parade for the subsequent one-year period. Such amount was deferred on the Company’s consolidated balance sheet initially and is being amortized to revenue as the Company sells products to Parade. During the year ended January 3, 2016, the Company recognized $5.7 million of revenue from amortization of such deferred revenue.

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The following table summarizes the components of the gain:

	(In thousands)
Cash Proceeds (a)	$	98,635
Deferred Revenue		(19,867	)
Assets Sold:
Property, plant and equipment, net		(69	)
Inventories		(9,290	)
Prepaid Expenses		(1,115	)
Transaction and other costs		(1,822	)
Gain on Divestiture	$	66,472

(a) Includes $10.0 million held in escrow account until January 2017 per the terms of the agreement.

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company’s impairment review process compares the fair value of the reporting unit in which the goodwill resides to its carrying value.  The Company has four reporting units of which two, Memory Products division (MPD) and Programmable Systems Division (PSD), have goodwill.  

The changes in the carrying amount of goodwill for the year ended January 3, 2016, are as follows:

	MPD			PSD		Total
	(in thousands)
Goodwill as of December 28, 2014	$	33,860		$	31,836	$	65,696
Goodwill from merger with Spansion (1)		739,036			937,000		1,676,036
Measurement period adjustments		(2,850	)		—		(2,850	)
Goodwill as of January 3, 2016	$	770,046		$	968,836	$	1,738,882

(1) Refer Note 2 for further details.

In fiscal 2015, the Company elected to perform a two-step quantitative goodwill impairment test for each of its reporting units.  The first step of the quantitative goodwill impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Based on this test, the Company determined that no impairment was indicated as the estimated fair value of each of the reporting units exceeded its respective carrying value.  The Company estimated the fair values of its reporting units using a combination of the income and market approach. These valuation approaches consider a number of factors that include, but are not limited to, forecasted financial information, growth rates, terminal or residual values, discount rates and comparable multiples from publicly traded companies in the Company’s industry and require the Company to make certain assumptions and estimates regarding industry economic factors and the future profitability of its’ business.    

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Based on the Company’s goodwill impairment testing, the Company determined that there was no impairment of goodwill.  The fair value of the MPD reporting unit exceeded its carrying value by 53% and the fair value of PSD reporting unit exceeded its carrying value by 9%.  Based on the Company’s testing, the Company determined that there is a risk of the PSD reporting unit failing the first step of goodwill impairment test in future periods.  For this reporting unit, declines in the Company’s stock price or peers’ stock price, relatively small declines in the future performance and cash flows of the reporting unit or small changes in other key assumptions, such as revenue growth rates and discount rates, may result in the recognition of a material impairment charge to the Company’s earnings as a result of a write-down of the carrying value of the goodwill associated with that reporting unit. The income approach valuations for PSD included the following assumptions for 2015:

	Year Ended
	January 3, 2016
Discount rate		9%
Long-term growth rate		4%
Tax rate		28%
Risk free rate		4%
Peer company beta		0.97

The Company’s next annual evaluation of the goodwill by reporting unit will be performed on the first day of the fourth quarter of fiscal year 2016, or earlier if indicators of potential impairment exist.  Such indicators include, but are not limited to, challenging economic conditions, such as a decline in the Company’s operating results, an unfavorable industry or macroeconomic environment, a substantial decline in the Company’s stock price, or any other adverse change in market conditions.  Such conditions could have the effect of changing one of the critical assumptions or estimates that the Company uses to calculate the fair value of its reporting units, which could result in a decrease in fair value and require the Company to record a material goodwill impairment charge.

In fiscal 2014, the Company elected to perform a qualitative analysis for impairment on goodwill rather than to perform the two-step quantitative goodwill impairment test. The Company assessed qualitative factors to determine whether it was necessary to perform the two-step goodwill impairment test. After assessing many qualitative factors pertinent to the Company, it determined that it was more likely than not that the fair value of our reporting unit exceeds its carrying amount. In assessing the qualitative factors, the Company considered the impact of these key factors: 1) change in the industry and competitive environment, 2) market capitalization, 3) stock price and 4) overall financial performance. Based on the results of the testing, no goodwill impairment was recognized in fiscal 2014.

In fiscal 2013, the Company elected to perform the two-step quantitative goodwill impairment test. The first step of the quantitative goodwill impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Based on the results of the testing, no goodwill impairment was recognized in fiscal 2013.

Intangible Assets

The following tables present details of the Company’s total intangible assets:

	As of January 3, 2016							As of December 28, 2014
	Gross		Accumulated Amortization			Net (c)		Gross		Accumulated Amortization			Net
	(In thousands)
Acquisition-related intangible    assets (a)	$	1,012,472	$	(226,417	)	$	786,055	$	151,773	$	(118,357	)	$	33,416
Non-acquisition related    intangible assets (b)		13,368		(10,228	)		3,140		10,523		(10,021	)		502
Total intangible assets	$	1,025,840	$	(236,645	)	$	789,195	$	162,296	$	(128,378	)	$	33,918

(a) Refer Note 2 for details on valuation of the intangible assets acquired from Spansion Inc.

(b) The increase in the Gross Carrying value relates to new license agreement entered into during fiscal 2015.

(c) The Net Acquisition-related intangible assets contains $176.1 million of IPR&D which remain to attain technological feasibility and commercial production.

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As of January 3, 2016, $36.2 million of the total capitalized IPR&D of $212.3 million had reached technological feasibility and was transferred to developed technology, to be amortized over the estimated useful life of 5 years and amortization of $2.6 million was recorded during the twelve months ended January 3, 2016 for these projects. The Company expects the remaining projects to attain technological feasibility and commence commercial production by the second half of fiscal 2016.

As of January 3, 2016, the estimated future amortization expense of intangible assets was as follows:

Fiscal Year	(In thousands)
2016		123,968
2017		120,966
2018		118,477
2019		111,249
2020 and future		138,319
Total future amortization expense	$	612,979

NOTE 5. FAIR VALUE MEASUREMENTS

Assets/Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of January 3, 2016 and December 28, 2014:

	As of January 3, 2016						As of December 28, 2014
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In thousands)
Financial Assets
Reported as cash equivalents:
Money market funds	$	119	$	—	$	119	$	7,665	$	—	$	7,665
Total cash equivalents		119		—		119		7,665		—		7,665
Reported as short-term investments:
U.S. treasuries		—		—		—		4,993		—		4,993
Corporate notes and bonds		—		—		—		—		5,599		5,599
Federal agency		—		—		—		—		3,615		3,615
Certificates of deposit		—		871		871		—		869		869
Total short-term investments		—		871		871		4,993		10,083		15,076
Reported as long-term investments:
Marketable equity securities		6,516		—		6,516		8,493		—		8,493
Total long-term investments		6,516		—		6,516		8,493		—		8,493
Employee deferred compensation    plan assets:
Cash equivalents		3,333		—		3,333		2,957		—		2,957
Mutual funds		22,023		—		22,023		24,114		—		24,114
Equity securities		8,624		—		8,624		9,352		—		9,352
Fixed income		—		3,227		3,227		—		3,798		3,798
Money market funds		4,042		—		4,042		3,895		—		3,895
Total employee deferred    compensation plan assets		38,022		3,227		41,249		40,318		3,798		44,116
Foreign Exchange Forward Contracts		—		966		966		—		—		—
Total financial assets	$	44,657	$	5,064	$	49,721	$	61,469	$	13,881	$	75,350
Financial Liabilities
Foreign Exchange Forward Contracts		—		1,283		1,283		—		—		—
Employee deferred compensation    plan liability		—		41,457		41,457		—		43,452		43,452
Total financial liabilities	$	—	$	42,740	$	42,740	$	—	$	43,452	$	43,452

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Valuation Techniques:

· Level 1—includes instruments for which quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The Company’s financial assets utilizing Level 1 inputs include U.S. treasuries, money market funds, marketable equity securities and our employee deferred compensation plan assets.

· Level 2—includes instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company’s Level 2 instruments include certain U.S. government securities, commercial paper, corporate notes and bonds and our employee deferred compensation plan liabilities.  Foreign currency forward contracts are classified as Level 2 because the valuation inputs are based on observable market data of similar instruments. The Company principally executes its foreign currency contracts in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants and the Company’s counterparties are large money center banks and regional banks. The valuation inputs for the Company’s foreign currency contracts are based on observable market data from public data sources (specifically, forward points, LIBOR rates, volatilities and credit default rates at commonly quoted intervals) and do not involve management judgment.

· Level 3—includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement. As of January 3, 2016 and December 28, 2014, the Company did not own any financial assets utilizing Level 3 inputs.

The Company determines the basis of the cost of a security sold or the amount reclassified out of accumulated other comprehensive income into earnings using the specific identification method.  

There were no material  transfers between Level 1, Level 2 and Level 3 fair value hierarchies during fiscal 2015 and 2014.

Assets 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.

As of January 3, 2016, the carrying value of the Company’s senior secured revolving line of credit was $449.0 million. The fair value of the Company’s line of credit approximates its fair value since it bears an interest rate that is similar to existing market rates.

The Company's 2.00% Senior Exchangeable Notes assumed as part of the Merger is traded in the market and is categorized as Level 2. The carrying value and the estimated fair value of the debt portion of the Notes as of January 3, 2016 is $131.8 million and $279.6 million respectively. See Note 14 for further details.

Investments in Equity Securities

Privately-held equity investments are accounted for under the cost method if the Company has less than 20 % ownership interest, and it does not have the ability to exercise significant influence over the operations of the privately-held companies. The Company’s total investments in equity securities accounted for under the cost method included long-term investments in non-marketable equity securities (investments in privately-held companies) are $9.2 million and $5.9 million, as of January 3, 2016 and December 28, 2014, respectively.

Privately-held equity investments 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 the privately-held companies.  The Company’s total investments in equity securities accounted for under the equity method of accounting are $41.3 million and $20.5 million as of January 3, 2016 and December 28, 2014, respectively.

In February 2012, the Company entered into a Stock Purchase Agreement (the “Agreement”) with a company that designs, develops and manufactures products in the area of advanced battery storage for mobile consumer devices. Pursuant to the terms of the Agreement, the Company has so far purchased $56.0 million of preferred voting stock from the company and has committed to purchase additional preferred stock in a series of subsequent closings subject to certain performance milestones that must be fulfilled within a defined and agreed-upon timeline. In fiscal 2016, the Company plans to make investments subject to the attainment of certain milestones and the timing of additional capital requests which could vary substantially. As of January 3, 2016 and December 28, 2014, the Company owned 38.7 % and 26.2% respectively, of the company. Since the fourth quarter of fiscal 2014, the company accounts for its investment in the company under the equity method of accounting.

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The remaining privately-held equity investments are accounted for under the cost method and are periodically reviewed for other-than-temporary declines in fair value

During fiscal 2013, the Company sold its equity investment in one publicly traded company for $2.2 million and recognized a gain of $1.1 million in “Other income (expense), net”.

In fiscal 2014, the Company, through its wholly-owned subsidiary, purchased 6.9 million ordinary shares of Hua Hong Semiconductor Limited (HHSL) for an aggregate price of $10.0 million in connection with their initial public offering. HHSL is the parent company of Grace Semiconductor Manufacturing Corporation, which is one of the Company’s strategic foundry partners.  The Company recorded an unrealized loss on its investment in HHSL’s ordinary shares of $4.7 million and $1.5 million in "Other income (expense), net" as a result of the decline in the fair market value of the investment as of January 3, 2016 and December 28, 2014, respectively.

The Company’s investments are periodically reviewed for other-than-temporary declines in fair value by considering available evidence, including general market conditions, financial condition, pricing in recent rounds of financing, if any, earnings and cash flow forecasts, recent operational performance and any other readily available market data.

NOTE 6.  INVESTMENTS

Available-For-Sale Securities and Other Investments

The following tables summarize the Company’s available-for-sale securities and other investments:

	As of January 3, 2016								As of December 28, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Reported as cash equivalents:
Money market funds	$	119	$	—	$	—	$	119	$	7,665	$	—	$	—		$	7,665
Total cash equivalents		119		—		—		119		7,665		—		—			7,665
Reported as short-term investments:
Corporate notes and bonds		—		—		—		—		5,616		—		(17	)		5,599
Federal agency		—		—		—		—		3,617		—		(2	)		3,615
U.S. treasuries		—		—		—		—		5,002		—		(9	)		4,993
Commercial paper		—		—		—		—		—		—		—			—
Certificates of deposit		871		—		—		871		869		—		—			869
Total short-term investments		871		—		—		871		15,104		—		(28	)		15,076
Total available-for-sale securities and    other investments	$	990	$	—	$	—	$	990	$	22,769	$	—	$	(28	)	$	22,741

As of January 3, 2016, the contractual maturities of the Company’s available-for-sale investments and certificates of deposit were as follows (the table below does not include our investments in marketable equity securities):

	Cost		Fair Value
	(In thousands)
Maturing within one year	$	990	$	990
Total	$	990	$	990

Realized gains and realized losses from sales of available-for-sale in fiscal 2015, 2014 and 2013 were not material.

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NOTE 7. ASSETS HELD FOR SALE

Fixed Assets

During fiscal 2014, certain equipment which had been classified as held for sale in fiscal 2013 was sold resulting in a gain of $0.6 million. During fiscal 2013, we incurred a $6.7 million restructuring charge to write down this equipment to the then current fair value of $2.3 million.

NOTE 8.EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION

The Company’s equity incentive plans are broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests.

The Company currently has the following employee stock plans:

1999 Stock Option Plan (“1999 Plan”):

The 1999 Plan expired in March 2009. There are currently no shares available for grant under the 1999 Plan. Under the 1999 Plan 2.0 million shares are issued and outstanding. Any outstanding shares cancelled or forfeited under the 1999 Plan will not be available for any future grants since the 1999 Plan expired.

2013 Stock Option Plan (“2013 Plan”):

At the 2013 Annual Shareholders Meeting, the Company’s shareholders approved the extension of the 1994 Stock Plan to January 15, 2024 and renamed the plan as the 2013 Stock Plan. The 2013 Plan provides for (1) the discretionary granting of Options, Stock Appreciation Rights ("SARs"), Restricted Stock Awards ("RSAs") or Restricted Stock Units ("RSUs") to Employees, Consultants and Outside Directors, which Options may be either Incentive Stock Options (for Employees only) or NonstatutoryStock Options, as determined by the Administrator at the time of grant; and (2) the grant of Nonstatutory Stock Options, SARs, Restricted Stock or RSUs to Outside Directors pursuant to an automatic, non-discretionary formula. Options or awards granted under the 2013 Stock Plan generally expire over terms not exceeding eight years from the date of grant, subject to earlier termination upon the cessation of employment or service of the recipients. The maximum aggregate number of shares authorized for issuance under the 2013 Stock Plan is 145.2 million shares. As of January 3, 2016, 25.0 million options or 13.3 million RSUs and RSAs were available for grant under the 2013 Stock Plan. In the first quarter of fiscal 2015, in connection with the Merger, Cypress’ the shareholders approved an increase in the number of shares issuable under the Cypress 2013 Stock Plan by 29.3 million shares that could be issued as full value awards (such as restricted stock units (RSUs), and performance stock units (PSUs)), or as appreciation awards (such as stock options and/or stock appreciation rights)(if awards are granted only in the form of RSUs or other full value awards, this increase in shares would allow for the issuance of only up to 15.6 million shares, to a total of 31.0 million reserved but unissued shares under the 2013 Stock Plan).

2010 Equity Incentive Award Plan (“2010 Plan”)

In connection with the Company’s Merger with Spansion, it assumed their 2010 Plan, as amended, which reserves a total of 10.1 million shares of common stock for issuance under stock options, stock appreciation rights, restricted stock units, restricted stock, performance awards, stock payments, dividend equivalents and deferred stock to its employees, consultants and non-employee members of its Board of Directors. The 2010 Plan provides that incentive stock options may only be granted to employees of the Company or its subsidiaries. All stock options expire if not exercised by the seventh anniversary of the grant date. Annual RSU awards granted generally vest over a period of two to four years. Options granted become exercisable in full or in installments pursuant to the terms of each agreement evidencing options granted. The exercise of stock options and issuance of restricted stock and restricted stock units is satisfied by issuing authorized common stock or treasury stock. Shares that are subject to or underlie awards that expire or for any reason are cancelled, terminated or forfeited, or fail to vest will again be available for grant under the 2010 Plan. Grants from this plan are limited to employees who joined Cypress as part of the Merger and grants to new Cypress employees.  As of January 3, 2016, 10.1 million shares of stock options or RSUs and RSAs were available for grant under the 2010 Plan.

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2012 Incentive Award Plan (“2012 Plan”):

In connection with the Company’s acquisition of Ramtron in 2012,it assumed their 2012 Plan, as amended, which reserves a total of 1.2 million shares of common stock for issuance under stock option or restricted stock grants. The exercise price of all non-qualified stock options must be no less than 100% of the fair market value on the effective date of the grant under the 2012 Plan, and the maximum term of each grant is seven years. The 2012 Plan permits the issuance of incentive stock options, the issuance of restricted stock, and other types of awards. Restricted stock grants generally vest five years from the date of grant. Options granted become exercisable in full or in installments pursuant to the terms of each agreement evidencing options granted. The exercise of stock options and issuance of restricted stock and restricted stock units is satisfied by issuing authorized common stock or treasury stock. Grants from this plan are limited to employees who joined Cypress as part of the Ramtron acquisition and grants to new Cypress employees. As of January 3, 2016, 2 thousand shares of stock options or RSUs and RSAs were available for grant under the 2012 Plan.

Employee Stock Purchase Plan (“ESPP”) :

At the 2013 Annual Shareholders Meeting, the Company’s shareholders approved an extension of the ESPP Plan to May 10, 2023. The Company’s ESPP allows eligible employees to purchase shares of our common stock through payroll deductions. The ESPP contains consecutive 18 -month offering periods composed of three six -month exercise periods. The shares can be purchased at the lower of 85% of the fair market value of the common stock at the date of commencement of the offering period or at the last day of each six -month exercise period. Purchases are limited to 10% of an employee’s eligible compensation, subject to a maximum annual employee contribution limit of $21,250. As of January 3, 2016 1.7 million shares were available for future issuance under the ESPP.

Stock-Based Compensation

The following table summarizes the stock-based compensation expense by line item in the Consolidated Statement of Operations:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Cost of revenues	$	16,459	$	13,209	$	12,789
Research and development		25,719		16,187		26,042
Selling, general and administrative		51,349		20,774		34,189
Total stock-based compensation expense	$	93,527	$	50,170	$	73,020

In connection with the Merger, the Company assumed stock options and full value awards originally granted by Spansion. Stock-based compensation expense in fiscal 2015 included $21.6 million related to assumed Spansion stock options and RSUs respectively.

As stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it has been adjusted for estimated forfeitures. The accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Consolidated cash proceeds from the issuance of shares under the employee stock plans were $52.9 million, $32.0 million and $43.3 million for fiscal 2015, fiscal 2014 and 2013, respectively. No income tax benefit was realized from stock option exercises for fiscal 2015, 2014 and 2013. As of January 3, 2016 and December 28, 2014 stock-based compensation capitalized in inventories totaled $4.3 million and $2.0 million, respectively.

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The following table summarizes the stock-based compensation expense by type of awards:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Stock options	$	1,920	$	4,717	$	8,747
Restricted stock units and restricted stock awards		74,897		37,837		54,359
ESPP		16,710		7,616		9,914
Total stock-based compensation expense	$	93,527	$	50,170	$	73,020

The following table summarizes the unrecognized stock-based compensation balance, net of estimated forfeitures, by type of awards as of January 3, 2016:

(In thousands)			Weighted-Average Amortization Period
			(In years)
Stock options	$	2,631		1.27
Restricted stock units and restricted stock awards		82,087		1.57
ESPP		18,364		0.67
Total unrecognized stock-based compensation balance,    net of estimated forfeitures	$	103,082		1.40

Valuation Assumptions

The Company estimates the fair value of its stock-based equity awards using the Black-Scholes valuation model. Assumptions used in the Black-Scholes valuation model were as follows:

	Year Ended
	January 3, 2016		December 28, 2014	December 29, 2013
Stock Option Plans:
Expected life		—	4.4-5.7 years	4.2-5.3 years
Volatility		—	39.7%-41.1%	38.2%-41.9%
Risk-free interest rate		—	0.26%-1.75%	0.93%-1.85%
Dividend yield		—	4.2%-4.4%	3.8%-4.5%
ESPP:
Expected life	0.5-1.5 years		0.5-1.5 years	0.5-1.5 years
Volatility	35.9%-46.6%		31.0%-36.1%	38.4%-46.3%
Risk-free interest rate	0.09%-0.86%		0.03%-0.35%	0.08%-0.32%
Dividend yield	4.5%-5.2%		4.2%-4.4%	3.8%-4.5%

Expected life: Expected life is based on historical exercise patterns, giving consideration to the contractual terms of the awards and vesting schedules. In addition, employees who display similar historical exercise behavior are grouped separately into two classes (executive officers and other employees) in determining the expected life.

Volatility: The Company determined that implied volatility of publicly traded call options and quotes from option traders is more reflective of market conditions and, therefore, can reasonably be a better indicator of expected volatility than historical volatility. Therefore, volatility is based on a blend of historical volatility of the Company’s common stock and implied volatility.

Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.

Dividend yield: The expected dividend is based on the Company’s history and expected dividend payouts.

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Employee Equity Award Activities

As of January 3, 2016, 35.1 million stock options, or 23.4 million RSUs/PSUs, were available for grant 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).

Stock Options:

As a part of the Merger, Cypress assumed all outstanding Spansion options and these options were converted into options to purchase Cypress common stock at the agreed upon conversion ratio. The exercise price per share for each assumed Spansion option is equal to exercise price per share of Spansion option divided by 2.457.

The following table summarizes the Company’s stock option activities:

	Year Ended
	January 3, 2016					December 28, 2014					December 29, 2013
	Shares			Weighted- Average Exercise Price per Share		Shares			Weighted- Average Exercise Price per Share		Shares				Weighted- Average Exercise Price per Share
	(In thousands, except per-share amounts)
Options outstanding, beginning of year		14,463		$	9.24		19,060		$	8.33		22,760			$	7.25
Options assumed as a part of the Merger		8,976		$	12.86		—		—			—		—
Granted		—		$	—		522		$	10.24		4,122			$	11.40
Exercised		(5,391	)	$	5.71		(4,027	)	$	4.47		(5,622	)		$	5.19
Forfeited or expired		(1,208	)	$	12.75		(1,092	)	$	11.59		(2,200	)		$	11.09
Options outstanding, end of year		16,840		$	7.99		14,463		$	9.24		19,060			$	8.33
Options exercisable, end of year		14,366		$	7.40		9,787		$	8.05		12,346			$	6.39

The weighted-average grant-date fair value was $2.22 per share for options granted in fiscal 2014 and $2.63 per share in options granted during fiscal 2013.  The Company did not grant any new stock options during 2015.

The aggregate intrinsic value of the options outstanding and options exercisable as of January 3, 2016 was $48.1 and $47.9 million respectively. The aggregate intrinsic value represents the total pre-tax intrinsic value which would have been received by the option holders had all option holders exercised their options as of January 3, 2016 and does not include substantial tax payments.

The aggregate intrinsic value of the options outstanding and options exercisable as of December 28, 2014 was $82.8 million and $68.0 million, respectively. The aggregate intrinsic value represents the total pre-tax intrinsic value which would have been received by the option holders had all option holders exercised their options as of December 28, 2014 and does not include substantial tax payments.

The aggregate pre-tax intrinsic value of option exercises, which represents the difference between the exercise price and the value of Cypress common stock at the time of exercise, was $41.8 million in fiscal 2015, $26.4 million in fiscal 2014 and $31.9 million in fiscal 2013.

The aggregate grant date fair value of the options which vested in fiscal 2015, fiscal 2014 and 2013 was $5.6 million $6.9 million and $10.1 million, respectively.

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The following table summarizes information about options outstanding and exercisable as of January 3, 2016:

	Options Outstanding						Options Exercisable
Range of Exercise Price	Shares		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price per Share		Shares		Weighted- Average Exercise Price per Share
			(In years)
$2.72-$3.99		1,821,541		0.81	$	3.57		1,812,477	$	3.57
$4.01-$4.09		1,815,277		3.01	$	4.09		1,815,277	$	4.09
$4.15-$4.22		173,644		0.51	$	4.17		173,644	$	4.17
$4.28-$4.28		1,981,218		1.35	$	4.28		1,981,218	$	4.28
$4.30-$6.17		2,162,508		2.80	$	5.44		2,150,857	$	5.44
$6.22-$8.10		2,112,745		2.11	$	7.61		2,112,745	$	7.61
$8.43-$10.92		1,133,060		4.38	$	9.97		697,698	$	9.90
$11.27-$11.27		1,812,686		4.87	$	11.27		1,072,597	$	11.27
$11.32-$11.40		181,205		3.02	$	11.33		167,965	$	11.33
$11.55-$23.23		3,645,837		4.54	$	13.67		2,381,600	$	14.50
		16,839,721		3.04	$	7.99		14,366,078	$	7.40

The total number of exercisable in-the-money options was 8.4 million shares as of January, 2016.

As of January 3, 2016, stock options vested and expected to vest totaled  16.6 million shares, with a weighted-average remaining contractual life of 3.0 years and a weighted-average exercise price of $7.95 per share. The aggregate intrinsic value was $48.0  million.

Restricted Stock Units, Performance-Based Restricted Stock Units and Restricted Stock Awards:

The following table summarizes the Company’s restricted stock unit and restricted stock award activities:

	Year Ended
	January 3, 2016					December 28, 2014					December 29, 2013
	Shares			Weighted- Average Grant Date Fair Value per Share		Shares			Weighted- Average Grant Date Fair Value per Share		Shares			Weighted- Average Grant Date Fair Value per Share
	(In thousands, except per-share amounts)
Non-vested, beginning of year		7,838		$	10.98		8,652		$	11.97		7,887		$	14.52
Granted and assumed		10,172		$	14.78		6,344		$	10.16		7,040		$	11.40
Released		(3,594	)	$	5.60		(4,363	)	$	11.58		(2,378	)	$	9.77
Forfeited		(3,363	)	$	11.66		(2,795	)	$	11.21		(3,897	)	$	14.74
Non-vested, end of year		11,053		$	13.43		7,838		$	10.98		8,652		$	11.97

Of the total awards granted and assumed in 2015, 3.2 million awards were performance-based units granted for the performance-based restricted stock program (PARS) for 2015, 1.6 million awards were service-based units granted under the 2015 PARS program, which employees are eligible to earn 100% if they remain an employee of the Company through specified dates between fiscal 2016 and 2018, and 23 thousand awards were granted to individuals subject to the achievement of specific milestones. Of the total awards granted in 2014, 2.6 million awards were performance-based units granted for the 2014 PARS program, 0.6 million awards were service-based units granted under the 2014 PARS program and 0.3 million awards were granted to individuals subject to the achievement of specific milestones.  Of the total awards granted in 2013, 4.6 million awards were performance-based units granted for the 2013 PARS program and 0.2 million awards were granted to individuals subject to the achievement of specific milestones.

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Of the total awards released in 2015, 0.6 million and 0.5 million awards were released for the performance-based units and service-based units, respectively granted under the 2014 PARS program and 0.2 million shares were released to individuals who achieved the specific milestones set upon grant. Of the total awards released in 2014, 2.4 million awards were released for the performance-based units granted under the 2013 PARS program and 46 thousand shares were released to individuals who achieved the specific milestones set upon grant.  Of the total awards released in 2013, 1.0 million awards were released for the 2012 PARS program and 0.1 million shares were released to individuals who achieved the specific milestones set upon grant.  

A portion of the non-vested balance as of January 3, 2016 included 5.3 million units for the PARS programs.  These PARS were issued to certain senior-level employees in fiscal 2014 and 2015 and can be earned ratably over a period of one to three years, subject to the achievement of certain milestones that were set by the Compensation Committee in advance.  Any share not earned due to not achieving the full performance milestone are forfeited and returned to the pool.

The PSUs and RSUs under Cypress’s 2015 PARS Program were granted by the Company in the first and second quarters of fiscal 2015 with an extended measurement period of three years. These awards were issued to certain senior-level employees and the PSU portion of the award can be earned over a period of one to three years, subject to the achievement of certain performance milestones that were set by the Compensation Committee in advance. Each participating employee is given a target number of PSUs under each milestone, which can be earned independent of the outcomes of other milestones. Any portion of PSUs not earned due to not achieving the performance milestone is forfeited and returned to the pool. The following milestones for the 2015 PSUs were approved by the Compensation Committee:

·       Total Shareholder Return (TSR) Factor, for the applicable measurement period of one, two and three years as compared to a group of peer companies chosen by the Compensation Committee. If the Company ranks in the 65th percentile of peers, 100% of the target PSUs is earned by employees. If the Company exceeds a 65th percentile ranking, employees can earn as high as 200% of the target RSUs. If the Company ranks in the 25th percentile or less, no PSUs are earned by employees under this milestone. If TSR is negative for the measurement period, only 50% of target PSUs are earned.

·       Realization of an annualized target Merger synergy over the three year period from fiscal 2015 to fiscal 2017. Employees are eligible to earn their target PSUs if the cost synergies associated with the Merger achieves the stated goal for each of the years between fiscal 2015 and 2017. The payouts under this milestone are adjusted on a linear scale between the 0% payout and the 100% payout and then between the 100% payout to 200% maximum payout, depending on the achievement of synergy savings target as specified in the grant agreement.

·Achievement of target non-GAAP earnings per share (EPS). Employees are eligible to earn their target PSUs if the Company achieves the target non-GAAP EPS for the specified periods. The payouts under this milestone are adjusted on a linear scale between the 0% payout and the 100% payout and then between the 100% payout to 200% maximum payout, depending on the achievement of this milestone. The measurement period will be for the Company’s reported non-GAAP EPS in the fourth quarter of 2015 and 2016 as well as an annual non-GAAP EPS for fiscal 2017.

The three milestones for the 2014 PARS Program, as approved by the Compensation Committee, were as follows:

· Milestone #1-our Chief Executive Officer’s annual goals, or CSFs. The CEO CSFs represent the action items that are most critical to the Company’s short- and long-term success. In order for a participant to earn 100% of the shares underlying Milestone #1, our CEO had to obtain 85 points or greater under the CEO CSFs and achievement then scaled down linearly to 0% of shares earned if the CEO CSF score was less than 60 points.

· Milestone #2-required the Company to achieve a specific revenue amount during fiscal year 2015. In order for a participant to earn 100% of the RSUs underlying Milestone #2, the Company had to achieve a specific revenue amount level in fiscal year 2015 which scaled down linearly to 0% of the shares earned if the dollar value of the specific revenue amount was less than target.

· Milestone #3-required the participant to remain employed through January 30, 2016. 75% of Milestone #3 targeted PARS vest on January 30, 2015 and the remaining 25% will vest on January 30, 2016.

Both Milestones #1 and #2 were multiplied by a Total Shareholder Return (TSR) Factor, for the applicable milestone performance period as compared to the performance of a Peer Group of Companies as detailed in our 2014 Proxy. The TSR factor which adjusted on a linear scale was .625 if Cypress was at the 10th or lower rank order percentile, 1.0 if Cypress was in the 40th and 60th rank percentile and 1.375 if Cypress was at the 90th or higher rank order percentile.

ESPP:

During fiscal 2015, 2014 and 2013, the Company issued 2.6 million, 1.5 million and 1.5 million shares under its ESPP with weighted-average price of $8.69, $8.93 and $9.21 per share, respectively.

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NOTE 9. BALANCE SHEET COMPONENTS

Accounts Receivable, Net

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Accounts receivable, gross	$	295,803		$	79,091
Allowances for doubtful accounts receivable and sales returns		(3,067	)		(3,107	)
Accounts receivable, net	$	292,736		$	75,984

Inventories

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Raw materials	$	13,516	$	4,753
Work-in-process		192,245		64,003
Finished goods		37,834		19,471
Total inventories	$	243,595	$	88,227

Total inventories include gross inventory of $385.2 million and inventory provisions of $141.6 million as of January 3, 2016.  Total inventories include gross inventory of $121.8 million and inventory provisions of $33.5 million as of December 28, 2014.  During the year ended January 3, 2016, the Company recorded $133 million of provisions to write down inventory assumed from the Merger and were recognized as part of the Company's strategy to focus on high margin, profitable business as a combined company and to move away from the production and sale of inventory associated with non-strategic business.

Other Current Assets

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Prepaid tooling assets	$	19,379	$	3,880
Restricted cash relating to pension plan (see Note 17)		3,730		—
Foundry service prepayments - ST		5,753		—
Prepaid expenses		30,934		17,897
Other current assets		27,084		7,511
Total other current assets	$	86,880	$	29,288

Property, Plant and Equipment, Net

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Land	$	37,819		$	18,570
Equipment		1,191,469			1,017,121
Buildings, building and leasehold improvements		314,017			221,465
Construction in progress		28,050			12,093
Furniture and fixtures		12,946			6,902
Total property, plant and equipment, gross		1,584,301			1,276,151
Less: accumulated depreciation and amortization		(1,159,298	)		(1,038,388	)
Total property, plant and equipment, net	$	425,003		$	237,763

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Other Long-term Assets

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Employee deferred compensation plan	$	41,249	$	44,116
Investments in Equity securities		57,030		34,992
Deferred tax assets		4,080		1,187
Long term license		24,079		4,633
Restricted cash relating to pension plan (see Note 17)		3,462		—
Long term receivable from sale of TrueTouch ®    Mobile business (see Note 3)		10,000		—
Foundry service prepayments - LT		26,237		—
Other assets		34,272		8,665
Total other long-term assets	$	200,409	$	93,593

Other Current Liabilities

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Employee deferred compensation plan	$	41,457	$	43,452
Restructuring accrual - ST (see Note 10)		7,270		1,177
License commitment		18,496		—
Deferred Revenue on sale of TrueTouch® mobile business    (see Note 3)		15,295		—
Deferred liability - distributor price adjustments		52,712		19,618
Other current liabilities		67,175		30,372
Total other current liabilities	$	202,405	$	94,619

Other Long-Term Liabilities

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Long-term pension liabilities	$	8,712	$	5,768
Restructuring accrual - LT (see Note 10)		14,217		—
Other long-term liabilities		14,855		4,925
Total other long-term liabilities	$	37,784	$	10,693

Sale of Spansion's Sunnyvale property

On January 23, 2014, Spansion sold its property in Sunnyvale, California, consisting of 24.5 acres of land with approximately 471,000 square feet of buildings that included its headquarters building and submicron development center, a Pacific Gas & Electric transmission facility and a warehouse building, for net consideration of $59.0 million. Spansion concurrently leased back approximately 170,000 square feet of the headquarters building on a month-to-month basis with the option to continue the lease for up to 24 months; thereafter, either party could terminate the lease. The first six months of the lease were rent free; thereafter, the rents were lower than the market rates. For accounting purposes, these rents were deemed to have been netted against the sale proceeds and represent prepaid rent. As such, the use of the property after its sale constituted continuing involvement and recognition of the sale of the property was deferred until the lease period ends. In the third quarter of fiscal 2015, the Company terminated the lease on the Sunnyvale building and recognized an immaterial gain.

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NOTE 10.RESTRUCTURING

Spansion Integration-Related Restructuring Plan

In March 2015, the Company began the implementation of planned cost reduction and restructuring activities in connection with the Merger. As part of this plan, the Company expects to eliminate approximately 1,000 positions from the combined workforce across all business and functional areas on a global basis. The restructuring charge of $90.1 million recorded for the fiscal year ended January 3, 2016 primarily consists of severance costs, lease termination costs and impairment of property, plant and equipment. The lease termination costs include approximately $18 million relating to the buildings Spansion had leased prior to the Merger, which the Company decided not to occupy in the post-merger period. The initial term of the lease commenced on January 1, 2015 and will expire on December 31, 2026.

The following table summarizes the restructuring charges recorded in the Company’s Consolidated Statements of Operations for the periods presented pursuant to the Spansion Integration-Related Restructuring Plan:

	Year Ended
	January 3, 2016
	(In thousands)
Personnel costs	$	58,972
Lease termination costs and other related charges		18,016
Impairment of property, plant and equipment		12,531
Other		565
Total restructuring and other charges	$	90,084

Restructuring activity under the Spansion Integration – Related Restructuring Plan during fiscal year ended January 3, 2016:

	Year Ended
	January 3, 2016
	(In thousands)
Accrued restructuring balance as of December 28, 2014	$	—
Provision		81,041
Cash payments and other		(59,554	)
Accrued restructuring balance as of January 3, 2016	$	21,487

The provision for restructuring expense in the table above does not include the charge to write off certain leasehold improvements from the first quarter of 2015, which totaled $9.0 million.

The Company anticipates that the remaining restructuring accrual balance will be paid out in cash through the first quarter of 2016 for employee terminations and over the remaining lease term through 2026 for the excess lease obligation.

NOTE 11. FOREIGN CURRENCY DERIVATIVES

The Company enters into multiple foreign exchange forward contracts to hedge certain operational exposures resulting from movements in Japanese yen and euro exchange rates. 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 movements on its operating results. Some foreign currency forward contracts are considered to be economic hedges that are not designated as hedging instruments while others are designated as cash flow hedges. Whether designated or undesignated, 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.

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Cash Flow Hedges

The Company enters into cash flow hedges to protect non-functional currency revenues, inventory purchases and certain other operational expenses 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 nine 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 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 other income (expense), net in the 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 other income (expense), net in its Consolidated Statements of Operations at that time.

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 other income (expense), net in its Consolidated Statements of Operations.

At January 3, 2016, the Company had outstanding forward contracts to buy ¥2,690.0 million for $22.7 million.

Non-designated hedges

Total notional amounts of outstanding contracts were as summarized below.  The duration or each contract is approximately thirty days:

Buy / Sell	January 3, 2016
	(in millions)
US dollar / Japanese Yen	$19.4 / ¥2,333
US dollar / EUR	$7.3/€6.8

NOTE 12. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated other comprehensive loss were as follows:

	Accumulated net unrealizedlosses on available-for-sale investments			Cumulative translation adjustment and other		Unrecognized Gain on the Defined Benefit Plan		Accumulated other comprehensive loss (income)
	(in thousands)
Balance as of December 29, 2013	$	(183	)	$	6	$	—	$	(177	)
Other comprehensive income (loss) before    reclassification		131			—		—		131
Balance as of December 28, 2014	$	(52	)	$	6	$	—	$	(46	)
Other comprehensive income (loss) before    reclassification		(1,623	)		—		—		(1,623	)
Amounts reclassified to earnings		1,416			—		—		1,416
Net unrecognized gain on the Defined    Benefit Plan		—			—		26		26
Balance as of January 3, 2016	$	(259	)	$	6	$	26	$	(227	)

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NOTE 13.  OTHER INCOME (EXPENSE), NET

The following table summarizes the components of “other income (expense), net,” recorded in the Consolidated Statements of Operations:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Interest income	$	885		$	362		$	301
Changes in fair value of investments under the    deferred compensation plan		(1,354	)		3,014			6,371
Unrealized loss on marketable securities		(4,655	)		(1,495	)		—
Impairment of investments		—			—			25
Foreign currency exchange gains (losses), net		744			1,382			2,791
Gain on sale of equity investments		276			—			908
Other		335			40			(59	)
Other income (expense), net	$	(3,769	)	$	3,303		$	10,337

NOTE 14. DEBT AND EQUITY TRANSACTIONS

Debt is comprised of the following:

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Current portion of long-term debt
Capital lease obligations	$	6,603	$	3,227
Equipment loans		3,003		2,916
Term Loan A		5,000		—
Current portion of long-term debt		14,606		6,143
Revolving credit facility and long-term debt
Credit facility		449,000		227,000
Term Loan A		92,228		—
2% Senior Exchangeable Notes		131,845		—
Capital lease obligations		586		7,105
Equipment loans		—		3,002
Revolving credit facility and long-term debt		673,659		237,107
Total debt	$	688,265	$	243,250

Senior Secured Revolving Credit Facility

On March 12, 2015, the Company amended and restated its existing senior secured revolving credit facility ("Credit Facility") and increased the size of the Credit Facility from $300 million to $450 million. The restated agreement also contains an option permitting the Company to arrange additional commitments of $250 million (“Incremental Availability”) and specifies that the proceeds of these loans may be used for working capital, acquisitions, stock repurchases and general corporate purposes. The borrowings under the Credit Facility will bear interest, at the Company's option, at an adjusted base rate plus a spread of 1.25%, or an adjusted LIBOR rate plus a spread of 2.25%. The borrowings under the Credit Facility are collateralized by substantially all of the Company's assets. The financial covenants were amended to include the following conditions: 1) maximum total leverage ratio of 3.50 to 1.00 through January 1, 2017, and 3.00 to 1.00 thereafter, 2) minimum fixed charge coverage ratio of 1.00 to 1.00. At January 3, 2016, the Company's outstanding borrowings of $449.0 million were recorded as part of long-term liabilities and are presented as “Long-term revolving credit facility and long term debt” on the Consolidated Balance Sheet.  The Company incurred financing costs of $2.3 million to the new lenders of the Credit Facility which has been capitalized and recognized in other long-term assets on the Consolidated Balance Sheet. These costs will be amortized over the life of the Credit Facility.

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As per the terms of the Credit Facility, the Company entered into a Joinder Agreement on December 22, 2015 under which the Company borrowed an additional $100 million (“Term Loan A”). Term Loan A is subject to, at the Company’s option, either an interest rate equal to (i) 3.25% over LIBOR or (ii) an interest rate equal to 2.25% over the greater of (x) the prime lending rate published by the Wall Street Journal, (y) the federal funds effective rate plus 0.50%, and (z) the LIBOR rate for a one month interest period plus 1%. The Company paid a 1.00% upfront fee in connection with the Term Loan A.  Such Term Loan A is payable in quarterly installments equal to 1.25% per quarter for 2016, 1.875% per quarter for 2017 and 2018, and 2.50% per quarter thereafter, with the remaining outstanding principle amount due at final maturity on March 12, 2020. It may be voluntarily prepaid at the Company’s option and is subject to mandatory prepayments equal to (i) 50% of excess cash flow, as defined in the agreement, (stepping down to 25% and 0% based on a decrease in total leverage ratio over time) at the end of each fiscal year, (ii) the net cash proceeds from certain asset sales (subject to certain reinvestment rights) and (iii) the proceeds from any debt issuances not otherwise permitted under the Credit Agreement.  The Company incurred financing costs of $2.8 million to the lenders of Term Loan A which has been capitalized and recognized as a deduction of the Term Loan A balance in “Long-term revolving credit facility and long term debt” on the Consolidated Balance Sheet. These costs will be amortized over the life of Term Loan A.

The Credit Facility, as amended, provides for a $450 million revolving credit facility and generally contains the same representations and warranties, covenants, and events of default that it contained prior to the effectiveness of the Amendment. The Amendment did not change the interest rate or maturity applicable to the Credit Facility and the Credit Facility remains guaranteed by certain present and future wholly-owned material domestic subsidiaries of the Company (the “Guarantors”) and secured by a security interest in substantially all assets of the Company and the Guarantors.

On January 6, 2016, subsequent to fiscal 2015, the Company entered into an Incremental Revolving Joinder Agreement to its Credit Facility to increase the amount of revolving commitments under our Credit Facility by an additional $90 million. The total aggregate amount of revolving commitments under the Credit Facility starting January 6, 2016 is $540 million.

The proceeds of the loans made under the Credit Facility may be used for working capital, acquisitions, stock repurchases and general corporate purposes. As January 3, 2016, $549 million aggregate principal amount of loans, including Term Loan A, and letters of credit are outstanding under the Credit Facility and none of the Incremental Availability has been used.

As of January 3, 2016, the Company was in compliance with all of the financial covenants under the Credit Facility.

2.00% Senior Exchangeable Notes

Pursuant to the Merger, Cypress assumed Spansion's 2.00% Senior Exchangeable Notes (the Notes) on March 12, 2015. The Notes are governed by a Supplemental Indenture, dated March 12, 2015, between the Company, Spansion and Wells Fargo Bank, National Association, as Trustee. They are fully and unconditionally guaranteed on a senior unsecured basis by the Company. The Notes will mature on September 1, 2020, unless earlier repurchased or converted, and bear interest of 2.00% per year payable semi-annually in arrears on March 1 and September 1, commencing on March 1, 2014. The Notes may be due and payable immediately in certain events of default.

As of January 3, 2016, the Notes are exchangeable for 184.068 shares of common stock per $1,000 principal amount of the Notes (equivalent to an exchange price of $5.43) subject to adjustments for dividends, anti-dilutive issuances and make-whole adjustments upon a fundamental change. A fundamental change includes a change in control, delisting of the Company’s stock and liquidation, consolidation or merger of the Company. According to the Indenture, a change in control occurs when a person or group becomes the beneficial owner directly or indirectly, of more than 50% of the Company’s common stock. In the case of a consolidation or merger, if the surviving entity continues to be listed, no change of control will be triggered. Prior to June 1, 2020, the Notes will be exchangeable under certain specified circumstances as described in the Indenture.

The Notes were valued as of March 12, 2015 as a part of the Merger and the Company separated the Notes into debt and equity components according to the accounting guidance for convertible debt instruments that may be fully or partially settled in cash upon conversion. The carrying amount of the debt component, which approximates its fair value, was estimated by using an interest rate for nonconvertible debt, with terms similar to the Notes. The excess of the principal amount of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to the carrying value of the Notes over their term as interest expense using the interest method. The amount recorded to additional paid-in capital will not to be remeasured as long as it continues to meet the conditions for equity classification. As of March 12, 2015, as a part of the Merger valuation, the Company recorded $129.3 million as debt and $287.3 million as additional paid-in capital in stockholders’ equity. On June 9, 2015, the Company settled ten of the Notes in both cash and shares owing to a receipt of notice of conversion in the first quarter of fiscal 2015.

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The net carrying amount of liability component of the Notes as of January 3, 2016 consists of the following:

	(in thousands)
Principal amount	$	150,000
Settlement due to notice from bondholder		(10	)
Unamortized debt discount		(18,145	)
Net carrying value	$	131,845

The following table presents the interest expense recognized on the Notes during the fiscal year ended January 3, 2016:

	Year Ended
	January 3, 2016
	( in thousands)
Contractual interest expense at 2% per annum	$	2,441
Accretion of debt discount		2,700
Total	$	5,141

Capped Calls

In connection with the Notes, Spansion had entered into capped call transactions in fiscal 2013 with certain bank counterparties to reduce the potential dilution to their common stock upon exchange of the Notes. The fair value of the capped call assumed as a part of the Merger was $25.3 million. In March 2015, the Company and the counterparties agreed to terminate and unwind the capped calls and the Company received a cash settlement of $25.3 million which has been recorded as a credit to additional paid-in-capital on the Consolidated Balance Sheet as of January 3, 2016.

Equipment Loans

In December 2011, the Company obtained equipment loans from a certain financial institution for an aggregate amount of $14.1 million. These loans are collateralized by certain of the Company’s manufacturing equipment and bear interest of 3.15% to 3.18% per annum and are payable in 60 equal installments which commenced in January 2012. The related master loan agreement includes a variety of standard covenants. All of the outstanding balance as of January 3, 2016 was recorded as part of “Other current liabilities.” At January 3, 2016 and December 28, 2014, the fair value of the equipment loans approximated the carrying value. The fair value was estimated using discounted cash flow analysis using relevant factors that might affect the fair value, such as present value factors and risk-free interest rates based on the U.S. Treasury yield curve.

The schedule of principal payments under equipment loans is as follows:

Fiscal Year	(In thousands)
2016	$	3,003
Total	$	3,003

Stock Buyback Programs:

On October 20, 2015, the Company’s Board authorized a new $450 million stock buyback program. In connection with the approval of the new share repurchase plan, the share repurchase plan previously approved in September 2011 was terminated.  The program allows the Company to purchase its common stock or enter into equity derivative transactions related to our common stock. The timing and actual amount expended with the new authorized funds will depend on a variety of factors including the market price of the Company’s common stock, regulatory, legal, and contractual requirements, alternatives uses of cash, availability of on shore cash and other market factors. The program does not obligate the Company to repurchase any particular amount of common stock and may be modified or suspended at any time at the Company’s discretion. From September 2011 through the termination of the program, the Company used $327.4 million from the program to repurchase 24.4 million shares at an average share price of $13.4. Under the new program authorized in October, 2015 through the end of fiscal 2015, the Company used $56.5 million to repurchase 5.7 million share at an average price of $10.00.  

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Yield Enhancement Program:

In fiscal 2009, the Audit Committee approved a yield enhancement strategy intended to improve the yield on the Company’s available cash. As part of this program, the Audit Committee authorized the Company to enter into short-term yield enhanced structured agreements, typically with maturities of 90 days or less, correlated to the Company’s stock price. Under the agreements the Company entered into to date, it pays a fixed sum of cash upon execution of an agreement in exchange for the financial institution’s obligations to pay either a pre-determined amount of cash or shares of the Company’s common stock depending on the closing market price of the Company’s common stock on the expiration date of the agreement. Upon expiration of each agreement, if the closing market price of the Company’s common stock is above the pre-determined price, the Company will have its cash investment returned plus a yield substantially above the yield currently available for short-term cash investments. If the closing market price is at or below the pre-determined price, the Company will receive the number of shares specified at the agreement’s inception. As the outcome of these arrangements is based entirely on the Company’s stock price and does not require the Company to deliver either shares or cash, other than the original investment, the entire transaction is recorded in equity.

The Company enters into a yield enhanced structured agreement based upon a comparison of the yields available in the financial markets for similar maturities against the expected yield to be realized per the structured agreement and the related risks associated with this type of arrangement. The Company believes the risk associated with these types of agreements is no different than alternative investments available to the Company with equivalent counterparty credit ratings. All counterparties to a yield enhancement program have a credit rating of at least Aa2 or A as rated by major independent rating agencies. For all such agreements that matured to date, the yields of the structured agreements were far superior to the yields available in the financial markets primarily due to the volatility of the Company’s stock price and the pre-payment aspect of the agreements. The counterparty is willing to pay a premium over the yields available in the financial markets due to the structure of the agreement.

The Company had no activity related to yield enhanced structured agreements during fiscal 2013. The following table summarizes the activity of the Company’s settled yield enhanced structured agreements during fiscal 2015 and 2014:

Periods	Aggregate Price Paid		Total Cash Proceeds Received Upon Maturity		Yield Realized		Total Number of Shares Received Upon Maturity		Average Price Paid per Share
Fiscal 2015:	(in thousands)
Settled through cash proceeds	$	28,966	$	29,353	$	387		—	$	—
Settled through issuance of common stock		9,601		—		—		1,000,000		9.6
Total for fiscal 2015	$	38,567	$	29,353	$	387		1,000,000		9.6
Fiscal 2014:
Settled through cash proceeds	$	19,415	$	19,733	$	318		—	$	—
Settled through issuance of common stock		—		—		—		—		—
Total for fiscal 2014	$	19,415	$	19,733	$	318		—	$	—

.

Dividends

During fiscal 2015, the Company paid total cash dividends of $128.0 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 9, 2015 the Company’s Board declared a cash dividend of $0.11 per share payable to holders of record of the Company’s common stock at the close of business day on December 31, 2015. This cash dividend was paid on January 21, 2016 and totaled $36.5 million.

During fiscal 2014, the Company paid total cash dividends of $69.2 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 24, 2014 the Company’s Board declared a cash dividend of $0.11 per share payable to holders of record of the Company’s common stock at the close of business day on December 26, 2014. This cash dividend was paid on January 15, 2015 and totaled $17.9 million.

During fiscal 2013, the Company paid total cash dividends of $64.8 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 1, 2013 the Company’s Board declared a cash dividend of $0.11 per share payable to holders of record of the Company’s common stock at the close of business day on December 23, 2013. This cash dividend was paid on January 15, 2014 and totaled $16.9 million.

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NOTE 15. EQUITY METHOD INVESTMENT

During fiscal 2014, the Company invested an additional $15 million in a company that designs, develops and manufactures products in the area of advanced batter storage for mobile consumer devices. The additional investment in this company increased the Company’s ownership interest in the company’s outstanding stock from 17.6% to 26.2% as of December 28, 2014 and required the Company to change from the cost method of accounting to the equity method of accounting for this investment. Under the equity method of accounting, the Company is required to record its interest in the investee's reported net income or loss for each reporting period. Additionally, the Company is required to present its prior period financial results to reflect the equity method of accounting from the date of the initial investment in the company.

During fiscal 2015, the Company invested an additional $28.0 million, which increased its cumulative total investment to $41.3 million, representing 38.7% of such investee's outstanding voting shares as of January 3, 2016.

Cypress's results of operations include charges of $7.1 million, $5.1 million and $1.9 million, respectively, for the fiscal years ended 2015, 2014 and 2013, for this investment which were recorded in "Equity in Net loss of equity method investee" in the Company's Consolidated Statements of Operations.

NOTE 16. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed using the weighted-average common shares outstanding. Diluted net income per share is computed using the weighted-average common shares outstanding and any dilutive potential common shares. Diluted net loss per common share is computed using the weighted-average common shares outstanding and excludes all dilutive potential common shares when the Company is in a net loss position their inclusion would be anti-dilutive. The Company’s dilutive securities primarily include stock options, restricted stock units and restricted stock awards.

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Year Ended
	January 3, 2016			December 28, 2014		December 29, 2013
	(In thousands, except per-share amounts)
Net Income (Loss) per Share—Basic:
Net income (loss) attributable to Cypress for basic    computation	$	(378,867	)	$	17,936	$	(48,242	)
Weighted-average common shares for basic computation		302,036			159,031		148,558
Net income (loss) per share—basic	$	(1.25	)	$	0.11	$	(0.32	)
Net Income (Loss) per Share—Diluted:
Net income (loss) attributable to Cypress for diluted    computation	$	(378,867	)	$	17,936	$	(48,242	)
Weighted-average common shares for basic computation		302,036			159,031		148,558
Effect of dilutive securities:
Stock options, restricted stock units, restricted stock    awards and other		—			10,091		—
Weighted-average common shares for diluted computation		302,036			169,122		148,558
Net income (loss) per share—diluted	$	(1.25	)	$	0.11	$	(0.32	)

Anti-Dilutive Securities:

The following securities were excluded from the computation of diluted Net income (loss) per share as their impact was anti-dilutive:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Stock options, restricted stock units and restricted stock    awards		6,828		8,708		8,023

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NOTE 17.  EMPLOYEE BENEFIT PLANS

Pension Plans

The Company sponsors defined benefit pension plans covering employees in certain of its international locations. The Company does not have defined-benefit pension plans for its United States-based employees. Pension plan benefits are based primarily on participants’ compensation and years of service credited as specified under the terms of each country’s plan. The funding policy is consistent with the local requirements of each country.

As of January 3, 2016 and December 28, 2014, projected benefit obligations totaled $8.4 million and $9.0 million, respectively, and the fair value of plan assets was $3.3 million and $3.4 million, respectively.

Spansion Innovates Group Cash balance plan (Defined Benefit Plan)

In connection with the Merger, the Company assumed the Spansion Innovates Group Cash Balance Plan (a defined benefit pension plan) in Japan. Defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions such as turnover rates, discount rates and other factors. The discount rate assumption is determined by comparing the projected benefit payments to the Japanese corporate bonds yield curve as of end of the fiscal year. The benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement. This liability is recorded in other long term liabilities on the Consolidated Balance Sheets. Net periodic pension cost is recorded in the Consolidated Statements of Operations and includes service cost. Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money associated with the passage of time on the PBO. Gains or losses resulting from a change in the PBO if actual results differ from actuarial assumptions will be accumulated and amortized over the future life of the plan participants if they exceed 10% of the PBO, being the corridor amount. If the amount of a net gain or loss does not exceed the corridor amount, they will be recorded in other comprehensive income.

Also in connection with the assumption of this pension plan liability, the Company assumed the restricted cash balance, which relates to the underfunded portion of the pension liability. The pension liability will be paid out by fiscal 2017 in annual installments according to the employee's election. As of January 3, 2016 the Company has a pension liability of $3.9 million and $3.7 million recorded as a part of the accrued compensation and employee benefits, and other long-term liabilities, respectively, on the Consolidated Balance Sheet. As of January 3, 2016, the Company has restricted cash of $3.7 million and $3.5 million recorded in other current assets and other long-term assets, respectively, on the Consolidated Balance Sheet.

The plan is unfunded as of January 3, 2016. This status is not indicative of the Company’s ability to pay ongoing pension benefits. The Company recorded a net periodic cost of $0.9 million for the year ended January 3, 2016. The Company has accrued a liability of $1.7 million as of January 3, 2016 which has been recorded in other long term liabilities on the Consolidated Balance Sheet. The Company expects to contribute an immaterial amount towards the Cash Balance Plan for fiscal 2016.

Key Employee Bonus Plan (“KEBP”)

The Company has a key employee bonus plan, which provides for incentive payments to certain key employees including all executive officers except the Chief Executive Officer. Payments under the plan are determined based upon certain performance measures, including the Company’s Non-GAAP actual PBT% compared to a target as well as achievement of strategic, operational and financial goals established for each key employee. The Company recorded total charges of $0.5 million under the plan in fiscal 2015, $2.7 million under the plan in fiscal 2014 and $7.4 million in fiscal 2013.

Performance Bonus Plan

The Company has a performance bonus plan which provides for incentive payments to the Company’s CEO under a shareholder approved Plan. Payments under the plan are determined based upon the attainment and certification of certain objective performance criteria established by the Committee. Under the plan, the Company recorded total charges of less than $0.1 million for fiscal 2015, 2014 and 2013.

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Performance Profit Sharing Plan (“PPSP”)

The Company has a performance profit sharing plan, which provides incentive payments to all of its employees. Payments under the plan are determined based upon the Company’s earnings per share and the employees’ percentage of success in achieving certain performance goals. The Company recorded total charges of $0.2 million under the plan in fiscal 2015, $1.1 million under the plan in fiscal 2014 and $2.7 million in fiscal 2013.

Deferred Compensation Plan

The Company has a deferred compensation plan, which provides certain key employees, including its executive management, with the ability to defer the receipt of compensation in order to accumulate funds for retirement on a tax-deferred basis. The Company does not make contributions to the deferred compensation plan or guarantee returns on the investments. Participant deferrals and investment gains and losses remain the Company’s assets and are subject to claims of general creditors.

Under the deferred compensation plan the assets are recorded at fair value in each reporting period with the offset being recorded in “Other income (expense), net.” The liabilities are recorded at fair value in each reporting period with the offset being recorded as an operating expense or income. As of January 3, 2016 and December 28, 2014, the fair value of the assets was $41.2 million and $44.1 million, respectively, and the fair value of the liabilities was $41.5 million and $43.5 million, respectively.

All expense and income recorded under the deferred compensation plan were included in the following line items in the Consolidated Statements of Operations:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Changes in fair value of assets recorded in:
Other income (expense), net	$	(1,353	)	$	3,014		$	6,371
Changes in fair value of liabilities recorded in:
Cost of revenues		38			427			(854	)
Research and development expenses		233			(793	)		(1,744	)
Selling, general and administrative expenses		260			(1,855	)		(3,795	)
Total income (expense), net	$	(822	)	$	793		$	(22	)

401(k) Plan

The Company sponsors a 401(k) plan which provides participating employees with an opportunity to accumulate funds for retirement on a tax deferred basis. The Company does not make contributions to the 401(k) plan and all employee contributions are fully vested.

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NOTE 18. INCOME TAXES

The geographic distribution of income (loss) before income taxes and the components of income tax benefit (provision) are summarized below:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
United States loss	$	(476,014	)	$	(109,307	)	$	(122,162	)
Foreign income		111,836			124,652			64,314
Income (loss) before income taxes		(364,178	)		15,345			(57,848	)
Income tax benefit (provision):
Current tax benefit (expense):
Federal		219			5,551			12,026
State		55			(49	)		(120	)
Foreign		(17,189	)		(4,732	)		(4,292	)
Total current tax benefit (expense)		(16,915	)		770			7,614
Deferred tax benefit (expense):
Federal		(610	)		—			—
State		(155	)		—			—
Foreign		720			403			147
Total deferred tax benefit (expense)		(45	)		403			147
Income tax benefit (provision)	$	(16,960	)	$	1,173		$	7,761

Income tax benefit (provision) differs from the amounts obtained by applying the statutory United States federal income tax rate to income (loss) before taxes as shown below:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Benefit (provision) at U.S. statutory rate of 35%	$	127,462		$	(5,371	)	$	19,589
Foreign income at other than U.S. rates		(22,385	)		37,477			15,425
Future benefits not recognized		(126,846	)		(35,107	)		(41,797	)
Reversal of previously accrued taxes		10,939			8,286			13,872
Tax impact of acquisitions		(6,457	)		(2,538	)		1,061
Foreign withholding taxes		(243	)		(1,195	)		(535	)
State income taxes, net of federal benefit		(138	)		(49	)		93
Other, net		708			(330	)		53
Income tax benefit (provision)	$	(16,960	)	$	1,173		$	7,761

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The components of deferred tax assets and liabilities were as follows:

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Deferred tax assets:
Credits and net operating loss carryovers	$	624,086		$	265,827
Reserves and accruals		160,804			55,678
Excess of book over tax depreciation		12,463			32,892
Deferred income		20,059			6,197
Total deferred tax assets		817,412			360,594
Less valuation allowance		(525,021	)		(358,424	)
Deferred tax assets, net		292,391			2,170
Deferred tax liabilities:
Foreign earnings		(184,671	)		—
Intangible assets arising from acquisitions		(108,784	)		—
Total deferred tax liabilities		(293,455	)		—
Net deferred tax assets	$	(1,064	)	$	2,170

The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:

Carryforward	Amount		Expiration Date
	($ in millions)
Federal net operating loss carryforward		1,708	2020-2035
Federal research credit carryforward		136	2018-2035
International foreign tax credit carryforward		13	2016-2023
State research credit carryforward		105	Indefinite
State net operating loss carryforward		761	2016-2035

The federal and state net operating loss carryforward is from acquired companies and the annual use of such loss is subject to significant limitations under Internal Revenue Code Section 382. Foreign tax credits may only be used to offset tax attributable to foreign source income.

As of January 3, 2016 of the total deferred tax assets of $817.4 million, a valuation allowance of $525.0 million has been recorded for the portion which is not more likely than not to be realized. As of December 28, 2014, of the total deferred tax assets of $360.6 million, a valuation allowance of $358.4 million has been recorded for the portion which is not more likely than not to be realized. The Company’s determination of the need for a valuation allowance each year is based on a jurisdictional assessment.

The Company received tax deductions from the gains realized by employees on the exercise of certain non-qualified stock options for which the benefit is recognized as a component of stockholders’ equity. When recognized, the tax benefit related to $648.3 million of the Company’s net operating loss carry forwards will be accounted for as an increase to additional paid-in capital rather than a reduction of the income tax provision.

The Protecting Americans from Tax Hikes (PATH) Act (“Act”) (H.R 2029) was signed into law on December 18, 2015.  The Act contains a number of provisions including, most notably, permanent extension of the United States federal research tax credit and extension of the refundable AMT credit in lieu of bonus depreciation.  The Act did not have a material impact on the Company’s effective tax rate for fiscal 2015 due to the effect of the valuation allowance on the Company's deferred tax assets.

United States income taxes and foreign withholding taxes have not been provided on a cumulative total of $339.1 million and $298.6 million of undistributed earnings for certain non-United States subsidiaries as of January 3, 2016 and December 28, 2014, respectively, because portion of such earnings are intended to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits). It is not practicable to determine the income tax liability that might be incurred if these earnings were to be distributed.

99

The Company’s global operations involve manufacturing, research and development, and selling activities. The Company’s operations outside the U.S. are in certain countries that impose a statutory tax rate both higher and lower than the U.S. The Company is subject to tax holidays in the Philippines, Malaysia and Thailand where it manufactures and designs certain products. These tax holidays are scheduled to expire at varying times within the next six years. The Company’s tax benefit of these tax holidays for the year ended January 3, 2016 had an insignificant impact on earnings per share. Overall, the Company expects its foreign earnings to be taxed at rates lower than the statutory tax rate in the U.S.

Unrecognized Tax Benefits

The following table is a reconciliation of unrecognized tax benefits:

	(In thousands)
Unrecognized tax benefits, as of December 30, 2012	$	31,466
Decrease related to settlements with taxing authorities		(9,216	)
Increase based on tax positions related to current year		962
Increase based on tax positions related to prior year		163
Decrease related to lapsing of statute of limitation		(4,762	)
Unrecognized tax benefits, as of December 29, 2013	$	18,613
Decrease related to settlements with taxing authorities		(6,361	)
Increase based on tax positions related to current year		993
Decrease related to lapsing of statute of limitation		(1,638	)
Unrecognized tax benefits, as of December 28, 2014	$	11,607
Decrease related to settlements with taxing authorities		(838	)
Decrease related to lapsing of statute of limitation		(818	)
Decrease based on tax positions related to prior year		(10,272	)
Increase based on tax positions related to current year		6,487
Increases in balances related to tax positions taken during prior    periods (including those related to acquisitions made    during the year)		108,677
Unrecognized tax benefits, as of January 3, 2016	$	114,843

Gross unrecognized tax benefits increased by $103 million during fiscal year 2015, resulting in gross unrecognized tax benefits of $115 million as of January 3, 2016. The increase in gross unrecognized tax benefits is primarily a result of our Merger with Spansion. Uncertain tax positions assumed in connection with merger and acquisitions are initially estimated as of the acquisition date.

During fiscal year 2015, the Company recognized $2 million of previously unrecognized tax benefits as a result of either the expiration of the statute of limitations for certain audit periods or settlement with taxing authorities.

The Company recognized interest and penalties related to unrecognized tax benefits within the provision for income taxes line in the accompanying consolidated statements of operations. The Company recognized approximately $6 million of expense related to interest and penalties in fiscal year 2015. Accrued interest and penalties are included within other long-term liabilities in the consolidated balance sheets. As of January 3, 2016 and December 28, 2014, the combined amount of cumulative accrued interest and penalties was approximately $12 million and $3 million, respectively. The increase in cumulative accrued interest and penalties is primarily a result of the Merger with Spansion.

As of January 3, 2016 and December 28, 2014, the amounts of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate totaled $28.4 million and $12.9  million, respectively.

Management believes events that could occur in the next 12 months and cause a material change in unrecognized tax benefits include, but are not limited to, the following:

· completion of examinations by the U.S. or foreign taxing authorities; and

· expiration of statute of limitations on the Company’s tax returns.

100

The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. The Company regularly assesses its tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which it does business. The Company believes it is possible that it may recognize approximately $7.0 million  of its existing unrecognized tax benefits within the next twelve months as a result of the lapse of statutes of limitations and the resolution of agreements with domestic and various foreign tax authorities.

Classification of Interest and Penalties

Our policy is to classify interest expense and penalties, if any, as components of income tax provision in the Consolidated Statements of Operations. As of January 3, 2016 and December 28, 2014, the amount of accrued interest and penalties totaled $12.0 million and $3.0 million, respectively. The Company recorded a charge or (benefit) from interest and penalties of $9.1 million, ($2.8) million and $1.9 million during fiscal 2015, 2014 and 2013, respectively.

Tax Examinations

The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by such jurisdictions as of January 3, 2016:

Tax Jurisdictions	Tax Years
United States	2009 and onward
Philippines	2011 and onward
Israel	2014 and onward
India	2009 and onward
Thailand	2010 and onward
Malaysia	2007 and onward
Switzerland	2008 and onward
California	2010 and onward

Non-U.S. tax authorities have completed their income tax examinations of the Company’s subsidiary in Israel for fiscal years 2008-2013 and its branch in Germany for fiscal years 2010 to 2013. Both Israel and Germany examinations did not result in material adjustments to the Company’s tax liabilities. Income tax examinations of the Company’s Malaysian subsidiary for the fiscal years 2007 to 2012 and its Thailand subsidiary for fiscal year 2010 are in progress. The Company does not believe the ultimate outcome of these examinations will result in a material increase to its tax liability.

NOTE 19.  COMMITMENTS AND CONTINGENCIES

Product Warranties

The Company 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 warranty costs based on 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 properly reflects the remaining obligations based on the anticipated returns over the balance of the obligation period.

The following table presents warranty reserve activities:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Beginning balance	$	2,370		$	2,628		$	3,360
Warranties assumed as part of the merger		1,254			—			—
Provisions		2,820			1,449			390
Settlements made		(2,348	)		(1,707	)		(1,122	)
Ending balance	$	4,096		$	2,370		$	2,628

101

Patent License Agreement

In December 2015, the Company entered into a strategic Patent License Agreement (“Agreement”) with Round Rock LLC (“Round Rock”) under which the Company and its majority-owned subsidiaries received a license to Round Rock’s substantial patent portfolio. This transaction allowed the Company and Round Rock to continue to develop its strategic relationship regarding patent monetization and litigation defense. Under the terms of the Agreement, the Company paid a license fee of $6 million.  One of the benefits that the Company received from the Agreement was the avoidance of future litigation expenses as well as future customer disruption and based upon its analysis, it determined that a portion of the license fee that the Company will pay Round Rock represents the cumulative cost relating to prior years. As such, the Company recorded, $2.2 million charge to cost of revenues in fiscal 2015. The Company capitalized $3.8 million on the Consolidated Balance Sheet of which $0.8 million in Current assets, and $3.0 million in Long-term assets on the Consolidated Balance Sheet as of January 3, 2016 and will amortize over the purchased life of the patent portfolio.

On April 30, 2012, the Company entered into a strategic Patent License Agreement (“PLA”) with IV Global Licensing LLC (“IV”) under which the Company and its majority-owned subsidiaries received a license to IV’s substantial patent portfolio. This transaction allowed the Company and IV to continue to develop their strategic relationship regarding patent monetization and litigation defense. Under the terms of the PLA, the Company paid a license fee of $14 million and to purchase certain litigation defense services from IV in the future. In addition, in a related agreement, IV is expected to make certain patent purchases from the Company in the near term. The exact terms and conditions of the PLA are subject to confidentiality provisions, and are the subject of an application for confidential treatment to be filed with the SEC. In June 2015, the Company paid an additional license fee of $18.5 million under the existing license agreement due to the merger with Spansion in March 2015.

One of the benefits that the Company received from the PLA was the avoidance of future litigation expenses as well as future customer disruption and based upon the Company’s analysis, using a relief from royalty method, the Company determined that a portion of the license fee that it will pay IV represents the cumulative cost relating to prior years. As such, the Company recorded, $7.1 million which was recorded as a charge to cost of revenues in fiscal 2012. The Company originally capitalized $6.9 million on the Consolidated Balance Sheet and an additional $18.5 million due to the acquisition of Spansion as discussed above and are amortizing over the remaining life of the patent portfolio. Amortization expense was $4.4 million, $0.8 million and $0.8 million in fiscal years January 3, 2016, December 28, 2014 and December 29, 2013, respectively. The remaining capitalized balance of the PLA is $18.7 million and $5.6 million in Current assets, and $13.2 million and $3.8 million in Long-term assets on the Consolidated Balance Sheet as of January 3, 2016 and December 28, 2014, respectively.

Capital Leases

On July 19, 2011, we entered into a capital lease agreement which allows us to borrow up to $35.0 million to finance the acquisition of certain manufacturing equipment. We have the option of purchasing the tools from the lessor at specified intervals during the lease term. The master lease contains standard covenants. Assets purchased under the capital lease are included in “Property, plant and equipment, net” as manufacturing equipment and the amortization is included in depreciation. As of January 3, 2016 the gross value and net book value of manufacturing equipment purchased under capital lease was $20.5 million and $11.9 million, respectively. As of January 3, 2016, the total minimum lease payments under our capital leases amounted to $7.2 million.

Future minimum payments, by year and in the aggregate, under the capitalized lease consist of the following:

Fiscal Year	(In thousands)
2016	$	6,715
2017		599
2018		—
Total minimum lease payments		7,314
Less: amount representing interest		(125	)
Present value of net minimum lease payments	$	7,189

102

Operating Lease Commitments

We lease certain facilities and equipment under non-cancelable operating lease agreements that expire at various dates through fiscal 2018. Some leases include renewal options, which would permit extensions of the expiration dates at rates approximating fair market rental values.

As of January 3, 2016 future minimum lease payments under non-cancelable operating leases were as follows:

Fiscal Year	(In thousands)
2016		16,171
2017		13,076
2018		9,164
2019		6,541
2020		6,028
2021 and Thereafter		23,835
Total	$	74,815

Rental expenses totaled $17.1 million, $6.8 million and $7.2 million in fiscal 2015, 2014 and 2013, respectively.

Equity Investment Commitments

We have committed to purchase additional preferred stock from a company that works in the area of advanced battery storage. In fiscal 2015, we invested $28.0 million in this company. Subject to the attainment of certain milestones, we intend to purchase additional preferred stock in this company.

Litigation and Asserted Claims

In a matter associated with Ramtron International Corporation (“Ramtron”), a wholly owned subsidiary of Cypress, bankruptcy proceedings are ongoing in Italy where the trustee for four bankrupt entities of Finmek S.pA. is seeking refunds of payments made by Finmek to Ramtron prior to Finmek’s bankruptcy in 2004. In November 2014, one of the courts presiding over these proceedings found that two payments should be refunded to Finmek, which currently total $0.5 million, including interest and fees. We believe this ruling was made in error and are appealing this decision. Due to the current stage of the proceedings and the appellate process, the Company cannot reasonably estimate the range of possible loss, if any.

In 2013, a former employee filed a grievance against the Company seeking back pay and reinstatement or front pay. That matter was tried before an administrative law judge in July 2014. In December 2014, the administrative law judge issued a ruling in favor of the former employee for amounts totaling $1.3 million. We believe the ruling was erroneous and are currently appealing the decision. Due to the current stage of the proceedings and the appellate process, the Company cannot reasonably estimate the range of possible loss, if any.

On May 6, 2015, the Company entered into a confidential settlement agreement with GSI Technology, Inc. under which all outstanding patent and antitrust disputes and actions between the companies were settled. As a part of the settlement, both companies agreed to dismiss with prejudice all pending litigation.  The settlement did not have a material effect on the Company’s business, financial condition, cash flows or results of operations.

In the LongPath Capital, LLC (“LongPath”) appraisal case, Petitioner LongPath sought an appraisal of the fair value of the shares of Ramtron common stock held by LongPath prior to the Company's acquisition of Ramtron in 2012. In June 2013, the Company paid the purchase price of $3.10 per share to LongPath, or $1.5 million, to cut off the accrual of statutory interest on the principal. As a result, the Company's potential exposure was limited to any premium on the purchase price that might be awarded by the court plus the interest accrued prior to June 2013. On June 30, 2015, the Delaware Court of Chancery ruled that the fair value of Ramtron as of the merger date was $3.07 per share, $0.03 below the purchase price, rejecting LongPath's claim that Ramtron should have been valued at over $4.00 per share.  LongPath did not appeal the ruling and the case is now closed and did not have a material impact on the Company’s financial statements.

Pursuant to a confidential settlement agreement, the Company’s six-patent infringement case against LG Electronics, Inc. (“LG”) (Case No. 13-cv-04034-SBA), which was filed in August 2013, and the six petitions filed by LG for inter partes review of the asserted patents were settled effective as of July 28, 2015. The settlement did not have a material effect on the Company’s business, financial condition, cash flows or results of operations.

103

The Company has reached a settlement in the pending class action claims in three Canadian provinces relating to the original SRAM class action case that was resolved in the United States in 2010. As with the case in the United States, the Company is confident that it did not engage in any antitrust activity, however given that it was the last remaining defendant and the cost of continued litigation would far exceed the cost of a nominal settlement, the Company agreed to settle the case. The settlement did not have a material effect on the Company’s business, financial condition, cash flows or results of operations.

After our announcement of the Merger in December 2014, two separate putative class action complaints (Walter Jeter v. Spansion Inc., et. al. (No. 114CV274635) and Shiva Y. Stein v. Spansion Inc., el. al. (No. 114CV274924)) were filed in Santa Clara County Superior Court, alleging claims of breach of fiduciary duty against the Spansion’s board of directors and naming Cypress as a defendant for aiding and abetting the alleged breach of fiduciary duty. While Cypress believes these lawsuits to be meritless, Spansion and Cypress entered into a memorandum of understanding with plaintiffs, the terms of which required additional disclosures by the Company and payment of nominal attorneys’ fees to the class counsel. Final resolution of these litigations will require court approval of a final settlement agreement.  Due to the current stage of the proceedings, the Company cannot reasonably estimate the range of possible loss, if any.

The Company is involved in various trademark opposition proceedings with Kingston Technology Corporation (“Kingston”) concerning Kingston’s “HYPERX” trademark and the Company’s “HYPERRAM trademark. These proceedings are in the early stages, preventing an accurate assessment of potential outcomes.

The Company is currently a party to various other legal proceedings, claims, disputes and litigation arising in the ordinary course of business. Based on its own investigations, the Company believes the ultimate outcome of the current legal proceedings, individually and in the aggregate, will not have a material adverse effect on its business, financial position, cash flows or results of operations. However, because of the nature and inherent uncertainties of the litigation, should the outcome of these actions be unfavorable, the Company's business, financial condition, cash flows or results of operations could be materially and adversely affected.

Indemnification Obligations

We are a party to a variety of agreements pursuant to which we may be obligated to indemnify another party to such agreements with respect to certain matters. Typically, these obligations arise in the context of contracts we have entered into, under which we customarily agree 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 our products, title to assets sold, certain intellectual property claims, defective products, specified environmental matters and certain income taxes. In these circumstances, payment by us is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow us to challenge the other party’s claims and vigorously defend ourselves and the third party against such claims. Further, our obligations under these agreements may be limited in terms of time, amount or the scope of our responsibility and in some instances, we 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 our obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments we have made under these agreements have not had a material effect on our business, financial condition, cash flows or results of operations. We believe that if we were to incur a loss in any of these matters, such loss would not have a material effect on our business, financial condition, cash flows or results of operations, although there can be no assurance of this. As of January 3, 2016 we had no reason to believe a loss exceeding amounts already recognized had been incurred.

NOTE 20. SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION

Segment Information

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 is considered to be the chief executive officer.

In connection with the Merger, the Company has aligned Spansion's two major product groups with Cypress's existing business segments: legacy Spansion flash memory products are reported in the Company's Memory Products Division and legacy Spansion microcontroller and analog products are reported in the Company's Programmable Systems Division.

104

The Company operates in the following four reportable business segments:

Business Segments	Description
PSD: Programmable Systems Division	PSD focuses on high-performance, programmable solutions. The programmable portfolio includes high-performance Traveo™ automotive microcontrollers, PSoC® programmable system-on-chip products, ARM® Cortex®-M4, -M3, -M0+ microcontrollers and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive-sensing controllers, TrueTouch® touchscreen and fingerprint reader products, and PSoC Bluetooth Low Energy solutions for the IoT. Effective March 12, 2015, PSD added Spansion’s microcontroller and analog products.
MPD: Memory Products Division	MPD focuses on high-performance parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), and high-reliability F-RAM™ ferroelectric memory devices. Its purpose is to enhance our position in these products and invent new products and derivatives. Effective March 12, 2015, MPD added Spansion’s Flash memory products.
DCD: Data Communications Division	DCD focuses on USB controllers, Bluetooth® Low Energy solutions that leverage Cypress’s PRoC™ programmable radio-on-chip technology, WirelessUSB™ solutions, module solutions such as trackpads and Bluetooth Low Energy modules, and controllers for the new USB Type-C standard, which enables data transmission and power delivery over a single cable with a slimmer plug. DCD focuses primarily on industrial, handset and consumer electronics markets and applications.
ETD: Emerging Technologies Division	Also known as our “startup” division, ETD includes subsidiaries AgigA Tech Inc. and Deca Technologies Inc., as well as our foundry business and other development-stage activities.

The following tables set forth certain information relating to the reportable business segments:

Revenues:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
Programmable Systems Division	$	613,884	$	283,206	$	292,707
Memory Products Division		871,640		347,887		338,986
Data Communications Division		72,791		70,378		79,410
Emerging Technologies and Other		49,538		24,026		11,590
Total revenues	$	1,607,853	$	725,497	$	722,693

105

Income (Loss) from Operations before Income Taxes:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Programmable Systems Division	$	(70,644	)	$	(18,981	)	$	(20,105	)
Memory Products Division		105,940			134,283			111,667
Data Communications Division		(15,822	)		(10,130	)		(7,452	)
Emerging Technologies and Other		(7,730	)		(13,992	)		(20,860	)
Unallocated items:
Stock-based compensation expense		(93,527	)		(50,170	)		(73,020	)
Restructuring (charges) benefit		(90,084	)		1,180			(15,357	)
Amortization of intangibles and other    acquisition-related costs		(143,487	)		(13,955	)		(34,056	)
Impairment of assets and other		—			(7,760	)		(1,795	)
Gain on divestiture of TrueTouch® Mobile    business		66,472			—			—
Changes in value of deferred compensation    plan		(820	)		—			—
Impact of purchase accounting and other		(107,328	)		(62	)		5,008
Income (loss) from operations before income    taxes	$	(357,030	)	$	20,413		$	(55,970	)

Depreciation:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
Programmable Systems Division	$	10,484	$	13,613	$	14,642
Memory Products Division		89,156		15,998		16,332
Data Communications Division		1,946		3,234		3,851
Emerging Technologies and Other		24,910		6,960		4,680
Total depreciation	$	126,496	$	39,805	$	39,505

Geographical Information

The following table presents our total revenues by geographical locations:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
United States	$	181,913	$	89,521	$	75,052
Europe		181,663		100,510		61,003
Asia:
China		414,299		294,655		254,993
South Korea		68,464		82,089		96,811
Japan		467,823		64,926		81,856
Rest of the world		293,691		93,796		152,978
Total revenues	$	1,607,853	$	725,497	$	722,693

106

Property, plant and equipment, net, by geographic locations were as follows:    

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
United States	$	269,304	$	128,544
Philippines		90,356		90,641
Thailand		34,233		—
Japan		9,537		67
Other		21,573		18,511
Total property, plant and equipment, net	$	425,003	$	237,763

We track our assets by physical location. Although management reviews asset information on a corporate level and allocates depreciation expense by segment, our chief operating decision maker does not review asset information on a segment basis.

Customer Information

Outstanding accounts receivable from three of our distributors, accounted for 42%, 11% and 9% , respectively, of our consolidated accounts receivable as of January 3, 2016 .Outstanding accounts receivable from three of our distributors, accounted for 12%, 11% and 9% , respectively, of our consolidated accounts receivable as of December 28, 2014 .

Revenue generated through three of our distributors, accounted for 25%, 10% and 7% respectively, of our consolidated revenue for fiscal 2015.  No end customer accounted for 10% or more of the Company’s revenue for fiscal 2015.

Revenue generated through three of our distributors, accounted for 13%, 10% and 10% respectively, of our consolidated revenue for fiscal 2014.

Revenue generated through two of our distributors accounted for 11%, and 10%, respectively, of our consolidated revenue for fiscal 2013. One end customer purchases our products both from our distributors and directly from us. Shipments to this end customer accounted for 12% of our consolidated revenue for fiscal 2013.

NOTE 21. SUBSEQUENT EVENT

Joinder Agreement

On January 6, 2016, we entered into an Incremental Revolving Joinder Agreement to our Credit Facility to increase the amount of revolving commitments under our Credit Facility by an additional $90 million. The total aggregate amount of revolving commitments under the Credit Facility starting January 6, 2016 is $540 million.

$450million stock buyback program

From January 3, 2016 through February 26, 2016, the Company repurchased 23.7 million shares for a total cost of $181.3 million.

Under the new program authorized in October, 2015 through February 26, 2016, the Company repurchased a total of 29.3 million shares for a total cost of $237.8 million.  As of February 26, 2016, the total dollar value of shares that may yet be purchased under the program is approximately $212.2 million.

107

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Cypress Semiconductor Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Cypress Semiconductor Corporation and its subsidiaries (the “Company”) at January 3, 2016 and December 28, 2014 and the results of their operations and their cash flows for each of the three years in the period ended January 3, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 3, 2016, based on criteria established in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it has classified deferred taxes on its consolidated balance sheet as of January 3, 2016.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A, management has excluded Spansion Inc. from its assessment of internal control over financial reporting as of January 3, 2016 because it was acquired by the Company in a purchase business combination during 2015. We have also excluded Spansion Inc. from our audit of internal control over financial reporting. The total assets of this acquisition are 19% and total revenues represent 59% of the related consolidated financial statement amounts as of and for the year ended January 3, 2016.

/s/ PricewaterhouseCoopers LLP

San Jose, California

March 1, 2016

108

UNAUDITED QUARTERLY FINANCIAL DATA

Fiscal 2015

		Three Months Ended
		January 3, 2016			September 27, 2015 (3)(5)		June 28, 2015			March 29, 2015 (4)
	(In thousands, except per-share amounts)
Revenues		$	450,128		$	463,810	$	484,778		$	209,137
Gross margin		$	143,248		$	160,376	$	138,073		$	(35,652	)
Net income (loss)		$	(72,797	)	$	29,791	$	(90,691	)	$	(247,441	)
Adjust for net loss attributable to non-controlling    interest		$	467		$	521	$	640		$	643
Net income attributable to Cypress		$	(72,330	)	$	30,312	$	(90,051	)	$	(246,798	)
Net income per share–basic		$	(0.22	)	$	0.09	$	(0.27	)	$	(1.26	)
Net income per share–diluted		$	(0.22	)	$	0.08	$	(0.27	)	$	(1.26	)

Fiscal 2014

	Three Months Ended
	December 28, 2014 (2)		September 28, 2014		June 29, 2014		March 30, 2014 (1)
	(In thousands, except per-share amounts)
Revenues	$	184,097	$	187,516	$	183,601	$	170,283
Gross margin	$	93,702	$	96,883	$	95,370	$	77,723
Net income (loss)	$	3,076	$	12,554	$	9,157	$	(8,269	)
Adjust for net loss attributable to non-controlling    interest		426		286		370		335
Net income (loss) attributable to Cypress	$	3,502	$	12,840	$	9,527	$	(7,934	)
Net income (loss) per share–basic	$	0.02	$	0.08	$	0.06	$	(0.05	)
Net income (loss) per share–diluted	$	0.02	$	0.08	$	0.06	$	0.05

(1) In the first quarter of fiscal 2014, the Company changed the manner in which it accounted for one of its investments in an entity from the cost method of accounting to the equity method of accounting. The Company has restated is historical financial statements for all periods presented as if the Company had accounted for its investment in the entity under the equity method of accounting. See Note 15 of the notes to the consolidated financial statements.

(2) During the fourth quarter of fiscal 2014, the Company changed from recognizing revenue for sales to certain distributors at the time of shipment, as compared to when resold by the distributor to the end customer, as it determined it could reliably estimate returns and pricing concessions on certain product families and with certain distributors. This change increased revenues in the fiscal fourth quarter of fiscal 2014 by $12.3 million, net income by $6.2 million and net income per share, basic and diluted, by $0.04.   The change increased 2015 revenue by $40.9 million and net income (loss) by $25 million and net income (loss) per share, basic and diluted, by $0.07. See additional disclosures on this change in revenue recognition in Footnote 1 to the consolidated financial statements.  

(3) During the third quarter of fiscal 2015, the impact from the change in methodology, for recognizing revenue for sales to certain distributors at the time of shipment, was increase in revenue of $17.3 million, increase in net income of $9.4 million or $0.03 per basic and diluted share.

(4) During the first quarter of fiscal 2015, the impact from the change in methodology, for recognizing revenue for sales to certain distributors at the time of shipment, was increase in revenue of $33.5 million, increase in net income of $17.5 million or $0.09 per basic and diluted share.

(5) In the third quarter of fiscal 2015, the Company completed the sale of its TrueTouch® Mobile business to Parade Technologies and recorded a total gain of $66.5 million.

Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share.

109

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of our internal control over financial reporting as of January 3, 2016. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). Based on our assessment using those criteria, our management (including our Chief Executive Officer and Chief Financial Officer) concluded that our internal control over financial reporting was effective as of January 3, 2016.

On March 12, 2015, we completed our merger with Spansion. In connection with the merger, one of our wholly-owned subsidiaries merged with and into Spansion, and Spansion and its subsidiaries became part of our consolidated group of subsidiaries. Management considered the transaction material to the results of operations, cash flows and financial position from the date of the merger through January 3, 2016 and believes that the internal controls and procedures of Spansion and its subsidiaries have a material effect on internal control over financial reporting. As a result of the merger with Spansion, certain systems and processes were integrated through January 3, 2016 and are included in the scope of management’s assessment of internal control over financial reporting. Due to the timing of the merger, certain systems and processes from Spansion were not integrated. As permitted by the SEC, management’s assessment as of January 3, 2016 did not include the internal control over financial reporting of Spansion, which is included in our consolidated financial statements as of January 3, 2016. Spansion constituted approximately 19% of our total assets at January 3, 2016 and approximately 59% of total revenues for the year ended January 3, 2016. SEC guidance provides that an assessment of a recently acquired business may be omitted in management’s report on internal control over financial reporting in the year of the acquisition.

Based on our assessment, which excluded an assessment of internal controls over financial reporting for Spansion, and using the criteria listed above, our management (including our Chief Executive Officer and Chief Financial Officer) concluded that our internal control over financial reporting was effective as of January 3, 2016.

110

Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued a report on our internal control over financial reporting. The report on the audit of internal control over financial reporting appears on page 108 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of fiscal 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

111

PART III

Certain information required by Part III is omitted from this Annual Report on Form 10-K. We will file a definitive proxy statement pursuant to Regulation 14A (the “Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and certain information included therein is incorporated herein by reference.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item concerning directors is incorporated by reference from the information set forth in the section titled “Proposal One―Election of Directors” in our Proxy Statement for the 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended January 3, 2016 (2016 Proxy Statement).

The information required by this item concerning delinquent filers pursuant to Item 405 of Regulation S-K is incorporated by reference from the information set forth in the section titled “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2016 Proxy Statement.

The information required by this item concerning executive officers is incorporated by reference from Item 1 of this Annual Report on Form 10-K.

We have adopted a code of ethics that applies to all of our directors, officers and employees. We have made the code of ethics available, free of charge, on our website at www.cypress.com.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item concerning executive compensation is incorporated by reference from the information set forth in the sections titled “Compensation Discussion and Analysis” and “Executive Compensation Tables” in our 2016 Proxy Statement.

The information required by this item concerning compensation of directors is incorporated by reference from the information set forth in the section titled “Director Compensation” in our 2016 Proxy Statement.

The information required by this item concerning our compensation committee is incorporated by reference from the information set forth in the sections titled “Compensation Committee Interlocks and Insider Participation” and “Report of the Compensation Committee of the Board of Directors” in our in our 2016 Proxy Statement.

Quarterly Executive Incentive Payments

There were no performance incentive payments earned by our executive officers in accordance with the terms of our Key Employee Bonus Plan (the “KEBP”) and the Performance Bonus Plan (the “PBP”) for the fourth quarter and the annual portion of fiscal 2015.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item concerning security ownership of certain beneficial owners, directors and executive officers is incorporated by reference from the information set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” in our 2016 Proxy Statement.

The information required by this item regarding our equity compensation plans is incorporated by reference from Item 5 of this Annual Report on Form 10-K

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this item concerning transactions with certain persons is incorporated by reference from the information set forth in the sections titled “ Policies and Procedures with Respect to Related Person Transactions” and “Certain Relationships and Related Transactions” in our 2016 Proxy Statement.

112

The information required by this item concerning director independence is incorporated by reference from the information set forth in the section titled “Corporate Governance” in our Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item concerning fees and services is incorporated by reference from the information set forth in the section titled “Proposal Two—Ratification of the Selection of Independent Registered Public Accounting Firm” in our 2016 Proxy Statement.

The information required by this item regarding the audit committee’s pre-approval policies and procedures is incorporated by reference from the information set forth in the section titled “Proposal Two—Ratification of the Selection of Independent Registered Public Accounting Firm” in our 2016 Proxy Statement.

113

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) The following documents are filed as a part of this Annual Report on Form 10-K:

1. Financial Statements:

	Page
Consolidated Balance Sheets	60
Consolidated Statements of Operations	61
Consolidated Statements of Stockholders’ Equity	63
Consolidated Statements of Cash Flows	64
Notes to Consolidated Financial Statements	66

2. Financial Statement Schedule:

	Page
Schedule II—Valuation and Qualifying Accounts	117

The exhibits listed below are required to be filed as exhibits to the Cypress Semiconductor’s Annual Report on Form 10-K for the year ended January 3, 2016.

3. Exhibits:

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Filing Date/ Period End Date	Filed Herewith
2.1	Agreement and Plan of Merger and Reorganization, dated as of December 1, 2014, by and among Cypress Semiconductor Corporation, a Delaware corporation, Mustang Acquisition Corporation, a wholly owned subsidiary of Cypress Semiconductor Corporation and a Delaware corporation, and Spansion Inc., a Delaware corporation.	8-K	12/1/2014
3.1	Second Restated Certificate of Incorporation of Cypress Semiconductor Corporation.	10-K	12/31/2000
3.2	Amended and Restated Bylaws of Cypress Semiconductor Corporation.	8-K	3/12/2015
4.1	Supplemental Indenture, dated March 12, 2015, by and between Spansion LLC, Spansion Inc., Spansion Technology LLC and the other guarantors from time to time party thereto, Cypress Semiconductor Corporation and Wells Fargo Bank, National Association, as trustee.	8-K(1)	3/12/2015
10.1	Form of Indemnification Agreement.	S-1	3/4/1987
10.2 +	Cypress Semiconductor Corporation Non-Qualified Deferred Compensation Plan I.			X
10.3 +	Cypress Semiconductor Corporation Non-Qualified Deferred Compensation Plan II.			X
10.4	Lease Agreement dated as of June 27, 2003 between Wachovia Development Corporation and Cypress Semiconductor Corporation.	10-Q	6/29/2003
10.5	Participation Agreement dated as of June 27, 2003 by and among Cypress Semiconductor Corporation, Wachovia Development Corporation and Wachovia Bank, National Association.	10-Q	6/29/2003
10.6	First Amendment to Certain Operative Agreements dated March 28, 2005 between Wachovia Development Corporation and Cypress Semiconductor Corporation.	10-Q	4/3/2005
10.7 +	Cypress Semiconductor Corporation 2006 Key Employee Bonus Plan (KEBP) Summary.	10-K	1/1/2006
10.8 +	Cypress Semiconductor Corporation Performance Profit Sharing Plan (PPSP) Summary.	10-K	1/1/2006
10.9	Memorandum of Agreement between GNPower Ltd. Co. and Cypress Manufacturing Ltd.	10-Q	10/1/2006
10.10	Guaranty dated December 12, 2006 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-K	12/31/2006

114

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Filing Date/ Period End Date	Filed Herewith
10.11	Guaranty dated February 1, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-K	12/31/2006
10.12	Guaranty dated March 19, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-Q	4/1/2007
10.13	Guaranty dated May 15, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-Q	7/1/2007
10.14	Guaranty dated June 15, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-Q	7/1/2007
10.15	Guaranty dated December 15, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-K	12/30/2007
10.16	Guaranty, dated March 24, 2008, by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation.	10-Q	3/30/2008
10.17 +	1999 Non-Statutory Stock Option Plan, as amended and restated.	S-8	10/24/2008
10.18 +	Employee Qualified Stock Purchase Plan, as amended and restated.			X
10.19 +	Amended and Restated Cypress Semiconductor Corporation 2013 Stock Plan.	10-Q	9/27/2015
10.20 +	Form of Restricted Stock Unit Agreement under the Cypress Semiconductor Corporation 2013 Stock Plan.	10-Q	9/27/2015
10.21 +	Amended Form of Restricted Stock Unit and Performance Stock Unit Grant Agreement under the 2015 PARS Grant program.	10-Q	6/28/2015
10.22 +	2012 Incentive Award Plan, as amended and restated.	S-8	12/12/2012
10.23 +	Spansion Inc. 2010 Equity Incentive Award Plan	S-8(1)	5/10/2010
10.24 +	Amendment to Spansion Inc. 2010 Equity Incentive Award Plan	8-K(1)	5/14/2010
10.25	Form of Cypress Support Agreement.	8-K	12/1/2014
10.26	Form of Spansion Support Agreement.	8-K	12/1/2014
10.27 +	Thad Trent Employment Agreement	10-K	2/17/2015
10.28 +	J. Daniel McCranie Employment Agreement	10-K	2/17/2015
10.29+	Separation Agreement with J. Daniel McCranie.	10-Q	3/29/2015
10.30	Amendment and Restatement Agreement, dated as of March 12, 2015, by and among Cypress Semiconductor Corporation, Cypress Semiconductor (Minnesota) Inc., Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International AM, Inc., Spansion International Trading, Inc., the lenders party thereto, and Morgan Stanley Senior Funding, Inc., as administrative agent.	8-K	3/12/2015
10.31	Amended and Restated Credit and Guaranty Agreement, dated as of March 12, 2015, by and among Cypress Semiconductor Corporation, the guarantors from time to time party thereto, the lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, East West Bank, Silicon Valley Bank and SunTrust Bank, as syndication agents and documentation agents, and Morgan Stanley Bank, N.A., as Issuing Bank.	8-K	3/12/2015
10.32	Amended and Restated Pledge and Security Agreement, dated as of March 12, 2015, by and among Cypress Semiconductor Corporation and the other grantors from time to time party thereto, and Morgan Stanley Senior Funding, Inc., as collateral agent.	8-K	3/12/2015
10.33	Joinder Agreement dated as of December 22, 2015.	8-K	12/22/2015
10.34	Incremental Revolving Joinder Agreement dated as of January 6, 2016.	8-K	12/22/2015
10.35	Lease Agreement between Spansion Inc. and Hines VAP No. Cal. Properties, LP, effective May 20, 2014.	10-Q(1)	5/20/2014
10.36++	Distribution Agreement between Cypress Semiconductor Corporation and Fujitsu Electronics Incorporated dated September 10, 2015.	10-Q	9/27/2015
21.1	Subsidiaries of Cypress Semiconductor Corporation.			X
23.1	Consent of Independent Registered Public Accounting Firm.			X

115

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Filing Date/ Period End Date	Filed Herewith
24.1	Power of Attorney (reference is made to the signature page of this Annual Report on Form 10-K).			X
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.			X
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.			X
32.1+++	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+++	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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

+ Identifies a management contract or compensatory plans or arrangements required to be filed as an exhibit.

++ Confidential treatment has been granted with respect to portions of this exhibit.

+++ 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.

(1) Indicates a filing of Spansion Inc.

116

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

	Balance at Beginning of Period		Charges (Releases) to Expenses/Revenues			Deductions			Balance at End of Period
	(In thousands)
Allowance for doubtful accounts receivable:
Year ended January 3, 2016	$	738	$	576		$	(125	)	$	1,189
Year ended December 28, 2014	$	719	$	39		$	(20	)	$	738
Year ended December 29, 2013	$	769	$	51		$	(101	)	$	719
Deferred tax valuation allowance
Year ended January 3, 2016	$	358,424	$	166,597	(1)	$	—		$	525,021
Year ended December 28, 2014	$	334,671	$	23,753	(1)	$	—		$	358,424
Year ended December 29, 2013	$	307,199	$	27,472	(1)	$	—		$	334,671

(1) Represents the change in valuation allowance primarily related to federal and state  deferred tax assets that management has determined not likely to be realized due, in part, to projections of future taxable income

117

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

	CYPRESS SEMICONDUCTOR CORPORATION
Date: March 1, 2016	By:	/ S /  Thad Trent
		Thad Trent Executive Vice President, Finance and Administration and Chief Financial Officer

118

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints T.J. Rodgers and Thad Trent, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/ S /    T. J. RODGERS	President, Chief Executive Officer and Director (Principal Executive Officer)	March 1, 2016
T. J. Rodgers
/ S /    THAD TRENT	Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer)	March 1, 2016
Thad Trent
/ S /    W. STEVE ALBRECHT	Director	March 1, 2016
W. Steve Albrecht
/ S /    ERIC A. BENHAMOU	Director	March 1, 2016
Eric A. Benhamou
/ S /    RAYMOND BINGHAM	Chairman of the Board of Directors	March 1, 2016
Raymond Bingham
/ S /    JOHN KISPERT	Director	March 1, 2016
John Kispert
/ S /    O. C. KWON	Director	March 1, 2016
O. C. Kwon
/ S /    WILBERT G.M. VAN DEN HOEK	Director	March 1, 2016
Wilbert G.M. Van Den Hoek
/ S /   MICHAELS. WISHART	Director	March 1, 2016
Michael S. Wishart

119

EX-10.2

Exhibit 10.2

CYPRESS SEMICONDUCTOR CORPORATION

NON-QUALIFIED

DEFERRED COMPENSATION PLAN I

Page 1 of 18

TABLE OF CONTENTS

	Page
ARTICLE I PLAN I ADMINISTRATION	4
ARTICLE II ELIGIBILITY, PARTICIPATION, AND BENEFICIARY DESIGNATION	5
ARTICLE III PLAN I CONTRIBUTIONS AND ALLOCATIONS	5
ARTICLE IV VESTING	7
ARTICLE V GENERAL DUTIES	7
ARTICLE VI PARTICIPANTS’ ACCOUNTS	8
ARTICLE VII PAYMENTS TO A PLAN I PARTICIPANT OR BENEFICIARY	8
ARTICLE VIII CHANGE OF CONTROL	12
ARTICLE IX TERMINATION DUE TO CORPORATE DISSOLUTION OR PURSUANT TO BANKRUPTCY COURT APPROVAL	13
ARTICLE X UNFORESEEABLE EMERGENCY DISTRIBUTIONS	13
ARTICLE XI CLAIMS PROCEDURE	13
ARTICLE XII MISCELLANEOUS	15

Page 2 of 18

CYPRESS NON-QUALIFIED DEFERRED COMPENSATION PLAN I

The Cypress Semiconductor Corporation Nonqualified Deferred Compensation Plan, originally effective as of September 1, 1995, and thereafter amended, was further amended and restated in its entirety by Cypress Semiconductor Corporation (the “Company”), effective as of January 1, 2002 on behalf of itself and any designated subsidiaries and was renamed the Cypress Non-Qualified Deferred Compensation Plan II (“Plan II”).  Also on January 1, 2002, the Cypress Non-Qualified Deferred Compensation Plan I (“Plan I”) was adopted by the Company.  Plan I is similar to Plan II except that (i) the phantom investments are different than those available under Plan II, and (ii) beneficiaries of Plan I participants who die in certain situations will receive a supplemental survivor benefit.  Plan I and Plan II were amended effective April 1, 2004 to permit outside directors who are also consultants to participate in the Plans.  Plan I and Plan II were frozen to new deferrals as of December 31, 2004 so as to qualify these prior plans for “grandfather” treatment under Internal Revenue Code Section 409A and were renamed Pre-2005 Plan I and Pre-2005 Plan II.

To comply with Internal Revenue Code Section 409A, the Company established Plan I and Plan II, covering deferrals made on and after January 1, 2005.  Plan I is similar to Plan II except that (i) the phantom investments are different than those available under Plan II, and (ii) beneficiaries of Plan I participants who die in certain situations will receive a supplemental survivor benefit. Plan I and Plan II were amended effective June 15, 2005 to allow the Committee, in its discretion, to permit Participants to cancel or reduce deferral elections in 2005 with respect to amounts deferred (or to be deferred) on or after January 1, 2005 through December 31, 2005.  Plans I and II were further amended effective January 1, 2006 to clarify that the definition of Compensation excludes any severance payments.  Plans I and II were further amended in December, 2008 to comply with the final Treasury Regulations under Internal Revenue Code Section 409A.  Plans I and II were further amended in January, 2009 to make clear that Cypress phantom stock is a permitted phantom investment.  Throughout, the term “Company” shall include wherever relevant any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity or investment interest, or any subsidiary of the Company, as determined by the Company.  Finally, Plans 1 and II were further amended effective January 1, 2016 to update plan eligibility. Plan I was also amended to freeze the supplemental survivor benefit to two times the total amount deferred into Plan I through December 31, 2015.

The purpose of Plan I is to provide supplemental retirement income and to permit eligible Participants the option to defer receipt of compensation, pursuant to the terms of the Plan.  Plan I is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and is intended to comply with Section 409A of the Internal Revenue Code.  Participants shall have the status of unsecured creditors of the Company with respect to the payment of Plan benefits.

Page 3 of 18

RECITALS:

1. The Company maintains Plan I for the benefit of a select group of management or highly compensated employees designated by the Company.

2. Under Plan I, the Company is obligated to pay vested accrued benefits, and in certain circumstances, a supplemental survivor benefit, to Plan I Participants and their beneficiary or beneficiaries (“Plan I Beneficiaries”) from the Company’s general assets.

3. The Company has entered into an agreement (the “Trust Agreement”) with American Stock Transfer and Trust Company (the “Trustees”) under an irrevocable trust (the “Trust”) to be used in connection with Plan I.

4. The Company intends to make contributions to the Trust so that such contributions will be held by the Trustees and invested, reinvested and distributed, all in accordance with the provisions of this Plan I and the Trust Agreement.

5. The Company intends that the assets of the Trust shall at all times be subject to the claims of the general creditors of the Company as provided in the Trust Agreement.

6. The Company intends that the existence of the Trust shall not alter the characterization of Plan I as “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and shall not be construed to provide income to Plan I Beneficiaries prior to actual payment of the vested accrued benefits thereunder.

NOW THEREFORE, the Company does hereby establish Plan I as follows and does also hereby agree that Plan I shall be structured, held and disposed of as follows:

ARTICLE I

PLAN I ADMINISTRATION

A. The Deferred Compensation Committee of the Company (the “Committee”) administers Plan I

Subject to the specific duties delegated by the Board of Directors (the “Board”) to such Committee, the Committee shall be responsible for the general administration and interpretation of Plan I and for carrying out its provisions.  The Committee shall have such powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following powers and duties:

(1) discretionary authority to construe and interpret the terms of Plan I, and to determine eligibility and the amount, manner and time of payment of any benefits hereunder;

(2) to prescribe forms and procedures for purposes of Plan I participation and distribution of benefits;

(3) to direct the Trustees as to the distribution of Plan I assets; and

(4) to take such other action as may be necessary and appropriate for the proper administration of Plan I.

B. The Committee may adopt such rules, regulations and bylaws and may make such decisions as it deems necessary or desirable for the proper administration of Plan I

Any rule or decision that is not inconsistent with the provisions of Plan I shall be conclusive and binding upon all persons affected by it, and there shall be no appeal from any ruling by the Committee that is within its authority, except as otherwise provided herein.

C. The Committee shall have the power to (i) identify investment choices for the Trust Fund; and (ii) appoint or employ agents, recordkeepers and advisors to assist the Committee in discharging its duties under Plan I.

Page 4 of 18

ARTICLE II

ELIGIBILITY, PARTICIPATION, AND BENEFICIARY DESIGNATION

A. Eligible Participants

The following categories of service providers (“Eligible Participants”) shall be eligible to participate in Plan I:  (i) Non-Sales employees with an annual salary equal to or greater than $200,000, or Sales employees with  a total cash target greater than or equal to $200,000,  (ii) any other employee or category of employee that is approved by the CEO as eligible to participate in Plan I, and (iii) non-employee members of the Board of Directors who are also paid consultants to the Company.  The Committee reserves the right to modify the definition of Eligible Participant at any time with the approval of the CEO.  Any Eligible Participant who has commenced participation in Plan I shall be referred to in this Plan I as a “Participant.”

B. Participation

Each Eligible Participant may elect to commence participation in Plan I by completing a Cypress Non-Qualified Deferred Compensation Plan I participation agreement and deferral election no later than the last day of his or her Election Period.  For purposes of the foregoing, an Eligible Participant’s Election Period shall be defined as: (i) for newly Eligible Participants who are eligible for the first time, the thirty (30) day period measured from the date upon which the Eligible Participant becomes eligible to participate in Plan I and any other non-qualified deferred compensation plans required to be aggregated with Plan I under Section 409A; and (ii) for all other Eligible Participants (including Eligible Participants who formerly were Eligible Participants), no later than the due date for the irrevocable enrollment forms during the annual open enrollment period which is from December 1st to December 31st of each year (the “Annual Open Enrollment Period”) prior to the beginning of the Plan Year for which the election is effective (the calendar year is the “Plan Year”).  Elections shall remain in effect for successive Plan years unless modified or revoked (with respect to future Plan Years only) in a subsequent Annual Open Enrollment Period.

C. Beneficiary Designation

Each Participant, prior to entering Plan I, may designate a beneficiary or beneficiaries to receive the remainder of any interest of the Participant and any supplemental survivor benefit under Plan I in the event of the Participant’s death.  A Participant may change his or her beneficiary designation at any time by submitting a complete and approved form of beneficiary designation (including dated spousal consent, if required pursuant to the beneficiary designation form) to the Committee (or its designee).  Each beneficiary designation shall be in a form prescribed by the Committee and will be effective only when filed with the Committee (or its designee) during the Participant’s lifetime.  Each beneficiary designation filed with the Committee will cancel all previously filed beneficiary designations.  In the absence of a valid designation, or if no designated beneficiary survives the Participant, the Participant’s interest shall be distributed to the Participant’s estate.

ARTICLE III

PLAN I CONTRIBUTIONS AND ALLOCATIONS

A. Participant Deferrals

Each Participant participating in Plan I shall, no later than the end of the applicable Enrollment Period, execute a participation agreement and deferral election (the “Deferral Election”) authorizing the Company to withhold a percentage amount of the Participant’s Compensation which would otherwise be paid to the Participant with respect to services rendered.  Compensation under Plan I is defined as annual base salary (or, for non-employee directors, cash consulting fees, including KEBP bonus), cash bonuses (including KEBP bonus, new product bonus and any other cash bonuses), and any cash Sales Commissions payable to the Participant in connection with the Participant’s services to the Company, provided however, that Compensation does not include severance payments (“Compensation”).  The Committee may, in its discretion, establish in the Deferral Election minimum and maximum levels of Compensation that may be deferred pursuant to Plan I.  Compensation deferrals made by a Participant under this Plan I shall be held as an asset of the Company and the Company intends to deposit the amounts deferred into the Trust.

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B.Sales Commissions and Bonuses Payable in a Subsequent Year.  If cash bonuses (including new product bonus and any other cash bonuses) or cash Sales Commissions are earned in one calendar year and would normally be paid in the first quarter of the ensuing calendar year, they shall be deferred and distributed based upon the election made by the Participant in the open enrollment period in the year prior to the year in which it was earned.  For newly Eligible Participants, any such cash bonus or Sales Commission shall be deferred and distributed based upon their initial election made with respect to the year in which it was earned; provided, however, that such election may apply to no more than the total amount of such compensation multiplied by the ratio of the number of days remaining in the applicable performance period after such election becomes irrevocable over the total number of days in the applicable performance period.

C. Year-End Cross-Over Payroll Periods.  Paydays relating to periods of service that cross-over the calendar year end shall be covered by the Participant’s deferral election in effect for the later year, consistently with the default rules under Treasury Regulation §1.409A-2(a)(13).

D. Election Changes

E. A Participant may, in such form and at such time or times as the Committee may prescribe, discontinue or modify the deferral of his or her Compensation with respect to Plan Years that have not yet commenced.  The Committee has the power to establish uniform and nondiscriminatory rules and from time to time to modify or change such rules governing the manner and method by which Compensation deferral elections shall be made, as well as the manner and method by which Compensation deferral elections with respect to Plan Years that have not yet commenced may be changed or discontinued temporarily or permanently.  All Compensation deferral contributions shall be authorized by the Participant in writing or electronically, made by payroll deduction, deducted from the Participant’s Compensation without reduction for any taxes or withholding (except to the extent required by law or regulation) and paid over to the Trust by the Company.  Notwithstanding the foregoing, each Participant shall remain liable for any and all employment taxes owing with respect to such Participant’s Compensation deferral contributions.

F. Limitation on Deferral Changes.  The dollar amount of any Plan deferrals shall not be reduced or increased during any Plan Year by virtue of any Participant election to increase, decrease or terminate his or her rate of deferral in any other employee benefit plan, including the Company’s employee stock purchase plan; except as permitted by Code Section 409A with respect to changes in deferral elections under the Company’s 401(k) Employee Savings Plan and Code Section 125 flexible benefits plan (or as otherwise permitted under Code Section 409A).

G. Cessation of Eligible Status

In the event a Participant ceases to be an Eligible Participant while also a participant in Plan I, if such individual has not undergone a Separation From Service, he or she shall continue to make Compensation deferral contributions under Plan I through the end of the Plan Year in which the individual ceases to be an Eligible Participant.  Thereafter, such individual shall not make any further Compensation deferral contributions to Plan I unless or until he or she again meets the eligibility requirements of Article II above.

H. Company Discretionary Contributions

The Company may, in its sole discretion, make discretionary contributions to the accounts of one or more Participants at such times and in such amounts as the Board of the Company shall determine, subject to such vesting and distribution conditions and limitations as the Company, in its sole discretion, shall impose.  To the extent such Company contributions do not vest, corresponding debits will be made to a Participant's Account, including any earnings on such forfeited amounts.

I. Allocations

The Compensation deferral contributions and any Company contributions made under Plan I on behalf of a Participant shall be credited to the Participant’s Account.  The Committee shall establish and maintain separate subaccounts as it determines to be necessary and appropriate for the proper administration of Plan I.  The Committee may cause the Trustees to maintain and invest separate asset accounts corresponding to each Participant account.   Each Participant Account consists of the aggregate interest of the Participant under Plan I (and in the Trust Fund), as reflected in the records maintained by the Company for such purposes.

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J.Plan to Plan Transfers

Subject to the Committee’s discretion, Participants shall be allowed to elect to transfer their deemed investment accounts from Plan II to Plan I or from Plan I to Plan II, subject to such limitations and reallocation requirements as the Committee, in its sole discretion, determines to be appropriate; provided, however, that any such Plan to Plan transfers shall not change the time and method of distribution of the amounts transferred.  The plan to plan transfers shall be effective as of the date specified by the Committee.

K. Cancellation of Elections Due to 401(k) Hardship Withdrawal, Unforeseeable Emergency Distribution, or Disability

(1) 401(k) Hardship Withdrawal.  A Participant’s deferral election shall be automatically cancelled in the event the Participant obtains a hardship distribution from the Company’s 401(k) Plan pursuant to Treasury Regulation §1.401(k)-1(d)(3).  The Participant, if still an Eligible Participant, may re-enroll in Plan I during the next open enrollment period.

(2) Unforeseeable Emergency Distribution.  A Participant’s deferral election shall be automatically cancelled in the event the Participant obtains an unforeseeable emergency distribution from Plan I or Plan II.  The Participant, if still an Eligible Participant, may re-enroll in Plan I during the next open enrollment period.

ARTICLE IV

VESTING

A. Compensation Deferral Contributions.  The value of a Participant’s Account attributable to Participants’ Compensation deferral contributions shall always be fully vested and nonforfeitable.

B. Company Contributions

The value of a Participant’s Account attributable to any Company contributions pursuant to Article III.D shall vest at such time or times as the Board may specify in connection with any such contributions.  In the absence of Board specification, a Participant’s interest in Company contributions shall be fully vested and nonforfeitable.  Upon a Participant’s Separation From Service for any reason, any portion of the Participant’s Account that is not then vested (including allocable earnings, as determined by the Committee), shall be forfeited.  Unless otherwise determined by the Board or the Committee, forfeitures shall be used to satisfy the Company’s obligation to remit contributions to the Trust under Plan I.

ARTICLE V

GENERAL DUTIES

A. Committee Duties

The Committee will provide the Trustees with a copy of any future amendment to this Plan I promptly upon its adoption.  The Committee may from time to time hire outside consultants, accountants, actuaries, legal counsel or recordkeepers to perform such tasks as the Committee may from time to time determine.

B. Trustees’ Duties

The Trustees shall invest and reinvest the Trust Fund as provided in the Trust Agreement.  The Trustees shall collect the income on the Trust Fund, and make distributions therefrom, as provided in this Plan I and in the Trust Agreement.

C. Company Contributions

While Plan I remains in effect, and prior to a Change in Control, as defined below, the Company shall make contributions to the Trust Fund at least once each quarter.  The amount of any quarterly contributions shall be at the discretion of the Company.  At the close of each calendar year, the Company shall make an additional contribution to the Trust Fund to the extent that previous contributions to the Trust Fund for the current calendar year are not equal to the total of the Compensation deferrals made by each Participant plus Company discretionary contributions, if any, accrued, as of the close of the current calendar year.  The Trustees shall not be liable for any failure by the Company to provide contributions sufficient to pay all accrued benefits under Plan I in full in accordance with the terms of Plan I.

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D.Department of Labor Determination

In the event that any Participants are found to be ineligible, that is, not members of a select group of management or highly compensated employees, according to a determination made by the Department of Labor, the Committee will take whatever steps it deems necessary, in its sole discretion, to equitably protect the interests of the affected Participants.

ARTICLE VI

PARTICIPANTS’ ACCOUNTS

A. Separate Accounts

The Committee shall open and maintain a separate Account for each Participant.  Each Participant’s Account shall reflect the amounts allocated thereto and distributed therefrom and such other information as affects the value of such Account pursuant to this Plan I.

B. Timing of Account Credit.  Amounts deferred under Plan I shall be credited to a Participant’s Account within five business days following the date upon which such amounts would otherwise have been paid to the Participant.

C. Statement of Accounts.  As soon as practicable after the end of each calendar year the Committee shall furnish to each Participant a statement of Account, determined as of the end of such calendar year.  Upon the discovery of any error or miscalculation in an Account, the Committee shall correct it, to the extent correction is practically feasible and permissible under Code Section 409A; provided, however, that any such statement of Account shall be considered to reflect accurately the status of the Participant’s Account for all purposes under Plan I unless the Participant reports a discrepancy to the Committee within six (6) months after receipt of the statement.  The Committee shall have no obligation to make adjustments to a Participant’s Account for any discrepancy reported to the Committee more than six (6) months after receipt of the statement, or for a discrepancy caused by the Participant’s error.  Statements to Participants are for reporting purposes only, and no allocation, valuation or statement shall vest any right or title in any part of the Trust Fund, nor require any segregation of Trust assets, except as is specifically provided in this Plan I.

D. Distribution of Accounts

Payment to a Participant shall be based on the value of the vested portion of the Participant’s Account as of the Valuation Date immediately preceding the date of distribution plus any contribution subsequently credited to such Account and less any distributions subsequently made from the Account.

ARTICLE VII

PAYMENTS TO A PLAN I PARTICIPANT OR BENEFICIARY

A. General.  Payments of vested accrued benefits to Plan I Beneficiaries from the Trust shall generally be made in accordance with the distribution event specified by the Participant in the Deferral Election between the Company and the Participant (the “Distribution Event”).  Except as otherwise expressly provided in the Participant’s Deferral Election and as set forth in Article VII below, no distribution shall be made or commenced prior to the time and manner as set forth in the Participant’s Deferral Election.

B. Installment Payments Treated as Single Payments.  All installment payments under the Plan are considered a single payment for purposes of complying with Code Section 409A.

C. Earliest Distributions.

(i) Regular Participants.  Except as permitted by the Plan and Code Section 409A in connection with a Change of Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a conflicts of interest or ethics rules distribution under Article 7.T., a FICA and related income tax distribution under Article 7.U., a state, local or foreign tax distribution under Article 7.V., or a Code Section 409A Distribution under Article 7.W., in no event may the account of a Participant who is not a Specified Employee be distributed earlier than (i) the Participant’s Separation From Service, (ii) the Participant’s Disability, (iii) the Participant’s death, (iv) a specified time under Article 7.J. hereunder, (v) a Change in Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) to an individual other than the Participant pursuant to a Domestic Relations Order.

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(ii)Specified Employee Participants.  Except as permitted by the Plan and Code Section 409A in connection with a Change of Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a conflicts of interest or ethics rules distribution under Article 7.T., a FICA and related income tax distribution under Article 7.U., a state, local or foreign tax distribution under Article 7.V., or a Code Section 409A Distribution under Article 7.W., in no event may a Specified Employee’s account be distributed earlier than (i) six (6) months following the Specified Employee’s Separation From Service (or if earlier, the Specified Employee’s death), (ii) six (6) months following the Specified Employee’s Disability, (iii) the Specified Employee’s death, (iv) a specified time under Article 7.J. hereunder, (v) a Change in Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) to an individual other than the Participant pursuant to a Domestic Relations Order.  In the event a Specified Employee’s Plan distributions are delayed due to the six-month delay requirement, the amounts otherwise payable to the Specified Employee during such period of delay shall be paid on a date that is at least six months and one day following Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends (or, if earlier, upon the death of the Specified Employee).  The Participant’s other scheduled distributions, if any, shall not be affected by the period of delay.

D. Small Account Lump-Sum Distribution.  If, on the date of a Participant’s Separation From Service, their Accounts under Old Plan I, Old Plan II, Plan I, Plan II and any other non-qualified deferred compensation plans required to be aggregated with such plans pursuant to Treasury Regulation §1.409A-1(c)(2) total, in the aggregate, less than the then applicable limit under Internal Revenue Code Section 402(g)(1)(B) (e.g., $16,500 in 2009), then all Accounts under all such plans, including Participant’s Account under this Plan I, shall be distributed in a lump-sum in the month following such Participant’s Separation From Service, or, if the Participant is a Specified Employee, in the seventh month following such Participant’s Separation From Service; provided, however, that in the event such Accounts increase in value so that their aggregate value exceeds the then applicable limit under Internal Revenue Code Section 402(g)(1)(B) on the scheduled payment date, such Accounts shall instead be paid in accordance with the Plan and the Participant’s Deferral Elections.

E. Upon Retirement – Plan Year 2005 Through 2008 Deferrals.  With respect to amounts deferred in Plan Years 2005 through 2008, if a Participant has a Separation From Service pursuant to Participant’s retirement at age 55 or greater but with at least ten full years of continuous employment, or for outside director Participants, age 55 or greater and ten full years of continuous service as a Board member or consultant (either case shall be referred to in this Plan I as “Retirement”), then Participant shall receive, pursuant to the election selected in his or her timely submitted Deferral Election(s) a distribution of his or her Account balance in (i) a lump-sum, (ii) a partial lump-sum combined with up to fifteen years of annual payments, or (iii) two to fifteen years of annual payments, each such payment equal to 1/n of the Participant’s vested accrued benefit where n is the number of installments remaining to be paid, (an “Annual Payment”); provided, however, that to the extent a Participant is permitted to and makes differing distribution elections for amounts deferred in different Plan Years, then the deferrals for each Plan Year (including earnings and losses thereon) shall be distributed in one of the three permitted methods in accordance with such Deferral Elections.

F. Upon Death – Plan Year 2005 Through 2008 Deferrals.  With respect to amounts deferred in Plan Years 2005 through 2008, if a Participant dies, then the Participant’s beneficiary will receive their remaining Account balance in either a lump-sum or in five Annual Payments, as specified in the Participant’s Deferral Election; provided, however, that to the extent a Participant is permitted to and makes differing distribution elections for amounts deferred in different Plan Years, then the deferrals for each Plan Year (including earnings and losses thereon) shall be distributed in one of the two permitted methods in accordance with such Deferral Elections.

G. Non-Retirement Separations From Service – Plan Year 2005 Through 2008 Deferrals.   With respect to amounts deferred in Plan Years 2005 through 2008, in the event a Participant has a Separation From Service that does not qualify as a Retirement, then his or her Account balance shall be distributed in a lump-sum within 60 days following such Separation From Service.

H. All Separations From Service and Death – Plan Year 2009 and Later Deferrals.  With respect to amounts deferred in Plan Years 2009 and later, if a Participant dies or undergoes any Separation From Service, then Participant shall receive, pursuant to the election selected in his or her timely submitted Deferral Election(s) a distribution of his or her Account balance in (i) a lump-sum, (ii) a partial lump-sum combined with up to fifteen years of annual payments, or (iii) two to fifteen years of Annual Payments; provided, however, that to the extent a Participant is permitted to and makes differing distribution elections for amounts deferred in different Plan Years, then the deferrals for each Plan Year (including earnings and losses thereon) shall be distributed in one of the three permitted methods in accordance with such Deferral Elections.

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I.Scheduled In-Service Distribution.  A Participant may elect, as provided in his or her Participant Deferral Election, to receive one or more scheduled in-service (i.e., prior to a Separation From Service) distributions from their Account balance without an early withdrawal penalty.  Any such distributions must be at least two full Plan Years following the date of the Participant’s Deferral Election.  Each scheduled in-service distribution may be postponed (but only once) in accordance with Article 7.O.  If a Participant specifies that a dollar amount will be distributed and the Account balance is less than the dollar amount, then the entire Account will be distributed.  A Participant may neither increase nor decrease the amount or percentage specified for an in-service distribution once their initial election becomes irrevocable.  In the event a Participant undergoes a Separation From Service prior to a scheduled in-service distribution, the in-service distribution election shall be without further force and effect and the applicable Separation From Service distribution provisions of Plan I and the Participant’s Deferral Election shall control.

J. Supplemental Survivor Benefit.If a Participant dies prior to undergoing a Separation From Service, then, in addition to the Account distributions relating to his or her Deferral Elections, his or her beneficiary shall receive a taxable survivor benefit equal to two times the total amount deferred into Plan I through December 31, 2015, including certain amounts deferred under Plan II that were transferred to Plan I (as described below), and excluding certain distributions (as described below) and amounts transferred from Plan I to Plan II, up to a maximum benefit, including any supplemental survivor benefit under Pre-2005 Plan I governing deferrals prior to January 1, 2005,  of three million dollars ($3,000,000).  For the purpose of determining the amount of the supplemental survivor benefit, earnings or losses on deferrals are not included.  Any Plan I distributions prior to death and any Plan I to Plan II transfers not subsequently re-transferred back to Plan I shall reduce the Plan I deferral balance by a pro rata amount, calculated as of the distribution Valuation Date.  Any Plan II transfers to Plan I shall carry a pro rata credit for Plan II deferrals.  With respect to Plan II to Plan I transfers that result in a supplemental survivor benefit payout (except for Plan II to Plan I transfers of amounts originally deferred to Plan I and subsequently transferred to Plan II), such supplemental survivor payout will be made simultaneously with the last payout scheduled to be made pursuant to the Deferral Elections in force with respect to the amount transferred from Plan II to Plan I.  Otherwise, the supplemental survivor benefit will be paid out in a full lump-sum payment in the year in which the Participant dies, except if the Participant dies in December, in which case the supplemental survivor benefit will be paid in the following calendar year.

Example I:  Participant A defers $1,750,000 to Plan I.  This appreciates to $2,000,000.  Participant A then dies prior to a Separation From Service.  Because the Supplemental Survivor Benefit is capped at $3,000,000, her beneficiary receives a $3,000,000 Supplemental Survivor Benefit.

Example II:  Participant A defers $100,000 into Plan II.  This appreciates to $130,000, at which time it is transferred to Plan I.  Participant A then defers $25,000 into Plan I.  Subsequently, Participant A’s Plan I total account value declines to $80,000 based upon her phantom investments diminishing in value.  Participant A dies while on a Company-approved leave of absence that is not a Separation From Service.  Due to Participant A’s $100,000 Plan II transfer deferral credit, and her $25,000 deferral credit under Plan I, her beneficiary receives a $250,000 Supplemental Survivor Benefit.

Example III:  Participant A defers $100,000 into Plan II.  This depreciates to $65,000, at which time it is transferred to Plan I.  Participant A then defers $25,000 into Plan I.  Subsequently, Participant A’s Plan I total account value declines to $40,000 based upon her phantom investments diminishing in value.  Participant dies while on a Company-approved leave of absence that is not a Separation From Service.  Due to Participant A’s $100,000 Plan II transfer deferral credit, and her $25,000 deferral credit under Plan I, her beneficiary receives a $250,000 Supplemental Survivor Benefit.

Example IV:  Participant B has deferred $150,000 into Plan II.  The Plan II account appreciates to $250,000, at which time $125,000 is transferred to Plan I.  Participant B thereafter defers $30,000 to Plan I.  The Plan I account subsequently appreciates to $235,000, at which time Participant B receives a scheduled $110,000 in-service distribution from Plan I.  Subsequently Participant B’s Plan I account appreciates to $150,000, at which time Participant B dies prior to any Separation From Service.

· The Plan II transfer deferral credit equals $75,000, because the total deferrals under Plan II at the time of distribution were $150,000, and because the transfer of 50% of the Plan II balance results in a pro rata 50% transfer of the Plan II deferral credit.

· The Total Plan I deferrals equal $30,000.

· At the time of the distribution, the total Plan I deferral credit is $105,000 = Plan II transfer credit of $75,000 plus Plan I deferrals of $30,000.

· The $110,000 Plan I distribution results in a pro rata reduction in the Plan I deferral credit. The $110,000 distribution is divided by the then Total Plan I account value of $235,000 resulting in .468.  Because distributions result in a pro rata reduction of deferral credit, .468 is multiplied by the total Plan I deferral credit of $105,000 = $49,140.  This amount is reduced from the Total Plan I deferral credit ($105,000 - $49,140) resulting in a post-distribution Total Plan I deferral credit of $55,860.

· Upon Participant B’s death, his beneficiary receives a Supplemental Survivor Benefit equal to 2 x $55,860 = $111,720.

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Example V:  Participant C defers $1,400,000 to Plan I.  Participant C has a Separation From Service.  Shortly thereafter, Participant C dies.  Because on her date of death Participant C had already undergone a Separation From Service, her beneficiary does not receive a Supplemental Survivor Benefit.

Example VI:   In 2009, Participant D defers $100,000 to Plan II and elects to receive payments upon death in five annual installments.  In 2010, Participant D defers $50,000 to Plan II and elects to receive payments upon death in ten annual installments.  The Plan II account remains at a value of $150,000.  In 2011, Participant transfers the entire $150,000 Plan II account to Plan I.  In 2012, Participant D dies prior to his Separation From Service, earning a $300,000 Supplemental Survivor Benefit.  The 2009 deferrals, including earnings and losses, are paid out ratably over five years.  The 2010 deferrals, including earnings and losses, are paid out ratably over ten years.  Because it results from a Plan II to Plan I transfer, the Supplemental Survivor Benefit of $300,000 (it is not subject to earnings or losses or interest) is paid out simultaneously with the tenth installment of the 2010 deferrals.

K. Method of Distribution.  Except as specified otherwise in this Article 7, payment to any Plan I Beneficiary shall be made (i) in accordance with the Deferral Election executed by the Participant, (ii) in cash, (iii) in a lump-sum or in annual payments.

L. Lump-Sum Distribution Timing.  For Participants receiving a lump-sum distribution (other than a small account lump-sum distribution under Article 7.D. hereof, which shall be paid in accordance with that subsection) the value of their Account (or portion thereof specified in the Participant’s election) shall be paid in a lump-sum cash payment no later than the end of the year in which their Separation From Service occurs (or if their Separation From Service occurs in December of any year, no earlier than January 1 of the following year and no later than December 31 of such following year), or, for Specified Employees (or their estates or beneficiaries), at least six months and one day after the date upon which they incur a Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends or, if earlier, upon their death.

M. Installment Distribution Timing.  Installment payments shall commence no later than the end of the year following the triggering distribution event (except if the triggering event is a Separation From Service or death occurring in December, in which case the payments shall commence in the following year), or, for Specified Employees undergoing a Separation From Service triggering event, as soon as is practicable at least six months and one day after the date upon which they incur a Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends.  However, in no event may installment payments be made over a period exceeding fourteen years following the first installment, even if the payments are postponed pursuant to an election made under Article 7.O. hereof.

N. Subsequent Election to Delay or Change Form of Payment.

(1) A Participant’s election to receive a retirement, Disability or in‑service distribution may be delayed or the form of payment changed by filing an election, in the form required by the Committee, at least one year in advance of the date upon which any distribution would otherwise have been made pursuant to the prior election.  Such election shall not be effective for a period of one (1) year, and must delay the initial payment by a period of at least five (5) years, but may not result in the initial payment occurring more than then ten (10) years following Retirement or Disability.  In the absence of such timely filed election, the value of such Participant’s Account shall be distributed in accordance with their previously timely filed Account election.

(2) Because Plan installment payments are considered a single payment for purposes of Code Section 409A, a subsequent election may accelerate the method of distribution.  For example, if a Participant initially elected to receive retirement or Disability payments in five annual installments following her Separation From Service, she could make a timely election to instead take a lump-sum distribution five years following her Separation From Service.  Moreover, a subsequent election may change a lump-sum distribution to an installment election, so long as, in either case, the initial payment is delayed for a period of at least five (5) years, the election is not effective for one (1) year and is made at least one (1) year in advance of the date upon which the first distribution would have otherwise been made.

(3) Because installment payments are treated as a single payment, any subsequent election must apply to all of the installment payments.  For example, if a Participant initially elected to receive retirement or Disability payments in five annual installments following her Separation From Service, the Participant may not elect to defer the 1st, 2d, 3rd and 5th installments only, but must also defer the 4th installment.

O. Distributions From Trust; Withholding.  Unless the Trustees do not require this, with respect to each Participant, the Company shall deliver to the Trustees a schedule (the “Payment Schedule”) that indicates the amounts payable in respect of the Participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to the Trustees for determining the amounts so payable, the form in which such amount is to be paid and the time of commencement for payment of such amounts.  The Payment Schedule shall be delivered to the Trustees not fewer than 15 days prior to the first date on which a payment is to be made to the Participant.  Any change to a Payment Schedule shall be delivered to the Trustees not fewer than 15 days prior to the date on

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which the first payment is to be made in accordance with the changed Payment Schedule.  Except as otherwise provided herein, the Trustees shall cause the Company or the Trust to make payments to Participants and their beneficiaries in accordance with such Payment Schedule.  The Trustees shall make provisions for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of Plan I benefits and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Company, it being understood among the parties hereto that the Company shall on a timely basis provide the Trustees specific information as to the amount of taxes from the Trustees and properly pay and report such withheld taxes from the Trustees and properly pay and report such amounts to the appropriate taxing authorities.

P. Certain Distributions.  In case of any distribution to a minor or to a legally incompetent person, the Committee may (1) direct the Trustees to make the distribution to his legal representative, to a designated relative, or directly to such person for his benefit, or (2) instruct the Trustees to use the distribution directly for his support, maintenance, or education.  The Trustees shall not be required to oversee the application, by any third party, of any distributions made pursuant to this Article.

Q. Phantom Cypress Stock.  Distributions of accounts with allocations credited to phantom Cypress stock shall be made in cash.

R. Domestic Relations Order Distributions.  The Committee, in its sole discretion, may accelerate a payment (or payments) make such payments to an individual other than the Participant as necessary to comply with the terms of a Domestic Relations Order.

S. Conflicts of Interest and Ethics Rules Distributions.  The Committee, in its sole discretion, may accelerate a payment (or payments) as necessary (i) for any U.S. federal officer or employee in the executive branch of the U.S. federal government to comply with an ethics agreement with the U.S. federal government, or (ii) to avoid violating a U.S. federal, state, local or foreign ethics law or conflicts of interest law, as specified under Code Section 409A.

T. FICA and Related Income Tax Distribution.  The Committee, in its sole discretion, may permit a distribution from a Participant’s Account sufficient to pay any FICA Amounts due upon the vesting of any Company contribution as well as to satisfy the income tax withholding requirements with respect to the FICA Amount and income tax payments under this Article 7.U.  In no event may the total payment under this Article 7.T. exceed the aggregate of the FICA Amount and the related income tax withholding.

U. State, Local and Foreign Tax Distribution.  The Committee, in its sole discretion, may permit a distribution from a Participant’s Account sufficient to pay any state, local or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan prior to the scheduled distribution of such amount.  In the event the Committee exercises such discretion, the Committee may also permit a distribution sufficient to pay related income tax withholding in accordance with Code Section 409A.  In no event may the total payment under this Article 7.V. exceed the aggregate amount of such taxes due.

V. Code Section 409A Distribution.  In the event that the Plan fails to satisfy the requirements of Code Section 409A, then the Company, in its sole discretion, may permit a distribution from a Participant’s Account up to the maximum amount required to be included in income as a result of the failure to comply with Code Section 409A.

W. Special 2005 Election.  Notwithstanding any other provision of this Plan I, in the period commencing June 15, 2005 and ending December 31, 2005, the Committee, in its sole discretion, may permit one or more Participants to cancel or reduce deferral elections with respect to amounts deferred (or to be deferred) under this Plan I on or after January 1, 2005 up through December 31, 2005 in accordance with Q&A-20 under IRS Notice 2005-1, subject to the Participant entering into such cancellation or reduction agreements as are specified by the Committee.

ARTICLE VIII

CHANGE OF CONTROL

The Company, in its sole discretion, may terminate the Plan and accelerate all scheduled Plan distributions within 30 days prior to or 12 months following a Change in Control Event by means of an irrevocable election; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.

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ARTICLE IX

TERMINATION DUE TO CORPORATE DISSOLUTION OR PURSUANT TO BANKRUPTCY COURT APPROVAL

A. Corporate Dissolution.  The Company, in its sole discretion may terminate the Plan and accelerate all scheduled Plan distributions within 12 months following a Corporate Dissolution; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.

B. Bankruptcy Court Approval.  The Company, in its sole discretion, may terminate the Plan and accelerate all scheduled Plan distributions pursuant to Bankruptcy Court Approval; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.

ARTICLE X

UNFORESEEABLE EMERGENCY DISTRIBUTIONS

With the consent of the Committee, a Participant may withdraw up to one hundred percent (100%) of his or her Account as may be required to meet a sudden Unforeseeable Emergency of the Participant.  Such distribution may only be made if the amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

ARTICLE XI

CLAIMS PROCEDURE

A. Claims and Review Procedures

(1) .  Purpose.  Every Participant or Beneficiary (or his or her representative who is authorized in writing by the Claimant to act on his or her behalf) (hereinafter collectively, “Claimant”) shall be entitled to file with the Committee (and subsequently with the individual(s) designated to review claims appealed after being initially denied by the Committee (the “Review Panel”)) a written claim for benefits under the Plan.  The Committee and Review Panel shall each be able to establish such rules, policies and procedures, consistent with ERISA and the Plan, as it may deem necessary or appropriate in carrying out its duties and responsibilities under this Article 11.  In the case of a denial of the claim, the Committee or Review Panel, as applicable, shall provide the Claimant with a written or electronic notification that complies with Department of Labor Regulation Section 2520.104b-1(c)(1).

(2) Denial of Claim.  If a claim is denied by the Committee (or its authorized representative), in whole or in part, then the Claimant shall be furnished with a denial notice that shall contain the following:

(i) specific reason(s) for the denial;

(ii) reference to the specific Plan provision(s) on which the denial is based;

(iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why the material or information is necessary; and

(iv) an explanation of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial on review (as set forth in Section 11(A)(4) below).

The denial notice shall be furnished to the Claimant no later than ninety (90) days after receipt of the claim by the Committee, unless the Committee determines that special circumstances require an extension of time for processing the claim.  If the Committee determines that an extension of time for processing is required, then notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90)-day period.  In no event shall such extension exceed a period of ninety (90)-days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefits determination.

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(3)Claim Review Procedure.  The Claimant may request review of the denial at any time within sixty (60) days following the date the Claimant received notice of the denial of his or her claim.  The Committee shall afford the Claimant a full and fair review of the decision denying the claim and, if so requested, shall:

(i) provide the Claimant with the opportunity to submit written comments, documents, records and other information relating to the claim for benefits;

(ii) provide that the Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information (other than documents, records and other information that is legally-privileged) relevant to the Claimant’s claim for benefits; and

(iii) provide for a review that takes into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

(4) If the claim is subsequently also denied by the Review Panel, in whole or in part, then the Claimant shall be furnished with a denial notice that shall contain the following:

(i) specific reason(s) for the denial;

(ii) reference to the specific Plan provision(s) on which the denial is based; and

(iii) an explanation of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following the denial on review.

(5) The decision on review shall be issued within sixty (60) days following receipt of the request for review.  The period for decision may, however, be extended up to one hundred twenty (120) days after such receipt if the Review Panel determines that special circumstances require extension.  In the case of an extension, notice of the extension shall be furnished to the Claimant prior to the expiration of the initial sixty (60)-day period.  In no event shall such extension exceed a period of sixty (60) days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefits determination.

(6) Special Procedure for Claims Due to Disability.  To the extent an application for distribution as a result of a Disability requires the Committee or the Review Panel, as applicable, to make a determination of Disability under the terms of the Plan, then such determination shall be subject to all of the general rules described in this Article, except as they are expressly modified by this Section.

(i) The initial decision on the claim for a Disability distribution will be made within forty-five (45) days after the Plan receives the Claimant’s claim, unless special circumstances require additional time, in which case the Committee will notify the Claimant before the end of the initial forty-five (45)-day period of an extension of up to thirty (30) days.  If necessary, the Committee may notify the Claimant, prior to the end of the initial thirty (30)-day extension period, of a second extension of up to thirty (30) days.  If an extension is due to the Claimant’s failure to supply the necessary information, then the notice of extension will describe the additional information and the Claimant will have forty-five (45) days to provide the additional information.  Moreover, the period for making the determination will be delayed from the date the notification of extension was sent out until the Claimant responds to the request for additional information.  No additional extensions may be made, except with the Claimant’s voluntary consent.  The contents of the notice shall be the same as described in Section 11(A)(2) above.  If a disability distribution claim is denied in whole or in part, then the Claimant will receive notification, as described in Section 11(A)(2).

(7) If an internal rule, guideline, protocol or similar criterion is relied upon in making the adverse determination, then the denial notice to the Claimant will either set forth the internal rule, guideline, protocol or similar criterion, or will state that such was relied upon and will be provided free of charge to the Claimant upon request (to the extent not legally-privileged) and if the Claimant’s claim was denied based on a medical necessity or experimental treatment or similar exclusion or limit, then the Claimant will be provided a statement either explaining the decision or indicating that an explanation will be provided to the Claimant free of charge upon request.

(8) Any Claimant whose application for a Disability distribution is denied in whole or in part, may appeal the denial by submitting to the Review Panel a request for a review of the application within one hundred and eighty (180) days after receiving notice of the denial.  The request for review shall be in the form and manner prescribed by the Review Panel.  In the event of such an appeal for review, the provisions of Section 11(A)(3) regarding the Claimant’s rights and responsibilities shall apply.  Upon request,

Page 14 of 18

the Review Panel will identify any medical or vocational expert whose advice was obtained on behalf of the Review Panel in connection with the denial, without regard to whether the advice was relied upon in making the determination.  The entity or individual appointed by the Review Panel to review the claim will consider the appeal de novo, without any deference to the initial denial.  The review will not include any person who participated in the initial denial or who is the subordinate of a person who participated in the initial denial.

(9) If the initial Disability distribution denial was based in whole or in part on a medical judgment, then the Review Panel will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment, and who was neither consulted in connection with the initial determination nor is the subordinate of any person who was consulted in connection with that determination; and upon notifying the Claimant of an adverse determination on review, include in the notice either an explanation of the clinical basis for the determination, applying the terms of the Plan to the Claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request.

(10) A decision on review shall be made promptly, but not later than forty-five (45) days after receipt of a request for review, unless special circumstances require an extension of time for processing.  If an extension is required, the Claimant will be notified before the end of the initial forty-five (45)-day period that an extension of time is required and the anticipated date that the review will be completed.  A decision will be given as soon as possible, but not later than ninety (90) days after receipt of a request for review.  The Review Panel shall give notice of its decision to the Claimant; such notice shall comply with the requirements set forth in paragraph (h) above.  In addition, if the Claimant’s claim was denied based on a medical necessity or experimental treatment or similar exclusion, then the Claimant will be provided a statement explaining the decision, or a statement providing that such explanation will be furnished to the Claimant free of charge upon request.  The notice shall also contain the following statement:  “You and your Plan may have other voluntary alternative dispute resolution options, such as mediation.  One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.”

B. Exhaustion of Claims Procedure and Right to Bring Legal Claim.  No action in law or equity shall be brought more than one (1) year after the Review Panel’s affirmation of a denial of the claim, or, if earlier, more than four (4) years after the facts or events giving rise to the Claimant’s allegation(s) or claim(s) first occurred.

ARTICLE XII

MISCELLANEOUS

A. Unsecured General Creditor.  Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company.  No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan I.  Any and all of the assets of the Company shall be, and remain, the general unpledged, unrestricted assets of the Company.  The obligation of the Company under Plan I shall be merely that of an unfunded and unsecured promise to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors.

B. Restriction Against Assignment.  The Company shall pay all amounts payable hereunder only to the person or persons designated by Plan I and not to any other person or corporation.  No part of a Participant’s Account shall be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a Participant’s Account be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever.  If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any distribution or payment from Plan I, voluntarily or involuntarily, the Committee, in its sole and absolute discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

C. Withholding

There shall be deducted from each payment made under Plan I, all taxes that are required to be withheld by the Company, as applicable, in respect to such payment.  The Company shall have the right to reduce any payment by the amount of cash sufficient to provide the amount of said taxes.

Page 15 of 18

D.Legal Representation

The Company will reimburse all reasonable legal fees and expenses incurred by a Plan I Beneficiary in seeking to obtain or enforce any right or benefit provided by Plan I.  This reimbursement right applies only to claims made after a Change of Control and only for fees and expenses incurred after a Plan I Beneficiary has exhausted the claims and appeals procedure specified in Article IX.  No reimbursement shall be made if the request is found to be frivolous by a court of competent jurisdiction.

E. Amendment, Modification, Suspension or Termination

The Committee may amend, modify, suspend or terminate Plan I in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Account, provided that a termination or suspension of Plan I or any Plan I amendment or modification that will significantly increase costs to the Company shall be approved by the Board.  In the event that this Plan I is terminated, the timing of the disposition of the amounts credited to a Participant’s Account shall occur in accordance with Article VII.

F. Governing Law

This Plan I shall be construed, governed and administered in accordance with the internal substantive laws of the State of California (other than the choice of law principles).

G. Receipt or Release

Any payment to a Plan I Beneficiary in accordance with the provisions of Plan I shall, to the extent thereof, be in full satisfaction of all claims against the Committee and the Company.  The Committee may require such Plan I Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

H. Payments on Behalf of Persons under Incapacity.  In the event that any amount becomes payable under Plan I to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person.  Any payment made pursuant to such determination shall constitute a full release and discharge of the Committee and the Company.

I. No Employment or Other Rights.  Participation in this Plan I shall not confer upon any person any right to be employed by the Company (or for outside director Participants, any right to remain in service as a Board member or consultant) or any other right not expressly provided hereunder.

J. Headings, etc.  Not Part of Agreement.  Headings and subheadings in this Plan I are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

K. Successorship.  This Plan I shall be binding upon and inure to the benefit of any successor to the Company or its business as the result of merger, consolidation, reorganization, transfer of assets or otherwise, and any subsequent successor thereto; and any such successor shall be deemed to be the “Company” under this Plan I.  In the event of any such merger, consolidation, reorganization, transfer of assets or other similar transaction, the successor to the Company or its business or any subsequent successor thereto shall promptly notify the Trustees in writing of its successorship and furnish the Trustees with the name or names of any person or persons authorized to act for the Company.  In no event shall any such transaction described herein suspend or delay the rights of Plan I Beneficiaries to receive their vested accrued benefits hereunder.

L. Plan I Document .  This document, the prospectus to Plan I, the Deferral Election, certain definitions expressly mentioned herein that are defined in the Cypress Semiconductor 401(k) Employee Savings Plan, the Trust Agreement, and any other documents identified by the Committee, comprise the Plan documents for Plan I.

M. Definitions

(1) “Account” means the bookkeeping account established to reflect the interest of a Participant or beneficiary in Plan I.

(2) “Bankruptcy Court Approval” means the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A).

Page 16 of 18

(3)“Cause” means: (i) Participant’s continued failure to substantially perform Participant’s principal duties and responsibilities (other than as a result of disability or death) after thirty (30) days written notice from the Company specifying the nature of Participant’s failure and demanding that such failure be remedied; (ii) Participant’s material and continuing breach of his or her obligations to the Company set forth in any written agreement between the Company and Participant or any written policy of the Company after thirty (30) days written notice from the Company specifying the nature of Participant’s breach and demanding that such breach be remedied (unless such breach by its nature cannot be cured, in which case notice and an opportunity to cure shall not be required); (iii) Participant’s arrest for a felony, fraud or an act of moral turpitude; or (iv) act or acts of dishonesty undertaken by Participant and intended to result in personal enrichment of Participant at the expense of the Company.

(4) “Change of Control Event” means a change in ownership or effective control of the Company or in the ownership of a substantial portion of the Company’s assets, as defined under Code Section 409A.

(5) “Code Section 409A” means Code Section 409A and the proposed or final (as applicable) Treasury regulations and other official guidance promulgated thereunder.

(6) “Corporate Dissolution” means a dissolution of the Company that is taxed under Code Section 331.

(7) “Deferral Election” means the documents that encompass the (i) Deferred Compensation Plan I Beneficiary Designation, (ii) Deferred Compensation Plan I Distribution Election Form, (iii) Deferred Compensation Plan I Participation Agreement and Deferral Election, (iv) the Deferred Compensation Plan I Investment Allocation Form for Future Deferrals,  (v) the Deferred Compensation Plan I Investment Allocation Change Form, and (vi) any other documents provided to Participants relating to their Plan I deferral election decisions.

(8) “Disability” means the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees.

(9) “Domestic Relations Order” means a court order that qualifies as a domestic relations order under Code Section 414(p)(1)(B).

(10) “FICA Amount” means the aggregate Federal Insurance Contributions Act (FICA) tax imposed on any Account under Code Sections 3101, 3121(a) and 3121(v)(2), as applicable and any corresponding tax withholding provisions of applicable state, local or foreign tax laws as a result of the payment of the FICA amount.

(11) “Involuntary Termination” means a Participant’s termination of employment (or for outside director Participants, termination of service as a consultant) with the Company because of the Company’s downsizing and/or restructuring, as determined in the sole discretion of the Committee.

(12) “Plan Year” means the calendar year.

(13) “Sales Commissions” means “sales commission compensation” as such term is defined in Treasury Regulation §1.409A-2(a)(12)(i).

(14) “Separation From Service” means a separation from service as defined under Code Section 409A.  For this purpose, the employment relationship will be treated as continuing intact while the Participant is on military leave, sick leave or other bona fide leave of absence, except that if the period of such leave exceeds six (6) months and the Participant does not retain a right to reemployment under an applicable statute or by contract, then the employment relationship will be deemed to have terminated on the first day immediately following such 6-month period.  A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.

(15) “Specified Employee” means a “key employee” as such term is defined in Internal Revenue Code Section 416(i) without regard to paragraph five (5) thereof.  As of 2007, this generally includes (i) the top fifty (50) Company officers making more than $145,000 per year, (ii) a 5% owner of the Company, or (iii) a 1% owner of the Company making more than $150,000 per year.  For purposes of the preceding sentence, “compensation” means compensation as such term is defined in the Company’s 401(k) Employee Savings Plan.  The determination of whom is a Specified Employee shall be made on December 31 of each year, shall include any employee who qualified as a Specified Employee at any time during the preceding twelve-month period and shall be effective on the following April 1.

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(16)“Unforeseeable Emergency” means a severe financial hardship to Participant resulting from an illness or accident of Participant, the Participant’s spouse or a dependent of Participant (as defined in Section 152(a) of the Code), loss of Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of Participant.

(17) “Valuation Date” means, except as otherwise specified by the Committee, (i) for distributions hereunder and for allocations of deferrals and re-allocations of amounts previously deferred, that the Participant’s Account shall be valued as of the last business day of the week preceding the transaction, and (ii) for permitted Plan II to Plan I transfers made prior to January 1, 2009, the last business day of the Plan Year.

CYPRESS SEMICONDUCTOR

CORPORATION

By:

(Title)

Date:

Page 18 of 18

Document History Page

Document Title: CYPRESS NON-QUALIFIED DEFERRED COMPENSATION PLAN I

Document Number:001-92196

Rev.	ECN No.	Orig. of Change	Description of Change
**	4371047	AMMO	Spec created.  Attachment will be updated periodically with changes approved by the Board of Directors.
		KARI	Updated plan eligibility and Supplemental Survivor Benefit.

Page 19 of 18

EX-10.3

Exhibit 10.3

CYPRESS SEMICONDUCTOR CORPORATION

NON-QUALIFIED

DEFERRED COMPENSATION PLAN II

Page1 of 16

TABLE OF CONTENTS

	Page
ARTICLE I PLAN II ADMINISTRATION 4	4
ARTICLE II ELIGIBILITY, PARTICIPATION, AND BENEFICIARY DESIGNATION 5	4
ARTICLE III PLAN II CONTRIBUTIONS AND ALLOCATIONS 6	5
ARTICLE IV VESTING 8	6
ARTICLE V GENERAL DUTIES 8	7
ARTICLE VI PARTICIPANTS’ ACCOUNTS 9	7
ARTICLE VIIPAYMENTS TO A PLAN II PARTICIPANT OR BENEFICIARY 10	8
ARTICLE VIIICHANGE OF CONTROL 15	11
ARTICLE IXTERMINATION DUE TO CORPORATE DISSOLUTION OR PURSUANT TO BANKRUPTCY COURT APPROVAL 15	11
ARTICLE XUNFORESEEABLE EMERGENCY DISTRIBUTIONS 15	11
ARTICLE XICLAIMS PROCEDURE 16	11
ARTICLE XII MISCELLANEOUS 19	13

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CYPRESS NON-QUALIFIED

DEFERRED COMPENSATION PLAN II

The Cypress Semiconductor Corporation Nonqualified Deferred Compensation Plan, originally effective as of September 1, 1995, and thereafter amended, was further amended and restated in its entirety by Cypress Semiconductor Corporation (the “Company”), effective as of January 1, 2002 on behalf of itself and any designated subsidiaries and was renamed the Cypress Non-Qualified Deferred Compensation Plan II (“Plan II”).  Also on January 1, 2002, the Cypress Non-Qualified Deferred Compensation Plan I (“Plan I”) was adopted by the Company.  Plan I is similar to Plan II except that (i) the phantom investments are different than those available under Plan II, and (ii) beneficiaries of Plan I participants who die in certain situations will receive a supplemental survivor benefit.  Plan I and Plan II were amended effective April 1, 2004 to permit outside directors who are also consultants to participate in the Plans.  Plan I and Plan II were frozen to new deferrals as of December 31, 2004 so as to qualify these prior plans for “grandfather” treatment under Internal Revenue Code Section 409A and were renamed Pre-2005 Plan I and Pre-2005 Plan II.

To comply with Internal Revenue Code Section 409A, the Company established Plan I and Plan II, covering deferrals made on and after January 1, 2005.  Plan I is similar to Plan II except that (i) the phantom investments are different than those available under Plan II, and (ii) beneficiaries of Plan I participants who die in certain situations will receive a supplemental survivor benefit. Plan I and Plan II were amended effective June 15, 2005 to allow the Committee, in its discretion, to permit Participants to cancel or reduce deferral elections in 2005 with respect to amounts deferred (or to be deferred) on or after January 1, 2005 through December 31, 2005.  Plans I and II were further amended effective January 1, 2006 to clarify that the definition of Compensation excludes any severance payments.  Plans I and II were further amended in December, 2008 to comply with the final Treasury Regulations under Internal Revenue Code Section 409A.  Plans I and II were further amended in January, 2009 to make clear that Cypress phantom stock is a permitted phantom investment.  Throughout, the term “Company” shall include wherever relevant any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity or investment interest, or any subsidiary of the Company, as determined by the Company.  Finally, Plans I and II were further amended effective January 1, 2016 to update plan eligibility.  Plan I was also amended to freeze the supplemental survivor benefit to two times the total amount deferred into Plan I through December 31, 2015.

The purpose of Plan II is to provide supplemental retirement income and to permit eligible Participants the option to defer receipt of compensation, pursuant to the terms of the Plan.  Plan II is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and is intended to comply with Section 409A of the Internal Revenue Code.  Participants shall have the status of unsecured creditors of the Company with respect to the payment of Plan benefits.

RECITALS:

1. The Company maintains Plan II for the benefit of a select group of management or highly compensated employees designated by the Company.

2. Under Plan II, the Company is obligated to pay vested accrued benefits to Plan II Participants and their beneficiary or beneficiaries (“Plan II Beneficiaries”) from the Company’s general assets.

3. The Company has entered into an agreement (the “Trust Agreement”) with American Stock Transfer and Trust Company (the “Trustees”) under an irrevocable trust (the “Trust”) to be used in connection with Plan II.

4. The Company intends to make contributions to the Trust so that such contributions will be held by the Trustees and invested, reinvested and distributed, all in accordance with the provisions of this Plan II and the Trust Agreement.

5. The Company intends that the assets of the Trust shall at all times be subject to the claims of the general creditors of the Company as provided in the Trust Agreement.

6. The Company intends that the existence of the Trust shall not alter the characterization of Plan II as “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and shall not be construed to provide income to Plan II Beneficiaries prior to actual payment of the vested accrued benefits thereunder.

NOW THEREFORE, the Company does hereby establish Plan II as follows and does also hereby agree that Plan II shall be structured, held and disposed of as follows:

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ARTICLE I

PLAN II ADMINISTRATION

A. The Deferred Compensation Committee of the Company (the “Committee”) administers Plan II

Subject to the specific duties delegated by the Board of Directors (the “Board”) to such Committee, the Committee shall be responsible for the general administration and interpretation of Plan II and for carrying out its provisions.  The Committee shall have such powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following powers and duties:

(1) discretionary authority to construe and interpret the terms of Plan II, and to determine eligibility and the amount, manner and time of payment of any benefits hereunder;

(2) to prescribe forms and procedures for purposes of Plan II participation and distribution of benefits;

(3) to direct the Trustees as to the distribution of Plan II assets; and

(4) to take such other action as may be necessary and appropriate for the proper administration of Plan II.

B. The Committee may adopt such rules, regulations and bylaws and may make such decisions as it deems necessary or desirable for the proper administration of Plan II

Any rule or decision that is not inconsistent with the provisions of Plan II shall be conclusive and binding upon all persons affected by it, and there shall be no appeal from any ruling by the Committee that is within its authority, except as otherwise provided herein.

C. The Committee shall have the power to (i) identify investment choices for the Trust Fund; and (ii) appoint or employ agents, recordkeepers and advisors to assist the Committee in discharging its duties under Plan II

ARTICLE II.

ELIGIBILITY, PARTICIPATION, AND BENEFICIARY DESIGNATION

A. Eligible Participants

The following categories of service providers (“Eligible Participants”) shall be eligible to participate in Plan II:  (i) Non-Sales employees with an annual salary equal to or greater than $200,000, or Sales employees with  a total cash target greater than or equal to $200,000  (ii) any other employee or category of employee that is approved by the CEO as eligible to participate in Plan II, and (iii) non-employee members of the Board of Directors who are also paid consultants to the Company.  The Committee reserves the right to modify the definition of Eligible Participant at any time with the approval of the CEO.  Any Eligible Participant who has commenced participation in Plan II shall be referred to in this Plan II as a “Participant.”

B. Participation

Each Eligible Participant may elect to commence participation in Plan II by completing a Cypress Non-Qualified Deferred Compensation Plan II participation agreement and deferral election no later than the last day of his or her Election Period.  For purposes of the foregoing, an Eligible Participant’s Election Period shall be defined as: (i) for newly Eligible Participants who are eligible for the first time, the thirty (30) day period measured from the date upon which the Eligible Participant becomes eligible to participate in Plan II and any other non-qualified deferred compensation plans required to be aggregated with Plan II under Section 409A; and (ii) for all other Eligible Participants (including Eligible Participants who formerly were Eligible Participants), no later than the due date for the irrevocable enrollment forms during the annual open enrollment period which is from December 1st to December 31st of each year (the “Annual Open Enrollment Period”) prior to the beginning of the Plan Year for which the election is effective (the calendar year is the “Plan Year”).  Elections shall remain in effect for successive Plan years unless modified or revoked (with respect to future Plan Years only) in a subsequent Annual Open Enrollment Period.

C. Beneficiary Designation

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Each Participant, prior to entering Plan II, may designate a beneficiary or beneficiaries to receive the remainder of any interest of the Participant under Plan II in the event of the Participant’s death.  A Participant may change his or her beneficiary designation at any time by submitting a complete and approved form of beneficiary designation (including dated spousal consent, if required pursuant to the beneficiary designation form) to the Committee (or its designee).  Each beneficiary designation shall be in a form prescribed by the Committee and will be effective only when filed with the Committee (or its designee) during the Participant’s lifetime.  Each beneficiary designation filed with the Committee will cancel all previously filed beneficiary designations.  In the absence of a valid designation, or if no designated beneficiary survives the Participant, the Participant’s interest shall be distributed to the Participant’s estate.

ARTICLE III

PLAN II CONTRIBUTIONS AND ALLOCATIONS

A. Participant Deferrals

Each Participant participating in Plan II shall, no later than the end of the applicable Enrollment Period, execute a participation agreement and deferral election (the “Deferral Election”) authorizing the Company to withhold a percentage amount of the Participant’s Compensation which would otherwise be paid to the Participant with respect to services rendered.  Compensation under Plan II is defined as annual base salary (or, for non-employee directors, cash consulting fees, including KEBP bonus), cash bonuses (including KEBP bonus, new product bonus and any other cash bonuses), and any cash Sales Commissions payable to the Participant in connection with the Participant’s services to the Company, provided however, that Compensation does not include severance payments (“Compensation”).  The Committee may, in its discretion, establish in the Deferral Election minimum and maximum levels of Compensation that may be deferred pursuant to Plan II.  Compensation deferrals made by a Participant under this Plan II shall be held as an asset of the Company and the Company intends to deposit the amounts deferred into the Trust.

B. Sales Commissions and Bonuses Payable in a Subsequent Year.  If cash bonuses (including new product bonus and any other cash bonuses) or cash Sales Commissions are earned in one calendar year and would normally be paid in the first quarter of the ensuing calendar year, they shall be deferred and distributed based upon the election made by the Participant in the open enrollment period in the year prior to the year in which it was earned.  For newly Eligible Participants, any such cash bonus or Sales Commission shall be deferred and distributed based upon their initial election made with respect to the year in which it was earned; provided, however, that such election may apply to no more than the total amount of such compensation multiplied by the ratio of the number of days remaining in the applicable performance period after such election becomes irrevocable over the total number of days in the applicable performance period.

C. Year-End Cross-Over Payroll Periods.  Paydays relating to periods of service that cross-over the calendar year end shall be covered by the Participant’s deferral election in effect for the later year, consistently with the default rules under Treasury Regulation §1.409A-2(a)(13).

D. Election Changes

(1) .A Participant may, in such form and at such time or times as the Committee may prescribe, discontinue or modify the deferral of his or her Compensation with respect to Plan Years that have not yet commenced.  The Committee has the power to establish uniform and nondiscriminatory rules and from time to time to modify or change such rules governing the manner and method by which Compensation deferral elections shall be made, as well as the manner and method by which Compensation deferral elections with respect to Plan Years that have not yet commenced may be changed or discontinued temporarily or permanently.  All Compensation deferral contributions shall be authorized by the Participant in writing or electronically, made by payroll deduction, deducted from the Participant’s Compensation without reduction for any taxes or withholding (except to the extent required by law or regulation) and paid over to the Trust by the Company.  Notwithstanding the foregoing, each Participant shall remain liable for any and all employment taxes owing with respect to such Participant’s Compensation deferral contributions.

E. Limitation on Deferral Changes.  The dollar amount of any Plan deferrals shall not be reduced or increased during any Plan Year by virtue of any Participant election to increase, decrease or terminate his or her rate of deferral in any other employee benefit plan, including the Company’s employee stock purchase plan; except as permitted by Code Section 409A with respect to changes in deferral elections under the Company’s 401(k) Employee Savings Plan and Code Section 125 flexible benefits plan (or as otherwise permitted under Code Section 409A).

F. Cessation of Eligible Status

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In the event a Participant ceases to be an Eligible Participant while also a participant in Plan II, if such individual has not undergone a Separation From Service, he or she shall continue to make Compensation deferral contributions under Plan II through the end of the Plan Year in which the individual ceases to be an Eligible Participant.  Thereafter, such individual shall not make any further Compensation deferral contributions to Plan II unless or until he or she again meets the eligibility requirements of Article II above.

G. Company Discretionary Contributions

The Company may, in its sole discretion, make discretionary contributions to the accounts of one or more Participants at such times and in such amounts as the Board of the Company shall determine, subject to such vesting and distribution conditions and limitations as the Company, in its sole discretion, shall impose.  To the extent such Company contributions do not vest, corresponding debits will be made to a Participant's Account, including any earnings on such forfeited amounts.

H. Allocations

The Compensation deferral contributions and any Company contributions made under Plan II on behalf of a Participant shall be credited to the Participant’s Account.  The Committee shall establish and maintain separate subaccounts as it determines to be necessary and appropriate for the proper administration of Plan II.  The Committee may cause the Trustees to maintain and invest separate asset accounts corresponding to each Participant account.  Each Participant Account consists of the aggregate interest of the Participant under Plan II (and in the Trust Fund), as reflected in the records maintained by the Company for such purposes.

I. Plan to Plan Transfers.  

Subject to the Committee’s discretion, Participants shall be allowed to elect to transfer their deemed investment accounts from Plan II to Plan I or from Plan I to Plan II, subject to such limitations and reallocation requirements as the Committee, in its sole discretion, determines to be appropriate; provided, however, that any such Plan to Plan transfers shall not change the time and method of distribution of the amounts transferred.  The plan to plan transfers shall be effective as of the date specified by the Committee.

J. Cancellation of Elections Due to 401(k) Hardship Withdrawal, Unforeseeable Emergency Distribution, or Disability

(1) 401(k) Hardship Withdrawal.  A Participant’s deferral election shall be automatically cancelled in the event the Participant obtains a hardship distribution from the Company’s 401(k) Plan pursuant to Treasury Regulation §1.401(k)-1(d)(3).  The Participant, if still an Eligible Participant, may re-enroll in New Plan I during the next open enrollment period.

(2) Unforeseeable Emergency Distribution.  A Participant’s deferral election shall be automatically cancelled in the event the Participant obtains an unforeseeable emergency distribution from New Plan I or Plan II.  The Participant, if still an Eligible Participant, may re-enroll in New Plan I during the next open enrollment period.

ARTICLE IV

VESTING

A. Compensation Deferral Contributions

The value of a Participant’s Account attributable to Participants’ Compensation deferral contributions shall always be fully vested and nonforfeitable.

B. Company Contributions

The value of a Participant’s Account attributable to any Company contributions pursuant to Article III.D shall vest at such time or times as the Board may specify in connection with any such contributions.  In the absence of Board specification, a Participant’s interest in Company contributions shall be fully vested and nonforfeitable.  Upon a Participant’s Separation From Service for any reason, any portion of the Participant’s Account that is not then vested (including allocable earnings, as determined by the Committee), shall be forfeited.  Unless otherwise determined by the Board or the Committee, forfeitures shall be used to satisfy the Company’s obligation to remit contributions to the Trust under Plan II.

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ARTICLE V

GENERAL DUTIES

A. Committee Duties

The Committee will provide the Trustees with a copy of any future amendment to this Plan II promptly upon its adoption.  The Committee may from time to time hire outside consultants, accountants, actuaries, legal counsel or recordkeepers to perform such tasks as the Committee may from time to time determine.

B. Trustees’ Duties

The Trustees shall invest and reinvest the Trust Fund as provided in the Trust Agreement.  The Trustees shall collect the income on the Trust Fund, and make distributions therefrom, as provided in this Plan II and in the Trust Agreement.

C. Company Contributions

While Plan II remains in effect, and prior to a Change in Control, as defined below, the Company shall make contributions to the Trust Fund at least once each quarter.  The amount of any quarterly contributions shall be at the discretion of the Company.  At the close of each calendar year, the Company shall make an additional contribution to the Trust Fund to the extent that previous contributions to the Trust Fund for the current calendar year are not equal to the total of the Compensation deferrals made by each Participant plus Company discretionary contributions, if any, accrued, as of the close of the current calendar year.  The Trustees shall not be liable for any failure by the Company to provide contributions sufficient to pay all accrued benefits under Plan II in full in accordance with the terms of Plan II.

D. Department of Labor Determination

In the event that any Participants are found to be ineligible, that is, not members of a select group of management or highly compensated employees, according to a determination made by the Department of Labor, the Committee will take whatever steps it deems necessary, in its sole discretion, to equitably protect the interests of the affected Participants.

ARTICLE VI

PARTICIPANTS’ ACCOUNTS

A. Separate Accounts

The Committee shall open and maintain a separate Account for each Participant.  Each Participant’s Account shall reflect the amounts allocated thereto and distributed therefrom and such other information as affects the value of such Account pursuant to this Plan II.

B. Timing of Account Credit.  Amounts deferred under Plan I shall be credited to a Participant’s Account within five business days following the date upon which such amounts would otherwise have been paid to the Participant.

C. Statement of Accounts

As soon as practicable after the end of each calendar year the Committee shall furnish to each Participant a statement of Account, determined as of the end of such calendar year.  Upon the discovery of any error or miscalculation in an Account, the Committee shall correct it, to the extent correction is practically feasible and permissible under Code Section 409A; provided, however, that any such statement of Account shall be considered to reflect accurately the status of the Participant’s Account for all purposes under Plan II unless the Participant reports a discrepancy to the Committee within six (6) months after receipt of the statement.  The Committee shall have no obligation to make adjustments to a Participant’s Account for any discrepancy reported to the Committee more than six (6) months after receipt of the statement, or for a discrepancy caused by the Participant’s error.  Statements to Participants are for reporting purposes only, and no allocation, valuation or statement shall vest any right or title in any part of the Trust Fund, nor require any segregation of Trust assets, except as is specifically provided in this Plan II.

D. Distribution of Accounts

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1..Payment to a Participant shall be based on the value of the vested portion of the Participant’s Account as of the Valuation Date immediately preceding the date of distribution plus any contribution subsequently credited to such Account and less any distributions subsequently made from the Account.

ARTICLE VII

PAYMENTS TO A PLAN II PARTICIPANT OR BENEFICIARY

A. General

(1) .Payments of vested accrued benefits to Plan II Beneficiaries from the Trust shall generally be made in accordance with the distribution event specified by the Participant in the Deferral Election between the Company and the Participant (the “Distribution Event”).  Except as otherwise expressly provided in the Participant’s Deferral Election and as set forth in Article VII below, no distribution shall be made or commenced prior to the time and manner as set forth in the Participant’s Deferral Election.

B. Installment Payments Treated as Single Payments.  All installment payments under the Plan are considered a single payment for purposes of complying with Code Section 409A.

C. Earliest Distributions.

(i) Regular Participants.  Except as permitted by the Plan and Code Section 409A in connection with a Change of Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a conflicts of interest or ethics rules distribution under Article 7.Q., a FICA and related income tax distribution under Article 7.R., a state, local or foreign tax distribution under Article 7.S., or a Code Section 409A Distribution under Article 7.T., in no event may the account of a Participant who is not a Specified Employee be distributed earlier than (i) the Participant’s Separation From Service, (ii) the Participant’s Disability, (iii) the Participant’s death, (iv) a specified time under Article 7.I. hereunder, (v) a Change in Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) to an individual other than the Participant pursuant to a Domestic Relations Order.

(ii) Specified Employee Participants.  Except as permitted by the Plan and Code Section 409A in connection with a Change of Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a conflicts of interest or ethics rules distribution under Article 7.Q., a FICA and related income tax distribution under Article 7.R., a state, local or foreign tax distribution under Article 7.S., or a Code Section 409A Distribution under Article 7.T., in no event may a Specified Employee’s account be distributed earlier than (i) six (6) months following the Specified Employee’s Separation From Service (or if earlier, the Specified Employee’s death), (ii) six (6) months following the Specified Employee’s Disability, (iii) the Specified Employee’s death, (iv) a specified time under Article 7.I. hereunder, (v) a Change in Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) to an individual other than the Participant pursuant to a Domestic Relations Order.  In the event a Specified Employee’s Plan distributions are delayed due to the six-month delay requirement, the amounts otherwise payable to the Specified Employee during such period of delay shall be paid on a date that is at least six months and one day following Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends (or, if earlier, upon the death of the Specified Employee).  The Participant’s other scheduled distributions, if any, shall not be affected by the period of delay.

D. Small Account Lump-Sum Distribution.  If, on the date of a Participant’s Separation From Service, their Accounts under Old Plan I, Old Plan II, New Plan I, Plan II and any other non-qualified deferred compensation plans required to be aggregated with such plans pursuant to Treasury Regulation §1.409A-1(c)(2) total, in the aggregate, less than the then applicable limit under Internal Revenue Code Section 402(g)(1)(B) (e.g., $15,500 in 2007), then all Accounts under all such plans, including Participant’s Account under this New Plan I, shall be distributed in a lump-sum in the month following such Participant’s Separation From Service, or, if the Participant is a Specified Employee, in the seventh month following such Participant’s Separation From Service; provided, however, that in the event such Accounts increase in value so that their aggregate value exceeds the then applicable limit under Internal Revenue Code Section 402(g)(1)(B) on the scheduled payment date, such Accounts shall instead be paid in accordance with the Plan and the Participant’s Deferral Elections.

E. Upon Retirement – Plan Year 2005 Through 2008 Deferrals.  With respect to amounts deferred in Plan Years 2005 through 2008, if a Participant has a Separation From Service pursuant to Participant’s retirement at age 55 or greater but with at least ten full years of continuous employment, or for outside director Participants, age 55 or greater and ten full years of continuous service as a Board member or consultant (either case shall be referred to in this Plan I as “Retirement”), then Participant shall receive, pursuant to the election selected in his or her timely submitted Deferral Election(s) a distribution of his or her Account balance in (i) a lump-sum, (ii) a partial lump-sum combined with up to fifteen years of annual payments, or (iii) two to fifteen years of annual payments, each such payment equal to 1/n of the Participant’s vested accrued benefit where n is the number of installments remaining to be paid, (an “Annual Payment”); provided, however, that to the extent a Participant is permitted to and makes differing distribution elections for amounts deferred in different Plan Years, then the deferrals for each Plan Year (including earnings and losses thereon) shall be distributed in one of the three permitted methods in accordance with such Deferral Elections.

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F.Upon Death – Plan Year 2005 Through 2008 Deferrals.With respect to amounts deferred in Plan Years 2005 through 2008, if a Participant dies, then the Participant’s beneficiary will receive their remaining Account balance in either a lump-sum or in five Annual Payments, as specified in the Participant’s Deferral Election; provided, however, that to the extent a Participant is permitted to and makes differing distribution elections for amounts deferred in different Plan Years, then the deferrals for each Plan Year (including earnings and losses thereon) shall be distributed in one of the two permitted methods in accordance with such Deferral Elections.

G. Non-Retirement Separations From Service – Plan Year 2005 Through 2008 Deferrals.With respect to amounts deferred in Plan Years 2005 through 2008, in the event a Participant has a Separation From Service that does not qualify as a Retirement, then his or her Account balance shall be distributed in a lump-sum within 60 days following such Separation From Service.

H. All Separations From Service and Death – Plan Year 2009 and Later Deferrals.  With respect to amounts deferred in Plan Years 2009 and later, if a Participant dies or undergoes any Separation From Service, then Participant shall receive, pursuant to the election selected in his or her timely submitted Deferral Election(s) a distribution of his or her Account balance in (i) a lump-sum, (ii) a partial lump-sum combined with up to fifteen years of annual payments, or (iii) two to fifteen years of Annual Payments; provided, however, that to the extent a Participant is permitted to and makes differing distribution elections for amounts deferred in different Plan Years, then the deferrals for each Plan Year (including earnings and losses thereon) shall be distributed in one of the three permitted methods in accordance with such Deferral Elections.

I. Scheduled In-Service Distribution.A Participant may elect, as provided in his or her Participant Deferral Election, to receive one or more scheduled in-service (i.e., prior to a Separation From Service) distributions from their Account balance without an early withdrawal penalty.  Any such distributions must be at least two full Plan Years following the date of the Participant’s Deferral Election.  Each scheduled in-service distribution may be postponed (but only once) in accordance with Article 6.M.  If a Participant specifies that a dollar amount will be distributed and the Account balance is less than the dollar amount, then the entire Account will be distributed.  A Participant may neither increase nor decrease the amount or percentage specified for an in-service distribution once their initial election becomes irrevocable.  In the event a Participant undergoes a Separation From Service prior to a scheduled in-service distribution, the in-service distribution election shall be without further force and effect and the applicable Separation From Service distribution provisions of Plan II and the Participant’s Deferral Election shall control.

J. Method of Distribution. Except as specified otherwise in this Article 6, payment to any Plan II Beneficiary shall be made (i) in accordance with the Deferral Election executed by the Participant, (ii) in cash, (iii) in a lump-sum or in annual payments.

K. Lump-Sum Distribution Timing. For Participants receiving a lump-sum distribution (other than a small account lump-sum distribution under Article 6.D. hereof, which shall be paid in accordance with that subsection), the value of their Account (or portion thereof specified in the Participant’s election) shall be paid in a lump-sum cash payment no later than the end of the year in which their Separation From Service occurs (or if their Separation From Service or death occurs in December of any year, no earlier than January 1 of the following year and no later than December 31 of such following year), or, for Specified Employees (or their estates or beneficiaries), at least six months and one day after the date upon which they incur a Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends or, if earlier, upon their death.

L. Installment Distribution Timing.  Installment payments shall commence no later than the end of the year following the triggering distribution event (except if the triggering event is a Separation From Service or death occurring in December, in which case the payments shall commence in the following year), or, for Specified Employees undergoing a Separation From Service triggering event, as soon as is practicable at least six months and one day after the date upon which they incur a Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends.  However, in no event may installment payments be made over a period exceeding fourteen years following the first installment, even if the payments are postponed pursuant to an election made under Article 6.M. hereof.

M. Subsequent Election to Delay or Change Form of Payment.

(1) A Participant’s election to receive a retirement, Disability or in‑service distribution may be delayed or the form of payment changed by filing an election, in the form required by the Committee, at least one year in advance of the date upon which any distribution would otherwise have been made pursuant to the prior election.  Such election shall not be effective for a period of one (1) year, and must delay the initial payment by a period of at least five (5) years, but may not result in the initial payment occurring more than then ten (10) years following Retirement or Disability.  In the absence of such timely filed election, the value of such Participant’s Account shall be distributed in accordance with their previously timely filed Account election.

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(2)Because Plan installment payments are considered a single payment for purposes of Code Section 409A, a subsequent election may accelerate the method of distribution.  For example, if a Participant initially elected to receive retirement or Disability payments in five annual installments following her Separation From Service, she could make a timely election to instead take a lump-sum distribution five years following her Separation From Service.  Moreover, a subsequent election may change a lump-sum distribution to an installment election, so long as, in either case, the initial payment is delayed for a period of at least five (5) years, the election is not effective for one (1) year and is made at least one (1) year in advance of the date upon which the first distribution would have otherwise been made.

(3) Because installment payments are treated as a single payment, any subsequent election must apply to all of the installment payments.  For example, if a Participant initially elected to receive retirement or Disability payments in five annual installments following her Separation From Service, the Participant may not elect to defer the 1^st, 2d, 3^rd and 5^th installments only, but must also defer the 4^th installment.

N. Distributions From Trust; Withholding.Unless the Trustees do not require this, with respect to each Participant, the Company shall deliver to the Trustees a schedule (the “Payment Schedule”) that indicates the amounts payable in respect of the Participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to the Trustees for determining the amounts so payable, the form in which such amount is to be paid and the time of commencement for payment of such amounts.  The Payment Schedule shall be delivered to the Trustees not fewer than 15 days prior to the first date on which a payment is to be made to the Participant.  Any change to a Payment Schedule shall be delivered to the Trustees not fewer than 15 days prior to the date on which the first payment is to be made in accordance with the changed Payment Schedule.  Except as otherwise provided herein, the Trustees shall cause the Company or the Trust to make payments to Participants and their beneficiaries in accordance with such Payment Schedule.  The Trustees shall make provisions for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of Plan II benefits and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Company, it being understood among the parties hereto that the Company shall on a timely basis provide the Trustees specific information as to the amount of taxes from the Trustees and properly pay and report such withheld taxes from the Trustees and properly pay and report such amounts to the appropriate taxing authorities.

O. Distributions From Trust; Withholding. In case of any distribution to a minor or to a legally incompetent person, the Committee may (1) direct the Trustees to make the distribution to his legal representative, to a designated relative, or directly to such person for his benefit, or (2) instruct the Trustees to use the distribution directly for his support, maintenance, or education.  The Trustees shall not be required to oversee the application, by any third party, of any distributions made pursuant to this Article.

P. Domestic Relations Order Distributions. The Committee, in its sole discretion, may accelerate a payment (or payments) make such payments to an individual other than the Participant as necessary to comply with the terms of a Domestic Relations Order.

Q. Conflicts of Interest and Ethics Rules Distributions. The Committee, in its sole discretion, may accelerate a payment (or payments) as necessary (i) for any U.S. federal officer or employee in the executive branch of the U.S. federal government to comply with an ethics agreement with the U.S. federal government, or (ii) to avoid violating a U.S. federal, state, local or foreign ethics law or conflicts of interest law, as specified under Code Section 409A.

R. FICA and Related Income Tax Distribution. The Committee, in its sole discretion, may permit a distribution from a Participant’s Account sufficient to pay any FICA Amounts due upon the vesting of any Company contribution as well as to satisfy the income tax withholding requirements with respect to the FICA Amount and income tax payments under this Article 7.R..  In no event may the total payment under this Article 6.R. exceed the aggregate of the FICA Amount and the related income tax withholding.

S. State, Local and Foreign Tax Distribution. The Committee, in its sole discretion, may permit a distribution from a Participant’s Account sufficient to pay any state, local or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan prior to the scheduled distribution of such amount.  In the event the Committee exercises such discretion, the Committee may also permit a distribution sufficient to pay related income tax withholding in accordance with Code Section 409A.  In no event may the total payment under this Article 6.S. exceed the aggregate amount of such taxes due.

T. Code Section 409A Distribution. In the event that the Plan fails to satisfy the requirements of Code Section 409A, then the Company, in its sole discretion, may permit a distribution from a Participant’s Account up to the maximum amount required to be included in income as a result of the failure to comply with Code Section 409A.

U. Special 2005 Election.  Notwithstanding any other provision of this Plan II, in the period commencing June 15, 2005 and ending December 31, 2005, the Committee, in its sole discretion, may permit one or more Participants to cancel or reduce deferral elections with respect to amounts deferred (or to be deferred) under this Plan II on or after January 1, 2005 up through December 31, 2005 in accordance with Q&A-20 under IRS Notice 2005-1, subject to the Participant entering into such cancellation or reduction agreements as are specified by the Committee.

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ARTICLE VIII

CHANGE OF CONTROL

The Company, in its sole discretion, may terminate the Plan and accelerate all scheduled Plan distributions within 30 days prior to or 12 months following a Change in Control Event by means of an irrevocable election; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.

ARTICLE IX

TERMINATION DUE TO CORPORATE DISSOLUTION OR PURSUANT TO BANKRUPTCY COURT APPROVAL

A. Corporate Dissolution

The Company, in its sole discretion terminate the Plan and accelerate all scheduled Plan distributions within 12 months following a Corporate Dissolution; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.

B. Bankruptcy Court Approval

The Company, in its sole discretion, may terminate the Plan and accelerate all scheduled Plan distributions pursuant to Bankruptcy Court Approval; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.

ARTICLE X

UNFORESEEABLE EMERGENCY DISTRIBUTIONS

With the consent of the Committee, a Participant may withdraw up to one hundred percent (100%) of his or her Account as may be required to meet a sudden Unforeseeable Emergency of the Participant.  Such distribution may only be made if the amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

ARTICLE XI

CLAIMS PROCEDURE

A. Claims and Review Procedures

(1) Purpose.  Every Participant or Beneficiary (or his or her representative who is authorized in writing by the Claimant to act on his or her behalf) (hereinafter collectively, “Claimant”) shall be entitled to file with the Committee (and subsequently with the individual(s) designated to review claims appealed after being initially denied by the Committee (the “Review Panel”)) a written claim for benefits under the Plan.  The Committee and Review Panel shall each be able to establish such rules, policies and procedures, consistent with ERISA and the Plan, as it may deem necessary or appropriate in carrying out its duties and responsibilities under this Article 11.  In the case of a denial of the claim, the Committee or Review Panel, as applicable, shall provide the Claimant with a written or electronic notification that complies with Department of Labor Regulation Section 2520.104b-1(c)(1).

(2) Denial of Claim.  If a claim is denied by the Committee (or its authorized representative), in whole or in part, then the Claimant shall be furnished with a denial notice that shall contain the following:

(i) specific reason(s) for the denial;

(ii) reference to the specific Plan provision(s) on which the denial is based;

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(iii)a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why the material or information is necessary; and

(iv) an explanation of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial on review (as set forth in Section 11(A)(4) below).

The denial notice shall be furnished to the Claimant no later than ninety (90)-days after receipt of the claim by the Committee, unless the Committee determines that special circumstances require an extension of time for processing the claim.  If the Committee determines that an extension of time for processing is required, then notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90)-day period.  In no event shall such extension exceed a period of ninety (90)-days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefits determination.

(3) Claim Review Procedure.  The Claimant may request review of the denial at any time within sixty (60) days following the date the Claimant received notice of the denial of his or her claim.  The Committee shall afford the Claimant a full and fair review of the decision denying the claim and, if so requested, shall:

(i) provide the Claimant with the opportunity to submit written comments, documents, records and other information relating to the claim for benefits;

(ii) provide that the Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information (other than documents, records and other information that is legally-privileged) relevant to the Claimant’s claim for benefits; and

(iii) provide for a review that takes into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

(4) If the claim is subsequently also denied by the Review Panel, in whole or in part, then the Claimant shall be furnished with a denial notice that shall contain the following:

(i) specific reason(s) for the denial;

(ii) reference to the specific Plan provision(s) on which the denial is based; and

(iii) an explanation of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following the denial on review.

(5) The decision on review shall be issued within sixty (60) days following receipt of the request for review.  The period for decision may, however, be extended up to one hundred twenty (120) days after such receipt if the Review Panel determines that special circumstances require extension.  In the case of an extension, notice of the extension shall be furnished to the Claimant prior to the expiration of the initial sixty (60)-day period.  In no event shall such extension exceed a period of sixty (60) days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefits determination.

(6) Special Procedure for Claims Due to Disability.  To the extent an application for distribution as a result of a Disability requires the Committee or the Review Panel, as applicable, to make a determination of Disability under the terms of the Plan, then such determination shall be subject to all of the general rules described in this Article, except as they are expressly modified by this Section.

(i) The initial decision on the claim for a Disability distribution will be made within forty-five (45) days after the Plan receives the Claimant’s claim, unless special circumstances require additional time, in which case the Committee will notify the Claimant before the end of the initial forty-five (45)-day period of an extension of up to thirty (30) days.  If necessary, the Committee may notify the Claimant, prior to the end of the initial thirty (30)-day extension period, of a second extension of up to thirty (30) days.  If an extension is due to the Claimant’s failure to supply the necessary information, then the notice of extension will describe the additional information and the Claimant will have forty-five (45) days to provide the additional information.  Moreover, the period for making the determination will be delayed from the date the notification of extension was sent out until the Claimant responds to the request for additional information.  No additional extensions may be made, except with the Claimant’s voluntary consent.  The contents of the notice shall be the same as described in Section 11(A)(2) above.  If a disability distribution claim is denied in whole or in part, then the Claimant will receive notification, as described in Section 11(A)(2).

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(7)If an internal rule, guideline, protocol or similar criterion is relied upon in making the adverse determination, then the denial notice to the Claimant will either set forth the internal rule, guideline, protocol or similar criterion, or will state that such was relied upon and will be provided free of charge to the Claimant upon request (to the extent not legally-privileged) and if the Claimant’s claim was denied based on a medical necessity or experimental treatment or similar exclusion or limit, then the Claimant will be provided a statement either explaining the decision or indicating that an explanation will be provided to the Claimant free of charge upon request.

(8) Any Claimant whose application for a Disability distribution is denied in whole or in part, may appeal the denial by submitting to the Review Panel a request for a review of the application within one hundred and eighty (180) days after receiving notice of the denial.  The request for review shall be in the form and manner prescribed by the Review Panel.  In the event of such an appeal for review, the provisions of Section 11(A)(3) regarding the Claimant’s rights and responsibilities shall apply.  Upon request, the Review Panel will identify any medical or vocational expert whose advice was obtained on behalf of the Review Panel in connection with the denial, without regard to whether the advice was relied upon in making the determination.  The entity or individual appointed by the Review Panel to review the claim will consider the appeal de novo, without any deference to the initial denial.  The review will not include any person who participated in the initial denial or who is the subordinate of a person who participated in the initial denial.

(9) If the initial Disability distribution denial was based in whole or in part on a medical judgment, then the Review Panel will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment, and who was neither consulted in connection with the initial determination nor is the subordinate of any person who was consulted in connection with that determination; and upon notifying the Claimant of an adverse determination on review, include in the notice either an explanation of the clinical basis for the determination, applying the terms of the Plan to the Claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request.

(10) A decision on review shall be made promptly, but not later than forty-five (45) days after receipt of a request for review, unless special circumstances require an extension of time for processing.  If an extension is required, the Claimant will be notified before the end of the initial forty-five (45)-day period that an extension of time is required and the anticipated date that the review will be completed.  A decision will be given as soon as possible, but not later than ninety (90) days after receipt of a request for review.  The Review Panel shall give notice of its decision to the Claimant; such notice shall comply with the requirements set forth in paragraph (h) above.  In addition, if the Claimant’s claim was denied based on a medical necessity or experimental treatment or similar exclusion, then the Claimant will be provided a statement explaining the decision, or a statement providing that such explanation will be furnished to the Claimant free of charge upon request.  The notice shall also contain the following statement:  “You and your Plan may have other voluntary alternative dispute resolution options, such as mediation.  One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.”

B. Exhaustion of Claims Procedure and Right to Bring Legal Claim

No action in law or equity shall be brought more than one (1) year after the Review Panel’s affirmation of a denial of the claim, or, if earlier, more than four (4) years after the facts or events giving rise to the Claimant’s allegation(s) or claim(s) first occurred.

ARTICLE XII

MISCELLANEOUS

A. Unsecured General Creditor

Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company.  No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan II.  Any and all of the assets of the Company shall be, and remain, the general unpledged, unrestricted assets of the Company.  The obligation of the Company under Plan II shall be merely that of an unfunded and unsecured promise to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors.

B. Restriction Against Assignment

The Company shall pay all amounts payable hereunder only to the person or persons designated by Plan II and not to any other person or corporation.  No part of a Participant’s Account shall be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a Participant’s Account be subject to execution by levy,

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attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever.  If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any distribution or payment from Plan II, voluntarily or involuntarily, the Committee, in its sole and absolute discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

C. Withholding

There shall be deducted from each payment made under Plan II, all taxes that are required to be withheld by the Company, as applicable, in respect to such payment.  The Company shall have the right to reduce any payment by the amount of cash sufficient to provide the amount of said taxes.

D. Legal Representation

The Company will reimburse all reasonable legal fees and expenses incurred by a Plan II Beneficiary in seeking to obtain or enforce any right or benefit provided by Plan II.  This reimbursement right applies only to claims made after a Change of Control and only for fees and expenses incurred after the Plan II Beneficiary has exhausted the claims and appeals procedure specified in Article IX.  No reimbursement shall be made if the request is found to be frivolous by a court of competent jurisdiction.

E. Amendment, Modification, Suspension or Termination

The Committee may amend, modify, suspend or terminate Plan II in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Account, provided that a termination or suspension of Plan II or any Plan II amendment or modification that will significantly increase costs to the Company shall be approved by the Board.  In the event that this Plan II is terminated, the timing of the disposition of the amounts credited to a Participant’s Account shall occur in accordance with Article VII.

F. Governing Law

This Plan II shall be construed, governed and administered in accordance with the internal substantive laws of the State of California (other than the choice of law principles).

G. Receipt or Release

Any payment to a Plan II Beneficiary in accordance with the provisions of Plan II shall, to the extent thereof, be in full satisfaction of all claims against the Committee and the Company.  The Committee may require such Plan II Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

H. Payments on Behalf of Persons under Incapacity

In the event that any amount becomes payable under Plan II to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person.  Any payment made pursuant to such determination shall constitute a full release and discharge of the Committee and the Company.

I. No Employment or Other Rights

Participation in this Plan II shall not confer upon any person any right to be employed by the Company (or for outside director Participants, any right to remain in service as a Board member or consultant) or any other right not expressly provided hereunder.

J. Headings, etc

Not Part of Agreement.  Headings and subheadings in this Plan II are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

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K.Successorship

This Plan II shall be binding upon and inure to the benefit of any successor to the Company or its business as the result of merger, consolidation, reorganization, transfer of assets or otherwise, and any subsequent successor thereto; and any such successor shall be deemed to be the “Company” under this Plan II.  In the event of any such merger, consolidation, reorganization, transfer of assets or other similar transaction, the successor to the Company or its business or any subsequent successor thereto shall promptly notify the Trustees in writing of its successorship and furnish the Trustees with the name or names of any person or persons authorized to act for the Company.  In no event shall any such transaction described herein suspend or delay the rights of Plan II Beneficiaries to receive their vested accrued benefits hereunder.

L. Plan II Document

This document, the prospectus to Plan II, the Deferral Election, certain definitions expressly mentioned herein that are defined in the Cypress Semiconductor 401(k) Employee Savings Plan, the Trust Agreement, and any other documents identified by the Committee, comprise Plan documents for Plan II.

M. Definitions.

(1) “Account” means the bookkeeping account established to reflect the interest of a Participant or beneficiary in Plan II.

(2) “Bankruptcy Court Approval” means the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A).

(3) “Cause” means: (i) Participant’s continued failure to substantially perform Participant’s principal duties and responsibilities (other than as a result of disability or death) after thirty (30) days written notice from the Company specifying the nature of Participant’s failure and demanding that such failure be remedied; (ii) Participant’s material and continuing breach of his or her obligations to the Company set forth in any written agreement between the Company and Participant or any written policy of the Company after thirty (30) days written notice from the Company specifying the nature of Participant’s breach and demanding that such breach be remedied (unless such breach by its nature cannot be cured, in which case notice and an opportunity to cure shall not be required); (iii) Participant’s arrest for a felony, fraud or an act of moral turpitude; or (iv) act or acts of dishonesty undertaken by Participant and intended to result in personal enrichment of Participant at the expense of the Company.

(4) “Change of Control Event” means a change in ownership or effective control of the Company or in the ownership of a substantial portion of the Company’s assets, as defined under Code Section 409A.

(5) “Code Section 409A” means Code Section 409A and the proposed or final (as applicable) Treasury regulations and other official guidance promulgated thereunder.

(6) “Corporate Dissolution” means a dissolution of the Company that is taxed under Code Section 331.

(7) “Deferral Election” means the documents that encompass the (i) Deferred Compensation Plan II Beneficiary Designation, (ii) Deferred Compensation Plan II Distribution Election Form, (iii) Deferred Compensation Plan II Participation Agreement and Deferral Election, (iv) the Deferred Compensation Plan II Investment Allocation Form for Future Deferrals,  (v) the Deferred Compensation Plan II Investment Allocation Change Form, and (vi) any other documents provided to Participants relating to their Plan II deferral election decisions.

(8) “Disability” means the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees.

(9) “Domestic Relations Order” means a court order that qualifies as a domestic relations order under Code Section 414(p)(1)(B).

(10) “FICA Amount” means the aggregate Federal Insurance Contributions Act (FICA) tax imposed on any Account under Code Sections 3101, 3121(a) and 3121(v)(2), as applicable and any corresponding tax withholding provisions of applicable state, local or foreign tax laws as a result of the payment of the FICA amount.

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(11)“Involuntary Termination” means a Participant’s termination of employment (or for outside director Participants, termination of service as a consultant) with the Company because of the Company’s downsizing and/or restructuring, as determined in the sole discretion of the Committee.

(12) “OASDI” means the Old Age, Survivors and Disability Insurance portion of FICA (the “Federal Insurance Contributions Act”).

(13) “Plan Year” means the calendar year.

(14) “Sales Commissions” means “sales commission compensation” as such term is defined in Treasury Regulation §1.409A-2(a)(12)(i).

(15) “Separation From Service” means a separation from service as defined under Code Section 409A.  For this purpose, the employment relationship will be treated as continuing intact while the Participant is on military leave, sick leave or other bona fide leave of absence, except that if the period of such leave exceeds six (6) months and the Participant does not retain a right to reemployment under an applicable statute or by contract, then the employment relationship will be deemed to have terminated on the first day immediately following such 6-month period.  A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.

(16) “Specified Employee” means a “key employee” as such term is defined in Internal Revenue Code Section 416(i) without regard to paragraph five (5) thereof.  As of 2007, this generally includes (i) the top fifty (50) Company officers making more than $145,000 per year, (ii) a 5% owner of the Company, or (iii) a 1% owner of the Company making more than $150,000 per year.  For purposes of the preceding sentence, “compensation” means compensation as such term is defined in the Company’s 401(k) Employee Savings Plan.  The determination of whom is a Specified Employee shall be made on December 31 of each year, shall include any employee who qualified as a Specified Employee at any time during the preceding twelve-month period and shall be effective on the following April 1.

(17) “Unforeseeable Emergency” means a severe financial hardship to Participant resulting from an illness or accident of Participant, the Participant’s spouse or a dependent of Participant (as defined in Section 152(a) of the Code), loss of Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of Participant.

(18) “Valuation Date” means, except as otherwise specified by the Committee, (i) for distributions hereunder and for allocations of deferrals and re-allocations of amounts previously deferred, that the Participant’s Account shall be valued as of the last business day of the week preceding the transaction, and (ii) for permitted Plan II to New Plan I transfers made prior to January 1, 2009, the last business day of the Plan Year.

CYPRESS SEMICONDUCTOR CORPORATION
By:
(Title)
Date:	,2009

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Document History Page

Document Title: CYPRESS NON-QUALIFIED DEFERRED COMPENSATION PLAN II

Document Number:001-92195

Rev.	ECN No.	Orig. of Change	Description of Change
**	4371073	AMMO	Spec created.  Attachment will be updated periodically with changes approved by the Board of Directors.
		KARI	Updated plan eligibility and Supplemental Survivor Benefit.

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EX-10.18

CYPRESS

Exhibit 10.18

CYPRESS SEMICONDUCTOR CORPORATION
EMPLOYEE STOCK PURCHASE PLAN

Amended and Restated As June 2, 2015

The following constitute the provisions of the Employee Stock Purchase Plan (herein called the “Plan”) of Cypress Semiconductor Corporation (herein called the “Company”).

1. PURPOSE. The purpose of the Plan is to provide employees of the Company and its designated subsidiaries with an opportunity to purchase common stock of the Company through accumulated payroll deductions (as described herein). This Plan includes two components: a Code Section 423 Plan Component and a Non-423 Plan Component. It is the intention of the Company to have the Code Section 423 Plan Component qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code and the provisions of the Plan with respect to the Code Section 423 Component, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. In addition, this Plan authorizes the grant of options under the Non-423 Plan Component that do not qualify under Section 423 of the Code, pursuant to the rules, procedures or sub-plans adopted by the Administrator that are designed to achieve tax, securities laws or other objectives for Employees and/or the Company. Except as otherwise indicated, the Non-423 Plan Component will operate and be administered in the same manner as the Code Section 423 Plan Component.

2.DEFINITIONS.

2.1 “Act” shall mean the U.S. Securities Exchange Act of 1934, as amended.

2.2 “Administrator” shall mean the Board of the company or any committee of the members of the Board authorized to administer the Plan.

2.3 “Board” shall mean the Board of Directors of the Company.

2.4 “Code” shall mean the Internal Revenue Code of 1986, as amended.

2.5 “Code Section 423 Plan Component” shall mean the component of this Plan that is intended to meet the requirements set forth in Section 423(b) of the Code. The Code Section 423 Plan Component shall be construed, administered and enforced in accordance with Section 423(b) of the Code.

2.6 “Common Stock” shall mean the Common Stock of the Company.

2.7 “Company” shall mean Cypress Semiconductor Corporation, a Delaware corporation.

2.8 “Compensation” shall mean all regular straight time earnings, payments for overtime, shift premium, cash incentive compensation, cash incentive payments, cash bonuses and commissions (except to the extent that the exclusion of any such items for all participants is specifically directed by the Board or its committee). The Administrator shall have the discretion to determine what constitutes Compensation for Employees under the Plan, but for purposes of Employees participating in the Code Section 423 Plan Component, such determination will be applied on a uniform, non-discriminatory basis.

2.9 “Continuous Status as an Employee” shall mean the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of a leave of absence agreed to in writing by the Company, provided that such leave is for a period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by contract or statute.

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CYPRESS

2.10 “Designated Subsidiaries” shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan. The Administrator may provide that any Designated Subsidiary shall only be eligible to participate in the Non- 423 Plan Component and at any given time, a Subsidiary that is a Designated Subsidiary under the Code Section 423 Plan Component shall not be a Designated Subsidiary under the Non-423 Plan Component.

2.11 “Employee” shall mean any person, including an officer, who is customarily employed for at least twenty (20) hours per week in a calendar year by the Company or one of its Designated Subsidiaries; provided, however that any temporary or contingency work shall not be included in this definition or be permitted to participate under the Plan. For Offering Periods under the Non-423 Plan Component, Employee shall also mean any other employee of Company or one of its Designated Subsidiaries to the extent that applicable law requires participation in the Plan to be extended to such employee, as determined by the Administrator; unless such employee resides in a country that has been specifically excluded from participation in the Non-423 Component at the discretion of the Administrator.

2.12 “Exercise Date” shall mean the first Trading Day on or after December 31 and June 30 of each year.

2.13 “Exercise Period” shall mean the approximately six (6) month period commencing on one Exercise Date and ending with the next Exercise Date, except that the first Exercise Period of any Offering Period shall commence on the Offering Date and end with the next Exercise Date.

2.14 “Non-423 Plan Component” shall mean a component of this Plan that is not intended to meet the requirements set forth in Section 423(b) of the Code.

2.15 “Offering Period” shall mean a period of approximately eighteen (18) months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after December 31 and June 30 of each year and terminating on the Offering Period commencement date approximately eighteen months later.

2.16 “Offering Date” shall mean the first Trading Day of each Offering Period of the Plan.

2.17 “Payroll Deduction” (whether or not capitalized herein) shall mean with respect to the Code Section 423 Plan Component, deductions from an Employee’s or participant’s Compensation or after-tax cash contributions made under the Plan by the Employee or participant during an applicable Offering Period and within three business days following each payday applicable to the Employee or participant during such Offering Period but in any event prior to the Exercise Date for such Offering Period.

2.18 “Plan” shall mean this Employee Stock Purchase Plan, which includes a Code Section 423(b) Plan and a non-423(b) Component.

2.19 “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

2.20 “Trading Day” shall mean a day on which national stock exchanges and the Nasdaq System are open for trading.

3. ELIGIBILITY.

3.1 Any Employee as defined in paragraph 2 who is employed by the Company as of an Offering Date shall be eligible to participate in the Plan; provided that for purposes of Participants participating in the Code Section 423 Plan Component, this rule will be applied on a uniform and non-discriminatory basis.

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CYPRESS

3.2 Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering Period if the participation of such Employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code.

3.3 No Employee shall be eligible to participate in the Non-423(b) Component of the Plan if he or she is an officer or director of the Company subject to the requirements of Section 16 of the Act.

3.4 Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any subsidiary of the Company, or (ii) which permits his rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair market value of such stock determined at the time such option is granted) for each calendar year in which such option is outstanding at any time.

4. OFFERING PERIODS. The Plan shall be implemented by eighteen (18) month Offering Periods beginning approximately every six (6) months with a new Offering Period commencing on the first trading day on or after December 31 and June 30 each year, or on such other date as the Board shall determine. The Plan shall continue thereafter until terminated in accordance with paragraph 20 hereof. Subject to the requirements of paragraph 20, the Board shall have the power to change the duration of offering periods with respect to future offerings without stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first offering period to be affected.

5. PARTICIPATION.

5.1 An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deduction on the form provided by the Company and filing it with the Company’s payroll office prior to the applicable Offering Date, unless a later time for filing the subscription agreement is set by the Board for all eligible Employees with respect to a given offering; provided that Employees participating in the Non-423 Component may contribute funds to participate in the Plan through other means specified by the Administrator to comply with non-U.S. requirements. For purposes of Employees participating in the Code Section 423 Plan Component, the processing of enrollments, whether on-line or via hard copy, will be applied on a uniform and non-discriminatory basis.

5.2 Payroll deductions for a participant shall commence on the first payroll following the Offering Date and shall end on the Exercise Date of the offering to which such authorization is applicable, unless sooner terminated by the participant as provided in paragraph 11.

6. PAYROLL DEDUCTIONS.

6.1 At the time a participant files his subscription agreement, he shall elect to have payroll deductions made on each payday during the Offering Period in amounts from two percent (2%) to ten percent (10%) of his Compensation; or such greater percentage of Compensation as the Board, in its sole discretion, determines and communicates to eligible Employees prior to the commencement of the first Offering Period affected thereby. The aggregate of such payroll deductions during any Offering Period shall not exceed ten percent (10%) of his aggregate Compensation (or such greater percentage of Compensation as is determined by the Board pursuant to the preceding sentence) during said offering period.

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CYPRESS

6.2 All payroll deductions made by a participant shall be credited to his account under the Plan. A participant may not make any additional payments into such account.

6.3 A participant may discontinue his participation in the Plan as provided in paragraph 11, or may decrease or increase the rate or amount of his payroll deductions during the Offering Period (within the limitations of paragraph 6(a)) by completing and filing with the Company a new subscription agreement authorizing a change in the rate or amount of payroll deductions; provided, however, that a participant may not change the rate or amount of his payroll deductions more than two (2) times in any one calendar year. The change in rate shall be effective fifteen (15) days following the Company’s receipt of the new authorization. Subject to the limitations of paragraph 6(a), a participant’s subscription agreement shall remain in effect for successive Offering Periods unless revised as provided herein or terminated as provided in paragraph 11.

6.4 Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and paragraph 3(b) herein, a participant’s payroll deductions may be decreased to zero percent (0%) at such time during any Exercise Period which is scheduled to end during the current calendar year that the aggregate of all payroll deductions accumulated with respect to such Exercise Period and any other Exercise Period ending within the same calendar year equal $21,250. Payroll deductions shall recommence at the rate provided in such participant’s subscription agreement at the beginning of the first Exercise Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in paragraph 11.

7. GRANT OF OPTION.

7.1 On the Offering Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on each Exercise Date during such Offering Period a number of shares of the Company’s Common Stock determined by dividing such Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the lower of (i) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Offering Date or (ii) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Exercise Date; provided, however, that the maximum number of Shares an Employee may purchase during each Offering Period shall be determined at the Offering Date by dividing $25,000 by the fair market value of a share of the Company’s Common Stock on the Offering Date, and provided further that such purchase shall be subject to the limitations set forth in paragraphs 3.4 and 13 hereof. In the case of the Non-423 Component, the number of shares shall be determined as set forth in the preceding sentence or determined pursuant to such manner or method as determined by the Administrator to comply with non-U.S. requirements. Exercise of the option shall occur as provided in paragraph 8, unless the participant has withdrawn pursuant to paragraph 11, and shall expire on the last day of the Offering Period. Fair market value of a share of the Company’s Common Stock shall be determined as provided in paragraph 7(b) herein.

7.2 The option price per share of the shares offered in a given Exercise Period shall be the lower of: (i) eighty-five percent (85%) of the fair market value of a share of the Common Stock of the Company on the Offering Date; or (ii) eighty-five percent (85%) of the fair market value of a share of the Common Stock of the Company on the Exercise Date, and in the case of the Non-423 Component, it shall be the lower of prices above or determined pursuant to such manner or method as determined by the Administrator to comply with non-U.S. requirements. The fair market value of the Company’s Common Stock on a given date shall be determined by the Board in its discretion; provided, however, that where there is a public market for the Common Stock, the fair market value per share shall be the closing price of the Common Stock for such date on the NASDAQ or on such other stock exchange as the Company’s Common Stock may be traded or, if not traded on a stock exchange, as reported by the NASDAQ National Market System, or, in the event the Common Stock is not listed on a stock exchange or NASDAQ’s National Market System, the fair market value per share shall be the mean of the bid and asked prices of the Common Stock reported for such date in over-the-counter trading.

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CYPRESS

8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as provided in paragraph 11, his option for the purchase of shares will be exercised automatically on each Exercise Date of the Offering Period, and the maximum number of full shares subject to the option shall be purchased for such participant at the applicable option price with the accumulated payroll deductions in his account.  During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him.

9. DELIVERY. As promptly as practicable after the Exercise Date of each Exercise Period, the Company shall arrange the delivery to each participant, as appropriate, of a certificate representing the shares purchased upon exercise of his option or an electronic notice reflecting the allocation of such shares to his brokerage account. Any cash remaining to the credit of a participant’s account under the Plan after a purchase by him of shares at the termination of each Exercise Period which is insufficient to purchase a full share of common stock of the Company shall be applied to the participant’s account for the next Exercise Period.  Any other excess accumulated payroll deductions shall be returned to the participant.

10. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. In the event that the fair market value of the Company’s Common Stock is lower on an Exercise Date than it was on the Offering Date for that Offering Period, all employees participating in the Plan on the Exercise Date shall be deemed to have withdrawn from the Offering Period immediately after the exercise of their option on such Exercise Date and to have enrolled as participants in the newly commencing Offering Period. A participant may elect to remain in the previous Offering Period by filing a written statement declaring such election with the Company prior to the time of the automatic change to the new Offering Period.

11. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

11.1 A participant may withdraw all but not less than all the payroll deductions credited to his account and not yet used to exercise his option under the Plan at any time by giving written notice to the Company. Notwithstanding the foregoing, for purposes of Employees participating in the Code Section 423 Plan Component, the processing of withdrawals, whether on-line or via hard copy, will be applied in a uniform and non-discriminatory basis. All of the participant’s payroll deductions credited to his account will be paid to such participant promptly after receipt of notice of withdrawal and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offering Period. If a participant withdraws from an Offering Period, payroll deductions will not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement. Notwithstanding any other provision of the Plan to the contrary, in the event a participant has elected to make payroll deduction contributions other than through deductions from his Compensation, such participant shall be deemed to have withdrawn from the Plan in accordance with this Section 11.1 if any such payroll deduction contribution is not received by the Company within three business days following an applicable payday.

11.2 Upon termination of the participant’s Continuous Status as an Employee prior to an Exercise Date for any reason, including retirement or death, the payroll deductions credited to such participant’s account during the Offering Period but not yet used to exercise the option will be returned to such participant or, in the case of his death, to the person or persons entitled thereto under paragraph 15, and such participant’s option will be automatically terminated.

11.3 In the event an Employee fails to remain in Continuous Status as an Employee of the Company during an Offering Period in which the Employee is a participant, he will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to his account will be returned to such participant and such participant’s option terminated.

11.4 A participant’s withdrawal from an Offering Period will not have any effect upon his eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws.

Page 5 of 10

CYPRESS

11.5 A participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company.

12.INTEREST. No interest shall accrue on the payroll deductions of a participant in the Plan, except as may be required by applicable law, as determined by the Administrator, for participants in the Non-423 Plan Component (or the Code Section 423 Plan Component if permitted under Section 423 of the Code).

13.STOCK.

13.1 The maximum number of shares of the Company’s Common Stock which are available for future issuance under the Plan shall be 4,210,080 shares, plus, commencing on the first day of the Company’s 2014 fiscal year, an annual increase equal to the lesser of (i) 2,000,000 shares, (ii) .75% of the Issued Shares (as defined below) as of the last day of the immediately preceding fiscal year, or (iii) a lesser amount determined by the Board, all subject to adjustment upon changes in capitalization of the Company as provided in paragraph 19. “Issued Shares” shall mean the number of shares of Common Stock of the Company outstanding on such date plus any shares reacquired by the Company during the fiscal year that ends on such date. If the total number of shares which would otherwise be subject to options granted pursuant to paragraph 7(a) hereof on the Exercise Date exceeds the number of shares then available under the Plan (after deduction of all shares for which options have been exercised or are then outstanding), the Company shall make a pro rata allocation of the shares remaining available for option grant in as uniform a manner as shall be practicable and as it shall determine to be equitable; provided, however, for purposes of Employees participating in the Code Section 423 Plan Component, any pro rata allocation, will be applied on a uniform and non-discriminatory basis. In such event, the Company shall give written notice of such reduction of the number of shares subject to the option to each Employee affected thereby and shall similarly reduce the rate of payroll deductions, if necessary.

13.2 The participant will have no interest or voting right in shares covered by his option until such option has been exercised.

13.3 Shares to be delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his spouse.

14. ADMINISTRATION. The Plan shall be administered by the Administrator. The Administrator is specifically authorized to adopt rules, procedures and subplans, which for purposes of the Non-423 Component may be outside the scope of Section 423 of the Code, regarding, but not limited to, eligibility to participate, the definition of Compensation, handling of payroll deductions, making of contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock certificates which vary with local requirements. The administration, interpretation or application of the Plan by the Administrator shall be final, conclusive and binding upon all participants.

15. DESIGNATION OF BENEFICIARY.

15.1 Unless otherwise determined by the Administrator, a participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to the end of the Offering Period but prior to delivery to him of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to the Exercise Date of the Offering Period.

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CYPRESS

15.2 Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

16. TRANSFERABILITY. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in paragraph 15 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with paragraph 11.

17. USE OF FUNDS. All payroll deductions received or held by the Company under the plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions except for deductions or contributions made to a Non-423 Component where, as determined by the Administrator, non-U.S. law requires segregation of such amounts. Until shares are issued, participants shall only have the rights of an unsecured creditor, although participants in the Non-423 Component may have additional rights where required under local law, as determined by the Administrator.

18. REPORTS. Individual accounts will be maintained for each participant in the plan. Statements of account will be given to participating employees promptly following the exercise date, which statements will set forth the amounts of payroll deductions, the per share purchase price, the number of shares purchased and the remaining cash balance, if any.

19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required action by the stockholders of the Company, the number of shares of common stock covered by each option under the plan which has not yet been exercised and the number of shares of common stock which have been authorized for issuance under the plan but have not yet been placed under option, including the annual share replenishment limit of two million shares set forth in Section 13, (collectively, the “reserves”) as well as the price per share of common stock covered by each option under the plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of common stock resulting from a stock split or the payment of a stock dividend (but only on the common stock) or any other increase or decrease in the number of shares of common stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration”. Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of common stock subject to an option. In the event of the proposed dissolution or liquidation of the Company, the offering period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the participant shall have the right to exercise the option as to all of the option stock, including shares as to which the option would not otherwise be exercisable. If the Board makes an option fully exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board shall notify the participant that the option shall be fully exercisable for a period of thirty (30) days from the date of such notice, and the option will terminate upon the expiration of such period. The Board may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, and in the event of the Company being consolidated with or merged into any other corporation.

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CYPRESS

20. AMENDMENT OR TERMINATION.

20.1 The Administrator may at any time and for any reason terminate or amend the Plan. Except as otherwise provided in the Plan, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Administrator on any Exercise Date if the Administrator determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder approval in such a manner and to such a degree as required.

20.2 Without stockholder consent and without regard to whether any participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan.

20.3 In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

20.3.1 increasing the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;

20.3.2 shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and

20.3.3 allocating shares.

21. NOTICES. All notices or other communications by a participant to the Company under or in connection with the plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the U.S. Securities Act of 1933, as amended, the Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

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CYPRESS

23 CODE SECTION 409A. The Code Section 423 Plan Component is exempt from the application of Code Section 409A. The Non-423 Plan Component is intended to be exempt from Code Section 409A under the short-term deferral exception and any ambiguities herein will be interpreted to so be exempt from Code Section 409A. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Administrator determines that an option granted under the Plan may be subject to Code Section 409A or that any provision in the Plan would cause an option under the Plan to be subject to Code Section 409A, the Administrator may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Administrator determines is necessary or appropriate, in each case, without the participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with Code Section 409A, but only to the extent any such amendments or action by the Administrator would not violate Code Section 409A. Notwithstanding the foregoing, the Company shall have no liability to a participant or any other party if the option to purchase Common Stock under the Plan that is intended to be exempt from or compliant with Code Section 409A is not so exempt or compliant or for any action taken by the Administrator with respect thereto. The Company makes no representation that the option to purchase Common Stock under the Plan is compliant with Code Section 409A.

24. TERM OF PLAN. Except to the extent it is terminated earlier pursuant to Section 20, the plan shall remain in effect until May 10, 2023.

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CYPRESS

Document History Page

Document Title:	EMPLOYEE STOCK PURCHASE PLAN (ESPP)
Document Number:	001-88629

Rev.	ECN No.	Orig. of Change	Description of Change
**	4098042	KIC	New spec.
*A	4905150	GMCH	Changes to update for non-US legal requirements.

Page 10 of 10

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF CYPRESS SEMICONDUCTOR CORPORATION

Name	Jurisdiction of Incorporation
Cypress Semiconductor Technology Ltd.	Cayman Islands
Spansion International IP, Inc.	Cayman Islands
Spansion LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-203038 and 333-95711), Form S-4 (No. 333-201173) and Form S-8 (Nos. 333-203041, 333-199798, 333-189612, 333-185439, 333-174673, 333-165750, 333-154748, 333-150484, 333-131494, 333-119049, 333-108175, 333-104672, 333-101479, 333-99221, 333-91764, 333-71528, 333-66074, 333-58896, 333-44264, 333-93839, 333-93719, 333-76665, 333-68703, 333-52035, 333-24831, 333-00535, 033-59153, 033-57499, and 033-54637) of Cypress Semiconductor Corporation of our report dated March 1, 2016 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Jose, California

March 1, 2016

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, T.J. Rodgers, certify that:

1. I have reviewed this Annual Report on Form 10-K 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.

Date: March 1, 2016	By:	/ S /    T.J. RODGERS
		T.J. Rodgers
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Thad Trent, certify that:

1. I have reviewed this Annual Report on Form 10-K 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.

Date: March 1, 2016	By:	/ S /    THAD TRENT
		Thad Trent
		Executive Vice President, Finance and Administration and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, T.J. Rodgers, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Cypress Semiconductor Corporation for the year ended January 3, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Cypress Semiconductor Corporation.

Date: March 1, 2016	By:	/ S /    T. J. RODGERS
		T. J. Rodgers
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Thad Trent, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Cypress Semiconductor Corporation for the year ended January 3, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Cypress Semiconductor Corporation.

Date: March 1, 2016	By:	/ S /    THAD TRENT
		Thad Trent
		Executive Vice President, Finance and Administration and Chief Financial Officer

XML

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Jan. 03, 2016	Feb. 26, 2016	Jun. 28, 2015
Document Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jan. 03, 2016
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	CY
Entity Registrant Name	CYPRESS SEMICONDUCTOR CORP /DE/
Entity Central Index Key	0000791915
Current Fiscal Year End Date	--01-03
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		314,558,619
Entity Public Float			$ 3.9

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Current assets:
Cash and cash equivalents	$ 226,690	$ 103,736
Short-term investments	871	15,076
Accounts receivable, net	292,736	75,984
Inventories	243,595	88,227
Other current assets	86,880	29,288
Total current assets	850,772	312,311
Property, plant and equipment, net	425,003	237,763
Goodwill	1,738,882	65,696
Intangible assets, net	789,195	33,918
Other long-term assets	200,409	93,593
Total assets	4,004,261	743,281
Current liabilities:
Accounts payable	143,383	42,678
Accrued compensation and employee benefits	54,850	35,182
Deferred margin on sales to distributors	73,370	75,569
Dividends payable	36,520	17,931
Income taxes payable	3,262	2,710
Current portion of long-term debt	14,606	6,143
Other current liabilities	202,405	94,619
Total current liabilities	528,396	274,832
Deferred income taxes and other tax liabilities	51,737	18,784
Revolving credit facility and long-term debt	673,659	237,107
Other long-term liabilities	37,784	10,693
Total liabilities	$ 1,291,576	$ 541,416
Commitments and contingencies (Note 19)
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; 481,912 and 306,167 shares issued; 332,276 and 163,013 shares outstanding at January 3, 2016 and December 28, 2014, respectively	$ 4,637	$ 3,039
Additional paid-in-capital	5,623,411	2,675,170
Accumulated other comprehensive loss	(227)	(46)
Accumulated deficit	(758,780)	(379,913)
Stockholders’ equity before treasury stock	4,869,041	2,298,250
Less: shares of common stock held in treasury, at cost; 149,636 and 143,154 shares at January 3, 2016 and December 28, 2014, respectively	(2,148,193)	(2,090,493)
Total Cypress stockholders’ equity	2,720,848	207,757
Non-controlling interest	(8,163)	(5,892)
Total equity	2,712,685	201,865
Total liabilities and equity	$ 4,004,261	$ 743,281

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jan. 03, 2016	Dec. 28, 2014
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 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	$ 0.01	$ 0.01
Common stock, shares authorized	650,000,000	650,000,000
Common stock, shares issued	481,912,000	306,167,000
Common stock, shares outstanding	332,276,000	163,013,000
Common stock held in treasury, shares	149,636,000	143,154,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Income Statement [Abstract]
Revenues	$ 1,607,853	$ 725,497	$ 722,693
Costs and expenses:
Cost of revenues	1,207,850	361,820	384,121
Research and development	281,391	164,560	190,906
Selling, general and administrative	323,570	170,741	182,671
Amortization of acquisition-related intangible assets	108,335	6,683	7,833
Restructuring costs (benefit)	90,084	(1,180)	15,357
Gain on divestiture of TrueTouch® Mobile business	(66,472)
Total costs and expenses, net	1,944,758	702,624	780,888
Operating income (loss)	(336,905)	22,873	(58,195)
Interest expense	(16,356)	(5,763)	(8,112)
Other income (expense), net	(3,769)	3,303	10,337
Income (loss) before income taxes and non-controlling interest	(357,030)	20,413	(55,970)
Income tax benefit (provision)	(16,960)	1,173	7,761
Equity in net loss of equity method investee	(7,148)	(5,068)	(1,878)
Net Income (loss)	(381,138)	16,518	(50,087)
Net income (loss) attributable to non-controlling interest, net of taxes	2,271	1,418	1,845
Net income (loss) attributable to Cypress	$ (378,867)	$ 17,936	$ (48,242)
Net income (loss) per share attributable to Cypress:
Basic	$ (1.25)	$ 0.11	$ (0.32)
Diluted	(1.25)	0.11	(0.32)
Cash dividends declared per share	$ 0.44	$ 0.44	$ 0.44
Shares used in net income (loss) per share calculation:
Basic	302,036	159,031	148,558
Diluted	302,036	169,122	148,558

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Net income (loss)	$ (381,138)	$ 16,518	$ (50,087)
Other comprehensive income (loss), net of taxes:
Net change in unrealized gains (losses) on available-for-sale securities	28	131	267
Reclassification of net realized (gains) losses on available-for-sale securities included in net income (loss)		171	885
Net unrecognized gain on the Defined Benefit Plan	26
Net unrealized gain (loss) arising during the period	(1,651)
Net unrealized gain (loss) on cash flow hedges	(235)
Other comprehensive gain (loss)	(181)	302	1,152
Comprehensive income (loss)	(381,319)	16,820	(48,935)
Comprehensive loss attributable to non-controlling interest	2,271	1,418	1,845
Comprehensive income (loss) attributable to Cypress	(379,048)	$ 18,238	$ (47,090)
Sales Revenue, Net | Cash Flow Hedging | Effective Portion
Other comprehensive income (loss), net of taxes:
Net loss (gain) cash flow hedge reclassified into earnings	(1,678)
Cost of revenues | Cash Flow Hedging | Effective Portion
Other comprehensive income (loss), net of taxes:
Net loss (gain) cash flow hedge reclassified into earnings	3,014
Cost of revenues | Cash Flow Hedging | Ineffective Portion
Other comprehensive income (loss), net of taxes:
Net loss (gain) cash flow hedge reclassified into earnings	$ 80

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Treasury Stock	Noncontrolling Interest
Balances at beginning of year (in shares) at Dec. 30, 2012		286,903				142,679
Balances at beginning of year at Dec. 30, 2012	$ 175,787	$ 2,868	$ 2,612,579	$ (444)	$ (349,607)	$ (2,085,570)	$ (4,039)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Cypress	(48,242)				(48,242)
Net unrealized gain on available-for-sale investments	267			267
Issuance of common shares under employee stock plans (in shares)		9,443
Issuance of common shares under employee stock plans	43,344	$ 95	43,249
Withholding of common shares for tax obligations on vested restricted shares (in shares)						453
Withholding of common shares for tax obligations on vested restricted shares	(4,663)					$ (4,663)
Stock-based compensation	75,447		75,447
Dividends	(65,822)		(65,822)
Noncontrolling interest	(435)						(435)
Balances at end of year (in shares) at Dec. 29, 2013		296,346				143,132
Balances at end of year at Dec. 29, 2013	175,683	$ 2,963	2,665,453	(177)	(397,849)	$ (2,090,233)	(4,474)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Cypress	17,936				17,936
Net unrealized gain on available-for-sale investments	131			131
Yield Enhancement Structured Agreements Net	318		318
Issuance of common shares under employee stock plans (in shares)		9,821
Issuance of common shares under employee stock plans	33,147	$ 76	33,071
Withholding of common shares for tax obligations on vested restricted shares (in shares)						22
Withholding of common shares for tax obligations on vested restricted shares	(260)					$ (260)
Stock-based compensation	46,663		46,663
Dividends	(70,335)		(70,335)
Noncontrolling interest	(1,418)						(1,418)
Balances at end of year (in shares) at Dec. 28, 2014		306,167				143,154
Balances at end of year at Dec. 28, 2014	201,865	$ 3,039	2,675,170	(46)	(379,913)	$ (2,090,493)	$ (5,892)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to Cypress	(378,867)				$ (378,867)
Net unrealized gain on available-for-sale investments	(181)			$ (181)
Changes in employee deferred compensation plan assets	(227)					$ (227)
Yield enhancement structured agreements, net (in shares)						1,000
Yield Enhancement Structured Agreements Net	(9,214)	$ (96)	(9,118)
Assumption of stock options and awards related to Spansion Merger (in shares)		163,932
Assumption of stock options and awards related to Spansion Merger	2,666,865		2,666,865
Assumption of 2.00% Senior Exchangeable Notes related to Spansion Merger	287,362		287,362
Issuance of common shares under employee stock plans (in shares)		11,813
Issuance of common shares under employee stock plans	55,557	$ 1,694	$ 53,863
Withholding of common shares for tax obligations on vested restricted shares (in shares)						234
Withholding of common shares for tax obligations on vested restricted shares	(2,455)					$ (2,455)
Repurchases of common shares (in shares)						5,248
Repurchases of common shares	(55,018)					$ (55,018)
Stock-based compensation	95,814		$ 95,814
Dividends	(146,545)		(146,545)
Noncontrolling interest	(2,271)						$ (2,271)
Balances at end of year (in shares) at Jan. 03, 2016		481,912				149,636
Balances at end of year at Jan. 03, 2016	$ 2,712,685	$ 4,637	$ 5,623,411	$ (227)	$ (758,780)	$ (2,148,193)	$ (8,163)

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical)	12 Months Ended
	Jan. 03, 2016
Spansion Inc
Senior exchangeable notes, Interest rate	2.00%

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Cash flows from operating activities:
Net income (loss)	$ (381,138)	$ 16,518	$ (50,087)
Adjustments to reconcile income (loss) to net cash provided by operating activities:
Stock-based compensation expense	93,527	50,170	73,020
Depreciation and amortization	241,584	46,734	48,393
Restructuring costs	8,581	(1,180)	15,357
(Gain) loss on sale or retirement of property and equipment, net	424	(196)
Gain on divestiture of TrueTouch® Mobile business	(66,472)
Equity in loss of equity method investee	7,148	5,068	1,878
Accretion of interest expense on convertible notes	2,537
Unrealized loss from trading securities	3,191	1,667
Other	3,042	272	(718)
Changes in operating assets and liabilities, net of effects of an acquisition and divestiture:
Accounts receivable	(117,371)	5,099	1,837
Inventories	288,264	9,140	29,419
Other current and long-term assets	(5,977)	10,560	8,354
Accounts payable and other liabilities	(54,294)	(13,126)	(51,270)
Deferred margin on sales to distributors	(14,245)	(27,390)	(8,615)
Net cash provided by operating activities	8,801	103,336	67,568
Cash flows from investing activities:
Proceeds from maturities of available-for-sale investments	800	16,556	58,684
Proceeds from sales of available-for-sale investments	16,584		5,730
Purchases of marketable securities	(1,530)	(23,425)	(23,137)
Business acquisition, net of cash acquired	(105,130)
Acquisition of property, plant and equipment	(47,206)	(20,947)	(36,627)
Proceeds from divestiture	88,635	3,240
Proceeds from sales of property and equipment			6,661
Cash paid for cost and equity method investments	(34,126)	(18,400)	(11,961)
Contributions to (distributions from) deferred compensation plan	1,511	(1,283)	(1,247)
Proceeds from sales of equity investments			2,158
Other	1,375	2,103
Net cash provided by (used in) investing activities	(79,087)	(42,156)	261
Cash flows from financing activities:
Repurchase of treasury stock	(55,018)
Issuance of common shares under employee stock plans	52,857	31,755	38,681
Yield enhancement structured agreements settled in cash, net	387	318
Yield enhancement structured agreements settled in common stock, net	(9,601)
Payments of dividends	(127,995)	(69,248)	(64,819)
Proceeds from settlement of capped calls	25,293
Repayment of equipment leases, loans and others	(9,420)	(6,278)	(8,880)
Borrowings under revolving credit facility and line of credit	537,000	264,000	140,000
Borrowings under Term Loan A	97,228
Repayments of revolving credit facility and line of credit loan	(315,000)	(264,000)	(145,000)
Financing costs	(2,491)		(3,276)
Repayments of other financing agreements			(3,140)
Proceeds from sale of shares to noncontrolling interest			1,411
Net cash provided by (used in) financing activities	193,240	(43,453)	(45,023)
Net increase in cash and cash equivalents	122,954	17,727	22,806
Cash and cash equivalents, beginning of year	103,736	86,009	63,203
Cash and cash equivalents, end of year	226,690	103,736	86,009
Supplemental disclosures:
Dividends payable	36,549	17,931	16,850
Cash paid for income taxes	8,736	4,598	6,921
Cash paid for interest	9,670	5,774	$ 4,825
Unpaid purchases of property, plant and equipment	$ 6,663	$ 1,688

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jan. 03, 2016

Description Of Business And Summary Of Significant Accounting Policies [Abstract]

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Cypress Semiconductor Corporation (“Cypress” or the “Company”) designs, develops, manufactures and markets high-performance, high quality, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. The Company’s offerings include the NOR flash memories, F-RAM^TM and SRAM, Traveo^TM microcontrollers, the industry’s only PSoC^® programmable system-on-chip solutions, analog and PMIC Power Management ICs, Capsense® capacitive touch-sensing controllers, and Wireless BLE Bluetooth Low-Energy and universal serial bus (“USB”) connectivity solutions. The Company serves numerous markets including industrial, mobile handsets, consumer, computation, data communications, automotive, and military markets.

The Company’s operations outside of the United States include its assembly and test plants in Malaysia and the Philippines, and sales offices and design centers located in various parts of the world.

On March 12, 2015, the Company completed the merger (“Merger”) with Spansion Inc. ("Spansion") pursuant to the Agreement and Plan of Merger and Reorganization, as of December 1, 2014 (the "Merger Agreement"), for a total consideration of approximately $2.8 billion. In accordance with the terms of the Merger Agreement, Spansion shareholders received 2.457 Cypress shares for each Spansion share they owned. The shareholders of each company initially owned approximately 50% of the post-merger company. The Merger has been accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standard Topic 805, Business Combinations, with Cypress treated as the accounting acquirer. See Note 2 for a detailed discussion of the Merger with Spansion. 

Basis of Preparation

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 2015 ended on January 3, 2016, Fiscal 2014 ended on December 28, 2014 and fiscal 2013 ended on December 29, 2013. Fiscal 2015 contained 53 weeks. Fiscal years 2014 and 2013 each contained 52 weeks.   The additional week in 2015 did not materially affect the Company's results of operations or financial position.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and include the accounts of Cypress and all of its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The following reclassifications have been made in the presentation of Cypress’s Consolidated Balance Sheet as of December 28, 2014 to conform to current year classification:

·$6.1 million reclassified from other current liabilities to current portion of long-term debt,

·$10.1 million reclassified from other long-term liabilities to revolving credit facility and long-term debt, and

·$19.6 million reclassified from deferred margin on sales to distributors to other current liabilities.

During fiscal 2014, the Company recorded out-of-period correcting adjustments to write off certain manufacturing and subcontractor costs that were capitalized within other current assets in previous periods. These corrections resulted in a decrease of net income of $2.6 million for the twelve months ended December 28, 2014. The Company recorded these corrections in the aggregate totaling $2.6 million in cost of revenues in the twelve months ended December 28, 2014. Management assessed the impact of these errors and concluded that the amounts were not material, either individually or in the aggregate, to any prior periods.

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these items. See Note 5 for a detailed discussion of fair value measurements.

Cash and Cash Equivalents

Highly liquid investments with original or remaining maturities of ninety days or less at the date of purchase are considered cash equivalents.

Investments

All of the Company’s investments in equity securities in publicly traded companies are classified as trading securities. All of the Company’s investments in debt securities are classified as available-for-sale securities. Available-for-sale debt securities with maturities greater than twelve months are classified as short-term when they are intended for use in current operations. Investments in available-for-sale securities are reported at fair value with unrealized gains and losses, net of tax, as a component of “Accumulated other comprehensive income (loss)” in the Consolidated Balance Sheets. The Company also has minority equity investments in privately-held companies. Minority equity investments in which the Company’s ownership interest is less than 20% are carried at cost less any other than temporary impairment write-downs. Minority equity investments in which the Company’s ownership interest is 20% or greater are accounted for using the equity method of accounting. Under the equity method of accounting, the Company is required to record its interest in the investee's reported net income or loss for each reporting period. None of the Company’s equity investments are a variable interest entity. The Company’s minority equity investments are included in “Other assets” in the Consolidated Balance Sheets.

The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary. See Note 5 for a detailed discussion of the impairment losses recorded on the Company’s investments.

Inventories

Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market. Market is based on estimated net realizable value. The Company writes down its inventories which have become obsolete or are in excess of anticipated demand or net realizable value based upon assumptions about demand forecasts, product life cycle status, product development plans and current sales levels. Inventory reserves are not relieved until the related inventory has been sold or scrapped.

Long-Lived Assets

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. Leasehold improvements and leasehold interests are amortized over the shorter of the estimated useful lives of the assets or the remaining term of the lease. Estimated useful lives are as follows:

Equipment	3 to 10 years
Buildings and leasehold improvements	5 to 20 years
Furniture and fixtures	3 to 7 years

The Company evaluates its long-lived assets, including property, plant and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors considered important that could result in an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of assets, significant negative industry or economic trends, and a significant decline in the Company’s stock price for a sustained period of time. Impairment is recognized based on the difference between the estimated fair value of the asset and its carrying value. Estimated fair value is generally measured based on quoted market prices, if available, appraisals or discounted cash flow analyses.

Goodwill and Intangible Assets

Goodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

The Company assesses goodwill for impairment on an annual basis on the first day of the fourth quarter of our fiscal year and if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. In accordance with ASU 2011-08, Testing Goodwill for Impairment, qualitative factors can be assessed to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required.

Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and are reviewed for impairment as discussed above. See Note 4 for more information.

Revenue Recognition

The Company generates revenues by selling products to distributors, various types of manufacturers including original equipment manufacturers (“OEMs”) and electronic manufacturing service providers (“EMSs”). The Company recognizes revenues on sales to OEMs and EMSs upon shipment provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no significant remaining obligations.

Sales to certain distributors are made under agreements which provide the distributors with price protection, stock rotation and other allowances under certain circumstances. When the Company determines that the uncertainties exist for the rights given to these distributors, revenues and costs related to distributor sales are deferred until products are sold by the distributors to the end customers. In those circumstances, revenues are recognized upon receiving notification from the distributors that products have been sold to the end customers. In these cases, at the time of shipment to distributors, the Company records a trade receivable for the selling price since there is a legally enforceable right to receive payment, relieves inventory for the value of goods shipped since legal title has passed to the distributors, and defers the related margin and price adjustment as deferred income on sales to distributors on the Consolidated Balance Sheets. Any effects of distributor price adjustments are recorded as a reduction to deferred income at the time the distributors sell the products to the end customers and the distributor submits a valid claim for the price adjustment.

The Company has historically recognized a significant portion of revenue through distributors at the time the distributor resold the product to its end customer (also referred to as the sell-through basis of revenue recognition) given the difficulty in estimating the ultimate price of these product shipments and amount of potential returns. The Company continuously reassesses its ability to reliably estimate the ultimate price of these products and, over the past several years, has made investments in its systems and process around the distribution channel to improve the quality of the information it receives from its distributors. Given these ongoing investments, and based on the financial framework for estimating potential price adjustments, beginning the fourth quarter of 2014, the Company concluded that it was able to reasonably estimate returns and pricing concessions on certain product families and with certain distributors, and recognized revenue at the time it shipped these specific products to the identified distributors, less its estimate of future price adjustments and returns. As a result of this change, the Company recognized an incremental $12.3 million of revenue during the fourth quarter of fiscal 2014. The impact of this change resulted in an increase of $6.2 million to net income attributable to Cypress for fiscal 2014, or $0.04 per basic and diluted share. During fiscal 2015, the Company recognized $40.9 million of incremental revenue from this change on additional product families, which resulted in a decrease to the net loss of $25.0 million or $0.07 per basic and diluted shares.

The Company records as a reduction to revenues reserves for sales returns, price protection and allowances based upon historical experience rates and for any specific known customer amounts. The Company also provides certain distributors and EMSs with volume-pricing discounts, such as rebates and incentives, which are recorded as a reduction to revenues at the time of sale. Historically these volume discounts have not been significant.

Employee Benefit Plans

In connection with the Merger, the Company assumed the Spansion Innovates Group Cash Balance Plan (a defined benefit pension plan) in Japan. A defined benefit pension plan is accounted for on an actuarial basis, which requires the selection of various assumptions such as turnover rates, discount rates and other factors. The discount rate assumption is determined by comparing the projected benefit payments to the Japanese corporate bonds yield curve as of end of the most recently completed fiscal year. The benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement. This liability is recorded in other long term liabilities on the Consolidated Balance Sheets. Net periodic pension cost is recorded in the Consolidated Statements of Operations and includes service cost. Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money associated with the passage of time on the PBO. Gains or losses resulting from a change in the PBO if actual results differ from actuarial assumptions will be accumulated and amortized over the future life of the plan participants if they exceed 10% of the PBO, being the corridor amount. If the amount of a net gain or loss does not exceed the corridor amount, it will be recorded to other comprehensive income (loss). See Note 17 for further details of the pension plans.

Cash Flow Hedges

The Company enters into cash flow hedges to protect non-functional currency inventory purchases and certain other operational expenses and has an 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 does not enter into derivative securities for speculative purposes. The Company’s foreign currency forward contracts that were designated as cash flow hedges have maturities between three and nine months. The maximum original duration of any contract allowable under the Company’s hedging policy is 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 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 other income (expense), net in the 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 other income (expense), net in its Consolidated Statements of Operations at that time.

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 other income (expense), net in its Consolidated Statements of Operations.

See Note 11 for further details of the contracts.

Shipping and Handling Costs

The Company records costs related to shipping and handling in cost of revenues.

Advertising Costs

Advertising costs consist of development and placement costs of the Company’s advertising campaigns and are charged to expense when incurred. Advertising expense was $5.0 million, $3.7 million and $2.9 million for fiscal years 2015, 2014 and 2013, respectively.

Foreign Currency Transactions

The Company uses the United States dollar as the functional currency for all of its foreign entities. Assets and liabilities of these entities are remeasured into the United States dollar using exchange rates in effect at the end of the period, except for non-monetary assets and liabilities, such as property, plant and equipment, which are remeasured using historical exchange rates. Revenues and expenses are remeasured using average exchange rates in effect for the period, except for items related to assets and liabilities, such as depreciation, that are remeasured using historical exchange rates. The total gains (losses) from foreign currency re-measurement for fiscal years 2015, 2014 and 2013 were $0.7 million, $1.4 million and $2.8 million, respectively and are included in “Other income (expense), net” in the Consolidated Statements of Operations. For additional details related to items included in “Other income (expense), net,” see Note 13.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash equivalents, debt investments and trade accounts receivable. The Company’s investment policy requires cash investments to be placed with high-credit quality institutions and limits the amount of credit risk from any one issuer. The Company performs ongoing credit evaluations of its customers’ financial condition whenever deemed necessary and generally does not require collateral. The Company maintains an allowance for doubtful accounts based upon the expected collectability of all accounts receivable.

Outstanding accounts receivable from three of the Company’s distributors, accounted for 42%, 11% and 9%, respectively, of the consolidated accounts receivable as of January 3, 2016. Outstanding accounts receivable from three of the Company’s distributors, accounted for 12%, 11% and 9%, of the consolidated accounts receivable as of December 28, 2014.

Revenue generated through three of the Company’s distributors accounted for 25%, 10%, and 7%, respectively, of the consolidated revenue for fiscal 2015 . No end customer accounted for 10% of the consolidated revenue for fiscal 2015.

Revenue generated through three of the Company’s distributors, accounted for 13%, 10% and 10% respectively, of the consolidated revenue for fiscal 2014. No end customers accounted for 10% or more of the consolidated revenue for fiscal 2014.

Revenue generated through two of the Company’s distributors accounted for 11% and 10%, respectively, of the consolidated revenue for fiscal 2013. One end customer purchased the Company’s products both from the Company’s distributors and directly from the Company. Shipments to this end customer accounted for 12% of the consolidated revenue for fiscal 2013.

Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when management cannot conclude that it is more likely than not that a tax benefit will be realized.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The Company recognizes potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

Impact ofRecently Issued Accounting Pronouncements

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2015-02, Amendments to the Consolidation Analysis, which is intended to improve upon and simplify the consolidation assessment required to evaluate whether organizations should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. The new accounting guidance is effective for interim and fiscal years beginning after December 15, 2015. The Company does not believe that the adoption of this guidance will have any material impact on its financial condition or results of operations.

In May 2014, the FASB issued an ASU on revenue from contracts with customers, ASU No. 2014-09, "Revenue from Contracts with Customers." This standard update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The guidance is effective for annual reporting periods including interim reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods including interim reporting periods beginning after December 15, 2016. As the new standard will supersede substantially all existing revenue guidance affecting the Company under GAAP, it could impact revenue and cost recognition on sales across all the Company's business segments, in addition to its business processes and its information technology systems. The Company is currently evaluating the impact, if any, the adoption of this standard will have on its Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact the pronouncement will have on the Company’s financial statements and related disclosures.

In February 2016, the FASB issued an ASU 2016-02, “Leases (Topic 842).” The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases.  This ASU is effective for annual and interim periods beginning after December 15, 2018.  Early adoption is permitted. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  The Company is currently evaluating the impact the pronouncement will have on the Company’s financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in the financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The new accounting guidance is effective for interim and fiscal years beginning after December 15, 2015. The Company early adopted ASU 2015-03 for the fiscal year 2015 and presented the debt issuance costs related to the new Term Loan debt as a direct deduction from the related debt liability.

In August 2015, FASB issued ASU No. 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting”. FASB ASU No. 2015-15 amends subtopic 835-30 to include that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  The Company early adopted ASU 2015-15 for the fiscal year ended January 3, 2016.  The Company has chosen to continue presentation of debt issuance costs as an asset for its revolving line of credit borrowings.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This ASU simplifies the treatment of adjustments to provisional amounts recognized in the period for items in a business combination for which the accounting is incomplete at the end of the reporting period. The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU are effective for fiscal years beginning after December 15, 2015 and for interim periods therein. The Company early adopted ASU 2015-16 standard for the fiscal year ended January 3, 2016.  

In November 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. The standard is effective in the annual reporting periods beginning after December 15, 2018. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. The Company early adopted ASU 2015-17 and prospectively applied ASU 2015-17 to fiscal year 2015.

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MERGER WITH SPANSION

12 Months Ended

Jan. 03, 2016

Business Combinations [Abstract]

MERGER WITH SPANSION

NOTE 2. MERGER WITH SPANSION

On March 12, 2015, Cypress completed its merger with Spansion ("the Merger") pursuant to the Agreement and Plan of Merger and Reorganization, as of December 1, 2014 ("the Merger Agreement") for a total purchase consideration of approximately $2.8 billion. In accordance with the terms of the Merger Agreement, Spansion shareholders received 2.457 Cypress shares for each Spansion share they owned. The Merger has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations, with Cypress treated as the accounting acquirer. The Company incurred $37.5 million in Merger costs for the fiscal year ended January 3, 2016, which were recorded in the selling, general and administrative expense line of the Consolidated Statements of Operations.

The total purchase consideration of approximately $2.8 billion consists of the following:

	Purchase Consideration
	(In thousands)
Fair value of Cypress common stock issued to Spansion shareholders	$	2,570,458
Fair value of partially vested Spansion equity awards assumed by Cypress		6,825
Fair value of vested Spansion options assumed by Cypress		89,582
Cash provided by Cypress to repay Spansion term loan		150,000
Total purchase consideration	$	2,816,865

In connection with the Merger, the Company assumed stock options and RSUs originally granted by Spansion and converted them into Cypress stock options and RSUs. The fair value of the stock options assumed were determined using a Black-Scholes valuation model with market-based assumptions. The fair value of partially vested Spansion equity awards is $15.68 per share, the Cypress closing stock price on March 12, 2015. The fair value of unvested equity awards relating to future services, and not yet earned, will be recorded as operating expenses over the remaining service periods. Option pricing models require the use of highly subjective market assumptions, including expected stock price volatility, which if changed can materially affect fair value estimates.

The table below represents the final allocation of the purchase price to the net assets acquired based on their estimated fair values as of March 12, 2015.

	Fair Values as of March 12, 2015			Changes through January 3, 2016				Final allocation as of January 3, 2016
	(In thousands)
Cash and cash equivalents	$	44,870			—			$	44,870
Short-term investments		1,433			—				1,433
Accounts receivable, net		99,977			(590	)	(2)		99,387
Inventories		450,634			—				450,634
Other current assets		58,959			(2,329	)	(3)		56,630
Property, plant and equipment, net		356,908			—				356,908
Intangible assets, net		860,700			—				860,700
Goodwill (2)		1,676,036			(2,850	)			1,673,186
Other long-term assets		63,497			—				63,497
Total assets acquired		3,613,014			(5,769	)			3,607,245
Accounts payable		(155,336	)		—				(155,336	)
Accrued compensation and benefits		(44,669	)		—				(44,669	)
Income taxes payable		(1,399	)		—				(1,399	)
Other current liabilities		(158,083	)		(30	)	(4)		(158,113	)
Deferred income taxes and other long term liabilities		(24,001	)		5,799		(5)		(18,202	)
Other non current liabilities		(21,477	)		—				(21,477	)
Long-term debt (1)		(391,184	)		—				(391,184	)
Total liabilities assumed		(796,149	)		5,769				(790,380	)
Fair value of net assets acquired	$	2,816,865		$	—			$	2,816,865

(1)        Includes the fair value of the debt and equity components of Spansion's Exchangeable 2.00% Senior Notes assumed by the   Company.

(2)       The Company determined that one customer account receivable balance that the Company assessed as collectible at the time of the Merger was determined uncollectible which led to a decrease of $0.6 million in the fair value of accounts receivables with a corresponding increase in goodwill.

(3)       The Company obtained new information regarding the valuation of other receivables as of the acquisition date which led to a decrease in the fair value of current assets of $2.3 million, and a corresponding increase in goodwill.

(4)       The Company obtained new information regarding the valuation of accrued liabilities as of the acquisition date which led to a net increase in the fair value of other current liabilities of $30 thousand, and a corresponding increase in goodwill.

(5)       The Company obtained additional information related to its deferred income taxes which led to an increase in the deferred income taxes and other long term liabilities and a corresponding decrease in goodwill.

The Company does not believe that the measurement period adjustments had a material impact on the Consolidated Statement of Operations, Balance Sheet or Cash Flows in any period previously reported and, therefore, no retrospective adjustment was made to the Company's previously issued Consolidated Financial Statements.

The table below shows the valuation of the intangible assets acquired from Spansion Inc. along with their estimated remaining useful lives:.

	As of March 12, 2015		Estimated range of lives (in years)
	Gross
	(In thousands)
Existing Technology	$	507,100	4 to 6
In-Process Research and Development Technology		212,300	N/A
Backlog		14,500	1
Customer/Distributor Relationships		97,300	9
License Agreements		9,400	3
Trade Name / Trademarks		20,100	10
Total intangible assets	$	860,700

In-process research and development ("IPR&D") consists of 21 projects, primarily relating to the development of process technologies to manufacture NOR, NAND, Analog, and MCU products. The projects are expected to be completed over the next 2 years. The estimated remaining costs to complete the IPR&D projects were $15.3 million as of the acquisition date. The acquired IPR&D will not be amortized until completion of the related products which is determined by when the underlying projects reach technological feasibility and commence commercial production. Upon completion, each IPR&D project will be amortized over its useful life; useful lives for IPR&D are expected to range between 4 years and 6 years.

As of January 3, 2016 five out of 21 projects originally identified, representing $36.2 million of the total capitalized IPR&D of $212.3 million, had reached technological feasibility and were transferred to developed technology. Refer to Note 4 for further details. No impairments have been identified as of January 3, 2016.

The purchase price has been allocated based on the estimated net tangible and intangible assets of Spansion that existed on the date of the Merger. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the Merger. During the fourth quarter of 2015, as additional information became available, the Company finalized its purchase price allocation that resulted in change in values allocated to identifiable assets and liabilities.  

Identifiable intangible assets

Developed technologies acquired primarily consist of Spansion's existing technologies related to embedded systems semiconductors, which include flash memory, microcontroller, mixed-signal and analog products. An income approach was used to value Spansion’s developed technologies. Using this approach, the estimated fair value was calculated using expected future cash flows from specific products discounted to their net present values at an appropriate risk-adjusted rate of return. A discount rate of 7.5% was used to discount the cash flows to the present value.

Customer relationships represent the fair value of projected cash flows that will be derived from the sale of products to Spansion’s existing customers based on existing, in-process, and future versions of the existing technology. Customer relationships were valued utilizing a form of the income approach known as the “distributor” method since the primary income producing asset of the business was determined to be the technology assets. Under this premise, the margin a distributor owns is deemed to be the margin attributable to the customer relationships. This isolates the cash flows attributable to the customer relationships that a market participant would be willing to pay for.

IPR&D represents the estimated fair values of incomplete Spansion research and development projects that had not reached technological feasibility as of the date of Merger. In the future, the fair value of each project at the Merger date will be either amortized or impaired depending on whether the projects are completed or abandoned. The fair value of IPR&D was determined using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the IPR&D less charges representing the contribution of other assets to those cash flows. A discount rate of 10.5% was used to discount the cash flows to the present value.

Trade names and trademarks are considered a type of guarantee of a certain level of quality or performance represented by the Spansion brand. Trade names and trademarks were valued using the “relief-from-royalty income” approach. This method is based on the assumption that in lieu of ownership, a market participant would be willing to pay a royalty in order to exploit the related benefits of this asset. A discount rate of 9.0% was used to discount the cash flows to the present value.

License agreements represent the estimated fair value of Spansion’s existing license agreements under which Spansion generates revenue by licensing its intellectual property to third parties and assists its customers in developing and prototyping their designs by providing software and hardware development tools, drivers and simulation models for system-level integration. License agreements were valued using a form of the income approach known as the of “multi-period excess earnings” approach. Under this approach, the expected cash flows associated with the License agreements were projected then discounted to present value at a rate of return that considers the relative risk of achieving the cash flows and the time value of money. A discount rate of 5.0% was used to discount the cash flows to the present value.

Goodwill

The excess of the fair value of the Merger consideration over the fair values of these identifiable assets and liabilities was recorded as goodwill. The goodwill recognized is primarily attributable to the assembled workforce, a reduction in costs and other synergies, and an increase in product development capabilities. The goodwill resulting from the Merger is not expected to be deductible for tax purposes. Goodwill has been allocated to the reporting units expected to benefit from the Merger.

Pro forma consolidated results of operations

The following unaudited pro forma consolidated results of operations for the fiscal year ended January 3, 2016 assume as if the Merger had occurred at the beginning of fiscal year 2014. The pro forma information includes adjustments to amortization and depreciation for intangible assets and property, plant and equipment, adjustments to stock-based compensation expense, and interest expense for the incremental indebtedness incurred. The pro forma results for the year ended January 3, 2016 also include utilization of the net increase in the cost basis of acquired inventory and the Merger related expenses. The pro forma data are for informational purposes only and are not necessarily indicative of the consolidated results of operations of the combined business had the Merger actually occurred at the beginning of fiscal year 2014 or of the results of future operations of the combined business. Consequently, actual results will differ from the unaudited pro forma information presented below.

	Years Ended
	January 3, 2016			December 28, 2014
	(In thousands)
Revenues	$	1,796,266		$	1,977,352
Net loss	$	(340,465	)	$	(597,980	)
Net loss per share attributable to Cypress
Basic	$	(0.76	)	$	(2.72	)
Diluted	$	(0.76	)	$	(2.72	)

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DIVESTITURES

12 Months Ended

Jan. 03, 2016

Discontinued Operations And Disposal Groups [Abstract]

DIVESTITURES

NOTE 3. DIVESTITURES

Sale of TrueTouch® mobile touchscreen business

On August 1, 2015, the Company completed the sale of the TrueTouch® Mobile touchscreen business to Parade Technologies (“Parade”) for total cash proceeds of $98.6 million pursuant to the definitive agreement signed on June 11, 2015. Of the total cash proceeds, $10.0 million are held in an escrow account until January 2017 subject to any indemnity claims on post-closing adjustments, per the terms of the agreement. In connection with the transaction, the Company sold certain assets associated with the disposed business mostly consisting of inventory with a net book value of $10.5 million and recognized a total gain of $66.5 million in the third fiscal quarter of 2015. This gain has been presented as a separate line item "Gain on divestiture of TrueTouch^® mobile business" in the Consolidated Statements of Operations.

Also in connection with the transaction, the Company entered into a Manufacturing Service Agreement (MSA) in which the Company agreed to sell finished products and devices to Parade during the one-year period following the close of the transaction. The terms of the MSA indicated that the Company would sell finished wafers to Parade at agreed-upon prices that were considered below fair market value, indicating that there was an embedded fair value that would be realized by Parade through those terms. Accordingly, the Company has allocated $19.9 million out of the $98.6 million proceeds to the fair value of the MSA based on the forecasted wafer sales to Parade for the subsequent one-year period. Such amount was deferred on the Company’s consolidated balance sheet initially and is being amortized to revenue as the Company sells products to Parade. During the year ended January 3, 2016, the Company recognized $5.7 million of revenue from amortization of such deferred revenue.

The following table summarizes the components of the gain:

	(In thousands)
Cash Proceeds (a)	$	98,635
Deferred Revenue		(19,867	)
Assets Sold:
Property, plant and equipment, net		(69	)
Inventories		(9,290	)
Prepaid Expenses		(1,115	)
Transaction and other costs		(1,822	)
Gain on Divestiture	$	66,472

(a) Includes $10.0 million held in escrow account until January 2017 per the terms of the agreement.

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GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Jan. 03, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company’s impairment review process compares the fair value of the reporting unit in which the goodwill resides to its carrying value.  The Company has four reporting units of which two, Memory Products division (MPD) and Programmable Systems Division (PSD), have goodwill.  

The changes in the carrying amount of goodwill for the year ended January 3, 2016, are as follows:

	MPD			PSD		Total
	(in thousands)
Goodwill as of December 28, 2014	$	33,860		$	31,836	$	65,696
Goodwill from merger with Spansion (1)		739,036			937,000		1,676,036
Measurement period adjustments		(2,850	)		—		(2,850	)
Goodwill as of January 3, 2016	$	770,046		$	968,836	$	1,738,882

(1) Refer Note 2 for further details.

In fiscal 2015, the Company elected to perform a two-step quantitative goodwill impairment test for each of its reporting units.  The first step of the quantitative goodwill impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Based on this test, the Company determined that no impairment was indicated as the estimated fair value of each of the reporting units exceeded its respective carrying value.  The Company estimated the fair values of its reporting units using a combination of the income and market approach. These valuation approaches consider a number of factors that include, but are not limited to, forecasted financial information, growth rates, terminal or residual values, discount rates and comparable multiples from publicly traded companies in the Company’s industry and require the Company to make certain assumptions and estimates regarding industry economic factors and the future profitability of its’ business.  

Based on the Company’s goodwill impairment testing, the Company determined that there was no impairment of goodwill.  The fair value of the MPD reporting unit exceeded its carrying value by 53% and the fair value of PSD reporting unit exceeded its carrying value by 9%.  Based on the Company’s testing, the Company determined that there is a risk of the PSD reporting unit failing the first step of goodwill impairment test in future periods.  For this reporting unit, declines in the Company’s stock price or peers’ stock price, relatively small declines in the future performance and cash flows of the reporting unit or small changes in other key assumptions, such as revenue growth rates and discount rates, may result in the recognition of a material impairment charge to the Company’s earnings as a result of a write-down of the carrying value of the goodwill associated with that reporting unit. The income approach valuations for PSD included the following assumptions for 2015:

	Year Ended
	January 3, 2016
Discount rate		9%
Long-term growth rate		4%
Tax rate		28%
Risk free rate		4%
Peer company beta		0.97

The Company’s next annual evaluation of the goodwill by reporting unit will be performed on the first day of the fourth quarter of fiscal year 2016, or earlier if indicators of potential impairment exist.  Such indicators include, but are not limited to, challenging economic conditions, such as a decline in the Company’s operating results, an unfavorable industry or macroeconomic environment, a substantial decline in the Company’s stock price, or any other adverse change in market conditions.  Such conditions could have the effect of changing one of the critical assumptions or estimates that the Company uses to calculate the fair value of its reporting units, which could result in a decrease in fair value and require the Company to record a material goodwill impairment charge.

In fiscal 2014, the Company elected to perform a qualitative analysis for impairment on goodwill rather than to perform the two-step quantitative goodwill impairment test. The Company assessed qualitative factors to determine whether it was necessary to perform the two-step goodwill impairment test. After assessing many qualitative factors pertinent to the Company, it determined that it was more likely than not that the fair value of our reporting unit exceeds its carrying amount. In assessing the qualitative factors, the Company considered the impact of these key factors: 1) change in the industry and competitive environment, 2) market capitalization, 3) stock price and 4) overall financial performance. Based on the results of the testing, no goodwill impairment was recognized in fiscal 2014.

In fiscal 2013, the Company elected to perform the two-step quantitative goodwill impairment test. The first step of the quantitative goodwill impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Based on the results of the testing, no goodwill impairment was recognized in fiscal 2013.

Intangible Assets

The following tables present details of the Company’s total intangible assets:

	As of January 3, 2016							As of December 28, 2014
	Gross		Accumulated Amortization			Net (c)		Gross		Accumulated Amortization			Net
	(In thousands)
Acquisition-related intangible    assets (a)	$	1,012,472	$	(226,417	)	$	786,055	$	151,773	$	(118,357	)	$	33,416
Non-acquisition related    intangible assets (b)		13,368		(10,228	)		3,140		10,523		(10,021	)		502
Total intangible assets	$	1,025,840	$	(236,645	)	$	789,195	$	162,296	$	(128,378	)	$	33,918

(a) Refer Note 2 for details on valuation of the intangible assets acquired from Spansion Inc.

(b) The increase in the Gross Carrying value relates to new license agreement entered into during fiscal 2015.

(c) The Net Acquisition-related intangible assets contains $176.1 million of IPR&D which remain to attain technological feasibility and commercial production.

As of January 3, 2016, $36.2 million of the total capitalized IPR&D of $212.3 million had reached technological feasibility and was transferred to developed technology, to be amortized over the estimated useful life of 5 years and amortization of $2.6 million was recorded during the twelve months ended January 3, 2016 for these projects. The Company expects the remaining projects to attain technological feasibility and commence commercial production by the second half of fiscal 2016.

As of January 3, 2016, the estimated future amortization expense of intangible assets was as follows:

Fiscal Year	(In thousands)
2016		123,968
2017		120,966
2018		118,477
2019		111,249
2020 and future		138,319
Total future amortization expense	$	612,979

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FAIR VALUE MEASUREMENTS

12 Months Ended

Jan. 03, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 5. FAIR VALUE MEASUREMENTS

Assets/Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of January 3, 2016 and December 28, 2014:

	As of January 3, 2016						As of December 28, 2014
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In thousands)
Financial Assets
Reported as cash equivalents:
Money market funds	$	119	$	—	$	119	$	7,665	$	—	$	7,665
Total cash equivalents		119		—		119		7,665		—		7,665
Reported as short-term investments:
U.S. treasuries		—		—		—		4,993		—		4,993
Corporate notes and bonds		—		—		—		—		5,599		5,599
Federal agency		—		—		—		—		3,615		3,615
Certificates of deposit		—		871		871		—		869		869
Total short-term investments		—		871		871		4,993		10,083		15,076
Reported as long-term investments:
Marketable equity securities		6,516		—		6,516		8,493		—		8,493
Total long-term investments		6,516		—		6,516		8,493		—		8,493
Employee deferred compensation    plan assets:
Cash equivalents		3,333		—		3,333		2,957		—		2,957
Mutual funds		22,023		—		22,023		24,114		—		24,114
Equity securities		8,624		—		8,624		9,352		—		9,352
Fixed income		—		3,227		3,227		—		3,798		3,798
Money market funds		4,042		—		4,042		3,895		—		3,895
Total employee deferred    compensation plan assets		38,022		3,227		41,249		40,318		3,798		44,116
Foreign Exchange Forward Contracts		—		966		966		—		—		—
Total financial assets	$	44,657	$	5,064	$	49,721	$	61,469	$	13,881	$	75,350
Financial Liabilities
Foreign Exchange Forward Contracts		—		1,283		1,283		—		—		—
Employee deferred compensation    plan liability		—		41,457		41,457		—		43,452		43,452
Total financial liabilities	$	—	$	42,740	$	42,740	$	—	$	43,452	$	43,452

Valuation Techniques:

· Level 1—includes instruments for which quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The Company’s financial assets utilizing Level 1 inputs include U.S. treasuries, money market funds, marketable equity securities and our employee deferred compensation plan assets.

· Level 2—includes instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company’s Level 2 instruments include certain U.S. government securities, commercial paper, corporate notes and bonds and our employee deferred compensation plan liabilities.  Foreign currency forward contracts are classified as Level 2 because the valuation inputs are based on observable market data of similar instruments. The Company principally executes its foreign currency contracts in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants and the Company’s counterparties are large money center banks and regional banks. The valuation inputs for the Company’s foreign currency contracts are based on observable market data from public data sources (specifically, forward points, LIBOR rates, volatilities and credit default rates at commonly quoted intervals) and do not involve management judgment.

· Level 3—includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement. As of January 3, 2016 and December 28, 2014, the Company did not own any financial assets utilizing Level 3 inputs.

The Company determines the basis of the cost of a security sold or the amount reclassified out of accumulated other comprehensive income into earnings using the specific identification method.  

There were no material transfers between Level 1, Level 2 and Level 3 fair value hierarchies during fiscal 2015 and 2014.

Assets 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.

As of January 3, 2016, the carrying value of the Company’s senior secured revolving line of credit was $449.0 million. The fair value of the Company’s line of credit approximates its fair value since it bears an interest rate that is similar to existing market rates.

The Company's 2.00% Senior Exchangeable Notes assumed as part of the Merger is traded in the market and is categorized as Level 2. The carrying value and the estimated fair value of the debt portion of the Notes as of January 3, 2016 is $131.8 million and $279.6 million respectively. See Note 14 for further details.

Investments in Equity Securities

Privately-held equity investments are accounted for under the cost method if the Company has less than 20 % ownership interest, and it does not have the ability to exercise significant influence over the operations of the privately-held companies. The Company’s total investments in equity securities accounted for under the cost method included long-term investments in non-marketable equity securities (investments in privately-held companies) are $9.2 million and $5.9 million, as of January 3, 2016 and December 28, 2014, respectively.

Privately-held equity investments 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 the privately-held companies.  The Company’s total investments in equity securities accounted for under the equity method of accounting are $41.3 million and $20.5 million as of January 3, 2016 and December 28, 2014, respectively.

In February 2012, the Company entered into a Stock Purchase Agreement (the “Agreement”) with a company that designs, develops and manufactures products in the area of advanced battery storage for mobile consumer devices. Pursuant to the terms of the Agreement, the Company has so far purchased $56.0 million of preferred voting stock from the company and has committed to purchase additional preferred stock in a series of subsequent closings subject to certain performance milestones that must be fulfilled within a defined and agreed-upon timeline. In fiscal 2016, the Company plans to make investments subject to the attainment of certain milestones and the timing of additional capital requests which could vary substantially. As of January 3, 2016 and December 28, 2014, the Company owned 38.7 % and 26.2% respectively, of the company. Since the fourth quarter of fiscal 2014, the company accounts for its investment in the company under the equity method of accounting.

The remaining privately-held equity investments are accounted for under the cost method and are periodically reviewed for other-than-temporary declines in fair value

During fiscal 2013, the Company sold its equity investment in one publicly traded company for $2.2 million and recognized a gain of $1.1 million in “Other income (expense), net”.

In fiscal 2014, the Company, through its wholly-owned subsidiary, purchased 6.9 million ordinary shares of Hua Hong Semiconductor Limited (HHSL) for an aggregate price of $10.0 million in connection with their initial public offering. HHSL is the parent company of Grace Semiconductor Manufacturing Corporation, which is one of the Company’s strategic foundry partners.  The Company recorded an unrealized loss on its investment in HHSL’s ordinary shares of $4.7 million and $1.5 million in "Other income (expense), net" as a result of the decline in the fair market value of the investment as of January 3, 2016 and December 28, 2014, respectively.

The Company’s investments are periodically reviewed for other-than-temporary declines in fair value by considering available evidence, including general market conditions, financial condition, pricing in recent rounds of financing, if any, earnings and cash flow forecasts, recent operational performance and any other readily available market data.

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INVESTMENTS

12 Months Ended

Jan. 03, 2016

Investments Debt And Equity Securities [Abstract]

INVESTMENTS

NOTE 6.  INVESTMENTS

Available-For-Sale Securities and Other Investments

The following tables summarize the Company’s available-for-sale securities and other investments:

	As of January 3, 2016								As of December 28, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Reported as cash equivalents:
Money market funds	$	119	$	—	$	—	$	119	$	7,665	$	—	$	—		$	7,665
Total cash equivalents		119		—		—		119		7,665		—		—			7,665
Reported as short-term investments:
Corporate notes and bonds		—		—		—		—		5,616		—		(17	)		5,599
Federal agency		—		—		—		—		3,617		—		(2	)		3,615
U.S. treasuries		—		—		—		—		5,002		—		(9	)		4,993
Commercial paper		—		—		—		—		—		—		—			—
Certificates of deposit		871		—		—		871		869		—		—			869
Total short-term investments		871		—		—		871		15,104		—		(28	)		15,076
Total available-for-sale securities and    other investments	$	990	$	—	$	—	$	990	$	22,769	$	—	$	(28	)	$	22,741

As of January 3, 2016, the contractual maturities of the Company’s available-for-sale investments and certificates of deposit were as follows (the table below does not include our investments in marketable equity securities):

	Cost		Fair Value
	(In thousands)
Maturing within one year	$	990	$	990
Total	$	990	$	990

Realized gains and realized losses from sales of available-for-sale in fiscal 2015, 2014 and 2013 were not material.

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ASSETS HELD FOR SALE

12 Months Ended

Jan. 03, 2016

Disclosure Assets Held For Sale Additional Information [Abstract]

ASSETS HELD FOR SALE

NOTE 7. ASSETS HELD FOR SALE

Fixed Assets

During fiscal 2014, certain equipment which had been classified as held for sale in fiscal 2013 was sold resulting in a gain of $0.6 million. During fiscal 2013, we incurred a $6.7 million restructuring charge to write down this equipment to the then current fair value of $2.3 million.

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION

12 Months Ended

Jan. 03, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION

NOTE 8.EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION

The Company’s equity incentive plans are broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests.

The Company currently has the following employee stock plans:

1999 Stock Option Plan (“1999 Plan”):

The 1999 Plan expired in March 2009. There are currently no shares available for grant under the 1999 Plan. Under the 1999 Plan 2.0 million shares are issued and outstanding. Any outstanding shares cancelled or forfeited under the 1999 Plan will not be available for any future grants since the 1999 Plan expired.

2013 Stock Option Plan (“2013 Plan”):

At the 2013 Annual Shareholders Meeting, the Company’s shareholders approved the extension of the 1994 Stock Plan to January 15, 2024 and renamed the plan as the 2013 Stock Plan. The 2013 Plan provides for (1) the discretionary granting of Options, Stock Appreciation Rights ("SARs"), Restricted Stock Awards ("RSAs") or Restricted Stock Units ("RSUs") to Employees, Consultants and Outside Directors, which Options may be either Incentive Stock Options (for Employees only) or NonstatutoryStock Options, as determined by the Administrator at the time of grant; and (2) the grant of Nonstatutory Stock Options, SARs, Restricted Stock or RSUs to Outside Directors pursuant to an automatic, non-discretionary formula. Options or awards granted under the 2013 Stock Plan generally expire over terms not exceeding eight years from the date of grant, subject to earlier termination upon the cessation of employment or service of the recipients. The maximum aggregate number of shares authorized for issuance under the 2013 Stock Plan is 145.2 million shares. As of January 3, 2016, 25.0 million options or 13.3 million RSUs and RSAs were available for grant under the 2013 Stock Plan. In the first quarter of fiscal 2015, in connection with the Merger, Cypress’ the shareholders approved an increase in the number of shares issuable under the Cypress 2013 Stock Plan by 29.3 million shares that could be issued as full value awards (such as restricted stock units (RSUs), and performance stock units (PSUs)), or as appreciation awards (such as stock options and/or stock appreciation rights)(if awards are granted only in the form of RSUs or other full value awards, this increase in shares would allow for the issuance of only up to 15.6 million shares, to a total of 31.0 million reserved but unissued shares under the 2013 Stock Plan).

2010 Equity Incentive Award Plan (“2010 Plan”)

In connection with the Company’s Merger with Spansion, it assumed their 2010 Plan, as amended, which reserves a total of 10.1 million shares of common stock for issuance under stock options, stock appreciation rights, restricted stock units, restricted stock, performance awards, stock payments, dividend equivalents and deferred stock to its employees, consultants and non-employee members of its Board of Directors. The 2010 Plan provides that incentive stock options may only be granted to employees of the Company or its subsidiaries. All stock options expire if not exercised by the seventh anniversary of the grant date. Annual RSU awards granted generally vest over a period of two to four years. Options granted become exercisable in full or in installments pursuant to the terms of each agreement evidencing options granted. The exercise of stock options and issuance of restricted stock and restricted stock units is satisfied by issuing authorized common stock or treasury stock. Shares that are subject to or underlie awards that expire or for any reason are cancelled, terminated or forfeited, or fail to vest will again be available for grant under the 2010 Plan. Grants from this plan are limited to employees who joined Cypress as part of the Merger and grants to new Cypress employees.  As of January 3, 2016, 10.1 million shares of stock options or RSUs and RSAs were available for grant under the 2010 Plan.

2012 Incentive Award Plan (“2012 Plan”):

In connection with the Company’s acquisition of Ramtron in 2012,it assumed their 2012 Plan, as amended, which reserves a total of 1.2 million shares of common stock for issuance under stock option or restricted stock grants. The exercise price of all non-qualified stock options must be no less than 100% of the fair market value on the effective date of the grant under the 2012 Plan, and the maximum term of each grant is seven years. The 2012 Plan permits the issuance of incentive stock options, the issuance of restricted stock, and other types of awards. Restricted stock grants generally vest five years from the date of grant. Options granted become exercisable in full or in installments pursuant to the terms of each agreement evidencing options granted. The exercise of stock options and issuance of restricted stock and restricted stock units is satisfied by issuing authorized common stock or treasury stock. Grants from this plan are limited to employees who joined Cypress as part of the Ramtron acquisition and grants to new Cypress employees. As of January 3, 2016, 2 thousand shares of stock options or RSUs and RSAs were available for grant under the 2012 Plan.

Employee Stock Purchase Plan (“ESPP”) :

At the 2013 Annual Shareholders Meeting, the Company’s shareholders approved an extension of the ESPP Plan to May 10, 2023. The Company’s ESPP allows eligible employees to purchase shares of our common stock through payroll deductions. The ESPP contains consecutive 18 -month offering periods composed of three six -month exercise periods. The shares can be purchased at the lower of 85% of the fair market value of the common stock at the date of commencement of the offering period or at the last day of each six -month exercise period. Purchases are limited to 10% of an employee’s eligible compensation, subject to a maximum annual employee contribution limit of $21,250. As of January 3, 2016 1.7 million shares were available for future issuance under the ESPP.

Stock-Based Compensation

The following table summarizes the stock-based compensation expense by line item in the Consolidated Statement of Operations:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Cost of revenues	$	16,459	$	13,209	$	12,789
Research and development		25,719		16,187		26,042
Selling, general and administrative		51,349		20,774		34,189
Total stock-based compensation expense	$	93,527	$	50,170	$	73,020

In connection with the Merger, the Company assumed stock options and full value awards originally granted by Spansion. Stock-based compensation expense in fiscal 2015 included $21.6 million related to assumed Spansion stock options and RSUs respectively.

As stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it has been adjusted for estimated forfeitures. The accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Consolidated cash proceeds from the issuance of shares under the employee stock plans were $52.9 million, $32.0 million and $43.3 million for fiscal 2015, fiscal 2014 and 2013, respectively. No income tax benefit was realized from stock option exercises for fiscal 2015, 2014 and 2013. As of January 3, 2016 and December 28, 2014 stock-based compensation capitalized in inventories totaled $4.3 million and $2.0 million, respectively.

The following table summarizes the stock-based compensation expense by type of awards:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Stock options	$	1,920	$	4,717	$	8,747
Restricted stock units and restricted stock awards		74,897		37,837		54,359
ESPP		16,710		7,616		9,914
Total stock-based compensation expense	$	93,527	$	50,170	$	73,020

The following table summarizes the unrecognized stock-based compensation balance, net of estimated forfeitures, by type of awards as of January 3, 2016:

(In thousands)			Weighted-Average Amortization Period
			(In years)
Stock options	$	2,631		1.27
Restricted stock units and restricted stock awards		82,087		1.57
ESPP		18,364		0.67
Total unrecognized stock-based compensation balance,    net of estimated forfeitures	$	103,082		1.40

Valuation Assumptions

The Company estimates the fair value of its stock-based equity awards using the Black-Scholes valuation model. Assumptions used in the Black-Scholes valuation model were as follows:

	Year Ended
	January 3, 2016		December 28, 2014	December 29, 2013
Stock Option Plans:
Expected life		—	4.4-5.7 years	4.2-5.3 years
Volatility		—	39.7%-41.1%	38.2%-41.9%
Risk-free interest rate		—	0.26%-1.75%	0.93%-1.85%
Dividend yield		—	4.2%-4.4%	3.8%-4.5%
ESPP:
Expected life	0.5-1.5 years		0.5-1.5 years	0.5-1.5 years
Volatility	35.9%-46.6%		31.0%-36.1%	38.4%-46.3%
Risk-free interest rate	0.09%-0.86%		0.03%-0.35%	0.08%-0.32%
Dividend yield	4.5%-5.2%		4.2%-4.4%	3.8%-4.5%

Expected life: Expected life is based on historical exercise patterns, giving consideration to the contractual terms of the awards and vesting schedules. In addition, employees who display similar historical exercise behavior are grouped separately into two classes (executive officers and other employees) in determining the expected life.

Volatility: The Company determined that implied volatility of publicly traded call options and quotes from option traders is more reflective of market conditions and, therefore, can reasonably be a better indicator of expected volatility than historical volatility. Therefore, volatility is based on a blend of historical volatility of the Company’s common stock and implied volatility.

Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.

Dividend yield: The expected dividend is based on the Company’s history and expected dividend payouts.

Employee Equity Award Activities

As of January 3, 2016, 35.1 million stock options, or 23.4 million RSUs/PSUs, were available for grant 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).

Stock Options:

As a part of the Merger, Cypress assumed all outstanding Spansion options and these options were converted into options to purchase Cypress common stock at the agreed upon conversion ratio. The exercise price per share for each assumed Spansion option is equal to exercise price per share of Spansion option divided by 2.457.

The following table summarizes the Company’s stock option activities:

	Year Ended
	January 3, 2016					December 28, 2014					December 29, 2013
	Shares			Weighted- Average Exercise Price per Share		Shares			Weighted- Average Exercise Price per Share		Shares				Weighted- Average Exercise Price per Share
	(In thousands, except per-share amounts)
Options outstanding, beginning of year		14,463		$	9.24		19,060		$	8.33		22,760			$	7.25
Options assumed as a part of the Merger		8,976		$	12.86		—		—			—		—
Granted		—		$	—		522		$	10.24		4,122			$	11.40
Exercised		(5,391	)	$	5.71		(4,027	)	$	4.47		(5,622	)		$	5.19
Forfeited or expired		(1,208	)	$	12.75		(1,092	)	$	11.59		(2,200	)		$	11.09
Options outstanding, end of year		16,840		$	7.99		14,463		$	9.24		19,060			$	8.33
Options exercisable, end of year		14,366		$	7.40		9,787		$	8.05		12,346			$	6.39

The weighted-average grant-date fair value was $2.22 per share for options granted in fiscal 2014 and $2.63 per share in options granted during fiscal 2013.  The Company did not grant any new stock options during 2015.

The aggregate intrinsic value of the options outstanding and options exercisable as of January 3, 2016 was $48.1 and $47.9 million respectively. The aggregate intrinsic value represents the total pre-tax intrinsic value which would have been received by the option holders had all option holders exercised their options as of January 3, 2016 and does not include substantial tax payments.

The aggregate intrinsic value of the options outstanding and options exercisable as of December 28, 2014 was $82.8 million and $68.0 million, respectively. The aggregate intrinsic value represents the total pre-tax intrinsic value which would have been received by the option holders had all option holders exercised their options as of December 28, 2014 and does not include substantial tax payments.

The aggregate pre-tax intrinsic value of option exercises, which represents the difference between the exercise price and the value of Cypress common stock at the time of exercise, was $41.8 million in fiscal 2015, $26.4 million in fiscal 2014 and $31.9 million in fiscal 2013.

The aggregate grant date fair value of the options which vested in fiscal 2015, fiscal 2014 and 2013 was $5.6 million $6.9 million and $10.1 million, respectively.

The following table summarizes information about options outstanding and exercisable as of January 3, 2016:

	Options Outstanding						Options Exercisable
Range of Exercise Price	Shares		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price per Share		Shares		Weighted- Average Exercise Price per Share
			(In years)
$2.72-$3.99		1,821,541		0.81	$	3.57		1,812,477	$	3.57
$4.01-$4.09		1,815,277		3.01	$	4.09		1,815,277	$	4.09
$4.15-$4.22		173,644		0.51	$	4.17		173,644	$	4.17
$4.28-$4.28		1,981,218		1.35	$	4.28		1,981,218	$	4.28
$4.30-$6.17		2,162,508		2.80	$	5.44		2,150,857	$	5.44
$6.22-$8.10		2,112,745		2.11	$	7.61		2,112,745	$	7.61
$8.43-$10.92		1,133,060		4.38	$	9.97		697,698	$	9.90
$11.27-$11.27		1,812,686		4.87	$	11.27		1,072,597	$	11.27
$11.32-$11.40		181,205		3.02	$	11.33		167,965	$	11.33
$11.55-$23.23		3,645,837		4.54	$	13.67		2,381,600	$	14.50
		16,839,721		3.04	$	7.99		14,366,078	$	7.40

The total number of exercisable in-the-money options was 8.4 million shares as of January, 2016.

As of January 3, 2016, stock options vested and expected to vest totaled 16.6 million shares, with a weighted-average remaining contractual life of 3.0 years and a weighted-average exercise price of $7.95 per share. The aggregate intrinsic value was $48.0 million.

Restricted Stock Units, Performance-Based Restricted Stock Units and Restricted Stock Awards:

The following table summarizes the Company’s restricted stock unit and restricted stock award activities:

	Year Ended
	January 3, 2016					December 28, 2014					December 29, 2013
	Shares			Weighted- Average Grant Date Fair Value per Share		Shares			Weighted- Average Grant Date Fair Value per Share		Shares			Weighted- Average Grant Date Fair Value per Share
	(In thousands, except per-share amounts)
Non-vested, beginning of year		7,838		$	10.98		8,652		$	11.97		7,887		$	14.52
Granted and assumed		10,172		$	14.78		6,344		$	10.16		7,040		$	11.40
Released		(3,594	)	$	5.60		(4,363	)	$	11.58		(2,378	)	$	9.77
Forfeited		(3,363	)	$	11.66		(2,795	)	$	11.21		(3,897	)	$	14.74
Non-vested, end of year		11,053		$	13.43		7,838		$	10.98		8,652		$	11.97

Of the total awards granted and assumed in 2015, 3.2 million awards were performance-based units granted for the performance-based restricted stock program (PARS) for 2015, 1.6 million awards were service-based units granted under the 2015 PARS program, which employees are eligible to earn 100% if they remain an employee of the Company through specified dates between fiscal 2016 and 2018, and 23 thousand awards were granted to individuals subject to the achievement of specific milestones. Of the total awards granted in 2014, 2.6 million awards were performance-based units granted for the 2014 PARS program, 0.6 million awards were service-based units granted under the 2014 PARS program and 0.3 million awards were granted to individuals subject to the achievement of specific milestones.  Of the total awards granted in 2013, 4.6 million awards were performance-based units granted for the 2013 PARS program and 0.2 million awards were granted to individuals subject to the achievement of specific milestones.

Of the total awards released in 2015, 0.6 million and 0.5 million awards were released for the performance-based units and service-based units, respectively granted under the 2014 PARS program and 0.2 million shares were released to individuals who achieved the specific milestones set upon grant. Of the total awards released in 2014, 2.4 million awards were released for the performance-based units granted under the 2013 PARS program and 46 thousand shares were released to individuals who achieved the specific milestones set upon grant.  Of the total awards released in 2013, 1.0 million awards were released for the 2012 PARS program and 0.1 million shares were released to individuals who achieved the specific milestones set upon grant.  

A portion of the non-vested balance as of January 3, 2016 included 5.3 million units for the PARS programs.  These PARS were issued to certain senior-level employees in fiscal 2014 and 2015 and can be earned ratably over a period of one to three years, subject to the achievement of certain milestones that were set by the Compensation Committee in advance.  Any share not earned due to not achieving the full performance milestone are forfeited and returned to the pool.

The PSUs and RSUs under Cypress’s 2015 PARS Program were granted by the Company in the first and second quarters of fiscal 2015 with an extended measurement period of three years. These awards were issued to certain senior-level employees and the PSU portion of the award can be earned over a period of one to three years, subject to the achievement of certain performance milestones that were set by the Compensation Committee in advance. Each participating employee is given a target number of PSUs under each milestone, which can be earned independent of the outcomes of other milestones. Any portion of PSUs not earned due to not achieving the performance milestone is forfeited and returned to the pool. The following milestones for the 2015 PSUs were approved by the Compensation Committee:

·       Total Shareholder Return (TSR) Factor, for the applicable measurement period of one, two and three years as compared to a group of peer companies chosen by the Compensation Committee. If the Company ranks in the 65th percentile of peers, 100% of the target PSUs is earned by employees. If the Company exceeds a 65th percentile ranking, employees can earn as high as 200% of the target RSUs. If the Company ranks in the 25th percentile or less, no PSUs are earned by employees under this milestone. If TSR is negative for the measurement period, only 50% of target PSUs are earned.

·       Realization of an annualized target Merger synergy over the three year period from fiscal 2015 to fiscal 2017. Employees are eligible to earn their target PSUs if the cost synergies associated with the Merger achieves the stated goal for each of the years between fiscal 2015 and 2017. The payouts under this milestone are adjusted on a linear scale between the 0% payout and the 100% payout and then between the 100% payout to 200% maximum payout, depending on the achievement of synergy savings target as specified in the grant agreement.

·Achievement of target non-GAAP earnings per share (EPS). Employees are eligible to earn their target PSUs if the Company achieves the target non-GAAP EPS for the specified periods. The payouts under this milestone are adjusted on a linear scale between the 0% payout and the 100% payout and then between the 100% payout to 200% maximum payout, depending on the achievement of this milestone. The measurement period will be for the Company’s reported non-GAAP EPS in the fourth quarter of 2015 and 2016 as well as an annual non-GAAP EPS for fiscal 2017.

The three milestones for the 2014 PARS Program, as approved by the Compensation Committee, were as follows:

· Milestone #1-our Chief Executive Officer’s annual goals, or CSFs. The CEO CSFs represent the action items that are most critical to the Company’s short- and long-term success. In order for a participant to earn 100% of the shares underlying Milestone #1, our CEO had to obtain 85 points or greater under the CEO CSFs and achievement then scaled down linearly to 0% of shares earned if the CEO CSF score was less than 60 points.

· Milestone #2-required the Company to achieve a specific revenue amount during fiscal year 2015. In order for a participant to earn 100% of the RSUs underlying Milestone #2, the Company had to achieve a specific revenue amount level in fiscal year 2015 which scaled down linearly to 0% of the shares earned if the dollar value of the specific revenue amount was less than target.

· Milestone #3-required the participant to remain employed through January 30, 2016. 75% of Milestone #3 targeted PARS vest on January 30, 2015 and the remaining 25% will vest on January 30, 2016.

Both Milestones #1 and #2 were multiplied by a Total Shareholder Return (TSR) Factor, for the applicable milestone performance period as compared to the performance of a Peer Group of Companies as detailed in our 2014 Proxy. The TSR factor which adjusted on a linear scale was .625 if Cypress was at the 10th or lower rank order percentile, 1.0 if Cypress was in the 40th and 60th rank percentile and 1.375 if Cypress was at the 90th or higher rank order percentile.

ESPP:

During fiscal 2015, 2014 and 2013, the Company issued 2.6 million, 1.5 million and 1.5 million shares under its ESPP with weighted-average price of $8.69, $8.93 and $9.21 per share, respectively.

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BALANCE SHEET COMPONENTS

12 Months Ended

Jan. 03, 2016

Balance Sheet Component [Abstract]

BALANCE SHEET COMPONENTS

NOTE 9. BALANCE SHEET COMPONENTS

Accounts Receivable, Net

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Accounts receivable, gross	$	295,803		$	79,091
Allowances for doubtful accounts receivable and sales returns		(3,067	)		(3,107	)
Accounts receivable, net	$	292,736		$	75,984

Inventories

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Raw materials	$	13,516	$	4,753
Work-in-process		192,245		64,003
Finished goods		37,834		19,471
Total inventories	$	243,595	$	88,227

Total inventories include gross inventory of $385.2 million and inventory provisions of $141.6 million as of January 3, 2016.  Total inventories include gross inventory of $121.8 million and inventory provisions of $33.5 million as of December 28, 2014.  During the year ended January 3, 2016, the Company recorded $133 million of provisions to write down inventory assumed from the Merger and were recognized as part of the Company's strategy to focus on high margin, profitable business as a combined company and to move away from the production and sale of inventory associated with non-strategic business.

Other Current Assets

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Prepaid tooling assets	$	19,379	$	3,880
Restricted cash relating to pension plan (see Note 17)		3,730		—
Foundry service prepayments - ST		5,753		—
Prepaid expenses		30,934		17,897
Other current assets		27,084		7,511
Total other current assets	$	86,880	$	29,288

Property, Plant and Equipment, Net

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Land	$	37,819		$	18,570
Equipment		1,191,469			1,017,121
Buildings, building and leasehold improvements		314,017			221,465
Construction in progress		28,050			12,093
Furniture and fixtures		12,946			6,902
Total property, plant and equipment, gross		1,584,301			1,276,151
Less: accumulated depreciation and amortization		(1,159,298	)		(1,038,388	)
Total property, plant and equipment, net	$	425,003		$	237,763

Other Long-term Assets

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Employee deferred compensation plan	$	41,249	$	44,116
Investments in Equity securities		57,030		34,992
Deferred tax assets		4,080		1,187
Long term license		24,079		4,633
Restricted cash relating to pension plan (see Note 17)		3,462		—
Long term receivable from sale of TrueTouch ®    Mobile business (see Note 3)		10,000		—
Foundry service prepayments - LT		26,237		—
Other assets		34,272		8,665
Total other long-term assets	$	200,409	$	93,593

Other Current Liabilities

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Employee deferred compensation plan	$	41,457	$	43,452
Restructuring accrual - ST (see Note 10)		7,270		1,177
License commitment		18,496		—
Deferred Revenue on sale of TrueTouch® mobile business    (see Note 3)		15,295		—
Deferred liability - distributor price adjustments		52,712		19,618
Other current liabilities		67,175		30,372
Total other current liabilities	$	202,405	$	94,619

Other Long-Term Liabilities

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Long-term pension liabilities	$	8,712	$	5,768
Restructuring accrual - LT (see Note 10)		14,217		—
Other long-term liabilities		14,855		4,925
Total other long-term liabilities	$	37,784	$	10,693

Sale of Spansion's Sunnyvale property

On January 23, 2014, Spansion sold its property in Sunnyvale, California, consisting of 24.5 acres of land with approximately 471,000 square feet of buildings that included its headquarters building and submicron development center, a Pacific Gas & Electric transmission facility and a warehouse building, for net consideration of $59.0 million. Spansion concurrently leased back approximately 170,000 square feet of the headquarters building on a month-to-month basis with the option to continue the lease for up to 24 months; thereafter, either party could terminate the lease. The first six months of the lease were rent free; thereafter, the rents were lower than the market rates. For accounting purposes, these rents were deemed to have been netted against the sale proceeds and represent prepaid rent. As such, the use of the property after its sale constituted continuing involvement and recognition of the sale of the property was deferred until the lease period ends. In the third quarter of fiscal 2015, the Company terminated the lease on the Sunnyvale building and recognized an immaterial gain.

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RESTRUCTURING

12 Months Ended

Jan. 03, 2016

Restructuring And Related Activities [Abstract]

RESTRUCTURING

NOTE 10.RESTRUCTURING

Spansion Integration-Related Restructuring Plan

In March 2015, the Company began the implementation of planned cost reduction and restructuring activities in connection with the Merger. As part of this plan, the Company expects to eliminate approximately 1,000 positions from the combined workforce across all business and functional areas on a global basis. The restructuring charge of $90.1 million recorded for the fiscal year ended January 3, 2016 primarily consists of severance costs, lease termination costs and impairment of property, plant and equipment. The lease termination costs include approximately $18 million relating to the buildings Spansion had leased prior to the Merger, which the Company decided not to occupy in the post-merger period. The initial term of the lease commenced on January 1, 2015 and will expire on December 31, 2026.

The following table summarizes the restructuring charges recorded in the Company’s Consolidated Statements of Operations for the periods presented pursuant to the Spansion Integration-Related Restructuring Plan:

	Year Ended
	January 3, 2016
	(In thousands)
Personnel costs	$	58,972
Lease termination costs and other related charges		18,016
Impairment of property, plant and equipment		12,531
Other		565
Total restructuring and other charges	$	90,084

Restructuring activity under the Spansion Integration – Related Restructuring Plan during fiscal year ended January 3, 2016:

	Year Ended
	January 3, 2016
	(In thousands)
Accrued restructuring balance as of December 28, 2014	$	—
Provision		81,041
Cash payments and other		(59,554	)
Accrued restructuring balance as of January 3, 2016	$	21,487

The provision for restructuring expense in the table above does not include the charge to write off certain leasehold improvements from the first quarter of 2015, which totaled $9.0 million.

The Company anticipates that the remaining restructuring accrual balance will be paid out in cash through the first quarter of 2016 for employee terminations and over the remaining lease term through 2026 for the excess lease obligation.

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FOREIGN CURRENCY DERIVATIVES

12 Months Ended

Jan. 03, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

FOREIGN CURRENCY DERIVATIVES

NOTE 11. FOREIGN CURRENCY DERIVATIVES

The Company enters into multiple foreign exchange forward contracts to hedge certain operational exposures resulting from movements in Japanese yen and euro exchange rates. 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 movements on its operating results. Some foreign currency forward contracts are considered to be economic hedges that are not designated as hedging instruments while others are designated as cash flow hedges. Whether designated or undesignated, 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.

Cash Flow Hedges

The Company enters into cash flow hedges to protect non-functional currency revenues, inventory purchases and certain other operational expenses 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 nine 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 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 other income (expense), net in the 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 other income (expense), net in its Consolidated Statements of Operations at that time.

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 other income (expense), net in its Consolidated Statements of Operations.

At January 3, 2016, the Company had outstanding forward contracts to buy ¥2,690.0 million for $22.7 million.

Non-designated hedges

Total notional amounts of outstanding contracts were as summarized below.  The duration or each contract is approximately thirty days:

Buy / Sell	January 3, 2016
	(in millions)
US dollar / Japanese Yen	$19.4 / ¥2,333
US dollar / EUR	$7.3/€6.8

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ACCUMULATED OTHER COMPREHENSIVE LOSS

12 Months Ended

Jan. 03, 2016

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 12. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated other comprehensive loss were as follows:

	Accumulated net unrealizedlosses on available-for-sale investments			Cumulative translation adjustment and other		Unrecognized Gain on the Defined Benefit Plan		Accumulated other comprehensive loss (income)
	(in thousands)
Balance as of December 29, 2013	$	(183	)	$	6	$	—	$	(177	)
Other comprehensive income (loss) before    reclassification		131			—		—		131
Balance as of December 28, 2014	$	(52	)	$	6	$	—	$	(46	)
Other comprehensive income (loss) before    reclassification		(1,623	)		—		—		(1,623	)
Amounts reclassified to earnings		1,416			—		—		1,416
Net unrecognized gain on the Defined    Benefit Plan		—			—		26		26
Balance as of January 3, 2016	$	(259	)	$	6	$	26	$	(227	)

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OTHER INCOME (EXPENSE), NET

12 Months Ended

Jan. 03, 2016

Other Income And Expenses [Abstract]

OTHER INCOME (EXPENSE), NET

NOTE 13.  OTHER INCOME (EXPENSE), NET

The following table summarizes the components of “other income (expense), net,” recorded in the Consolidated Statements of Operations:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Interest income	$	885		$	362		$	301
Changes in fair value of investments under the    deferred compensation plan		(1,354	)		3,014			6,371
Unrealized loss on marketable securities		(4,655	)		(1,495	)		—
Impairment of investments		—			—			25
Foreign currency exchange gains (losses), net		744			1,382			2,791
Gain on sale of equity investments		276			—			908
Other		335			40			(59	)
Other income (expense), net	$	(3,769	)	$	3,303		$	10,337

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DEBT AND EQUITY TRANSACTIONS

12 Months Ended

Jan. 03, 2016

Debt And Equity Transactions [Abstract]

DEBT AND EQUITY TRANSACTIONS

NOTE 14. DEBT AND EQUITY TRANSACTIONS

Debt is comprised of the following:

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Current portion of long-term debt
Capital lease obligations	$	6,603	$	3,227
Equipment loans		3,003		2,916
Term Loan A		5,000		—
Current portion of long-term debt		14,606		6,143
Revolving credit facility and long-term debt
Credit facility		449,000		227,000
Term Loan A		92,228		—
2% Senior Exchangeable Notes		131,845		—
Capital lease obligations		586		7,105
Equipment loans		—		3,002
Revolving credit facility and long-term debt		673,659		237,107
Total debt	$	688,265	$	243,250

Senior Secured Revolving Credit Facility

On March 12, 2015, the Company amended and restated its existing senior secured revolving credit facility ("Credit Facility") and increased the size of the Credit Facility from $300 million to $450 million. The restated agreement also contains an option permitting the Company to arrange additional commitments of $250 million (“Incremental Availability”) and specifies that the proceeds of these loans may be used for working capital, acquisitions, stock repurchases and general corporate purposes. The borrowings under the Credit Facility will bear interest, at the Company's option, at an adjusted base rate plus a spread of 1.25%, or an adjusted LIBOR rate plus a spread of 2.25%. The borrowings under the Credit Facility are collateralized by substantially all of the Company's assets. The financial covenants were amended to include the following conditions: 1) maximum total leverage ratio of 3.50 to 1.00 through January 1, 2017, and 3.00 to 1.00 thereafter, 2) minimum fixed charge coverage ratio of 1.00 to 1.00. At January 3, 2016, the Company's outstanding borrowings of $449.0 million were recorded as part of long-term liabilities and are presented as “Long-term revolving credit facility and long term debt” on the Consolidated Balance Sheet.  The Company incurred financing costs of $2.3 million to the new lenders of the Credit Facility which has been capitalized and recognized in other long-term assets on the Consolidated Balance Sheet. These costs will be amortized over the life of the Credit Facility.

As per the terms of the Credit Facility, the Company entered into a Joinder Agreement on December 22, 2015 under which the Company borrowed an additional $100 million (“Term Loan A”). Term Loan A is subject to, at the Company’s option, either an interest rate equal to (i) 3.25% over LIBOR or (ii) an interest rate equal to 2.25% over the greater of (x) the prime lending rate published by the Wall Street Journal, (y) the federal funds effective rate plus 0.50%, and (z) the LIBOR rate for a one month interest period plus 1%. The Company paid a 1.00% upfront fee in connection with the Term Loan A.  Such Term Loan A is payable in quarterly installments equal to 1.25% per quarter for 2016, 1.875% per quarter for 2017 and 2018, and 2.50% per quarter thereafter, with the remaining outstanding principle amount due at final maturity on March 12, 2020. It may be voluntarily prepaid at the Company’s option and is subject to mandatory prepayments equal to (i) 50% of excess cash flow, as defined in the agreement, (stepping down to 25% and 0% based on a decrease in total leverage ratio over time) at the end of each fiscal year, (ii) the net cash proceeds from certain asset sales (subject to certain reinvestment rights) and (iii) the proceeds from any debt issuances not otherwise permitted under the Credit Agreement.  The Company incurred financing costs of $2.8 million to the lenders of Term Loan A which has been capitalized and recognized as a deduction of the Term Loan A balance in “Long-term revolving credit facility and long term debt” on the Consolidated Balance Sheet. These costs will be amortized over the life of Term Loan A.

The Credit Facility, as amended, provides for a $450 million revolving credit facility and generally contains the same representations and warranties, covenants, and events of default that it contained prior to the effectiveness of the Amendment. The Amendment did not change the interest rate or maturity applicable to the Credit Facility and the Credit Facility remains guaranteed by certain present and future wholly-owned material domestic subsidiaries of the Company (the “Guarantors”) and secured by a security interest in substantially all assets of the Company and the Guarantors.

On January 6, 2016, subsequent to fiscal 2015, the Company entered into an Incremental Revolving Joinder Agreement to its Credit Facility to increase the amount of revolving commitments under our Credit Facility by an additional $90 million. The total aggregate amount of revolving commitments under the Credit Facility starting January 6, 2016 is $540 million.

The proceeds of the loans made under the Credit Facility may be used for working capital, acquisitions, stock repurchases and general corporate purposes. As January 3, 2016, $549 million aggregate principal amount of loans, including Term Loan A, and letters of credit are outstanding under the Credit Facility and none of the Incremental Availability has been used.

As of January 3, 2016, the Company was in compliance with all of the financial covenants under the Credit Facility.

2.00% Senior Exchangeable Notes

Pursuant to the Merger, Cypress assumed Spansion's 2.00% Senior Exchangeable Notes (the Notes) on March 12, 2015. The Notes are governed by a Supplemental Indenture, dated March 12, 2015, between the Company, Spansion and Wells Fargo Bank, National Association, as Trustee. They are fully and unconditionally guaranteed on a senior unsecured basis by the Company. The Notes will mature on September 1, 2020, unless earlier repurchased or converted, and bear interest of 2.00% per year payable semi-annually in arrears on March 1 and September 1, commencing on March 1, 2014. The Notes may be due and payable immediately in certain events of default.

As of January 3, 2016, the Notes are exchangeable for 184.068 shares of common stock per $1,000 principal amount of the Notes (equivalent to an exchange price of $5.43) subject to adjustments for dividends, anti-dilutive issuances and make-whole adjustments upon a fundamental change. A fundamental change includes a change in control, delisting of the Company’s stock and liquidation, consolidation or merger of the Company. According to the Indenture, a change in control occurs when a person or group becomes the beneficial owner directly or indirectly, of more than 50% of the Company’s common stock. In the case of a consolidation or merger, if the surviving entity continues to be listed, no change of control will be triggered. Prior to June 1, 2020, the Notes will be exchangeable under certain specified circumstances as described in the Indenture.

The Notes were valued as of March 12, 2015 as a part of the Merger and the Company separated the Notes into debt and equity components according to the accounting guidance for convertible debt instruments that may be fully or partially settled in cash upon conversion. The carrying amount of the debt component, which approximates its fair value, was estimated by using an interest rate for nonconvertible debt, with terms similar to the Notes. The excess of the principal amount of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to the carrying value of the Notes over their term as interest expense using the interest method. The amount recorded to additional paid-in capital will not to be remeasured as long as it continues to meet the conditions for equity classification. As of March 12, 2015, as a part of the Merger valuation, the Company recorded $129.3 million as debt and $287.3 million as additional paid-in capital in stockholders’ equity. On June 9, 2015, the Company settled ten of the Notes in both cash and shares owing to a receipt of notice of conversion in the first quarter of fiscal 2015.

The net carrying amount of liability component of the Notes as of January 3, 2016 consists of the following:

	(in thousands)
Principal amount	$	150,000
Settlement due to notice from bondholder		(10	)
Unamortized debt discount		(18,145	)
Net carrying value	$	131,845

The following table presents the interest expense recognized on the Notes during the fiscal year ended January 3, 2016:

	Year Ended
	January 3, 2016
	( in thousands)
Contractual interest expense at 2% per annum	$	2,441
Accretion of debt discount		2,700
Total	$	5,141

Capped Calls

In connection with the Notes, Spansion had entered into capped call transactions in fiscal 2013 with certain bank counterparties to reduce the potential dilution to their common stock upon exchange of the Notes. The fair value of the capped call assumed as a part of the Merger was $25.3 million. In March 2015, the Company and the counterparties agreed to terminate and unwind the capped calls and the Company received a cash settlement of $25.3 million which has been recorded as a credit to additional paid-in-capital on the Consolidated Balance Sheet as of January 3, 2016.

Equipment Loans

In December 2011, the Company obtained equipment loans from a certain financial institution for an aggregate amount of $14.1 million. These loans are collateralized by certain of the Company’s manufacturing equipment and bear interest of 3.15% to 3.18% per annum and are payable in 60 equal installments which commenced in January 2012. The related master loan agreement includes a variety of standard covenants. All of the outstanding balance as of January 3, 2016 was recorded as part of “Other current liabilities.” At January 3, 2016 and December 28, 2014, the fair value of the equipment loans approximated the carrying value. The fair value was estimated using discounted cash flow analysis using relevant factors that might affect the fair value, such as present value factors and risk-free interest rates based on the U.S. Treasury yield curve.

The schedule of principal payments under equipment loans is as follows:

Fiscal Year	(In thousands)
2016	$	3,003
Total	$	3,003

Stock Buyback Programs:

On October 20, 2015, the Company’s Board authorized a new $450 million stock buyback program. In connection with the approval of the new share repurchase plan, the share repurchase plan previously approved in September 2011 was terminated.  The program allows the Company to purchase its common stock or enter into equity derivative transactions related to our common stock. The timing and actual amount expended with the new authorized funds will depend on a variety of factors including the market price of the Company’s common stock, regulatory, legal, and contractual requirements, alternatives uses of cash, availability of on shore cash and other market factors. The program does not obligate the Company to repurchase any particular amount of common stock and may be modified or suspended at any time at the Company’s discretion. From September 2011 through the termination of the program, the Company used $327.4 million from the program to repurchase 24.4 million shares at an average share price of $13.4. Under the new program authorized in October, 2015 through the end of fiscal 2015, the Company used $56.5 million to repurchase 5.7 million share at an average price of $10.00.

Yield Enhancement Program:

In fiscal 2009, the Audit Committee approved a yield enhancement strategy intended to improve the yield on the Company’s available cash. As part of this program, the Audit Committee authorized the Company to enter into short-term yield enhanced structured agreements, typically with maturities of 90 days or less, correlated to the Company’s stock price. Under the agreements the Company entered into to date, it pays a fixed sum of cash upon execution of an agreement in exchange for the financial institution’s obligations to pay either a pre-determined amount of cash or shares of the Company’s common stock depending on the closing market price of the Company’s common stock on the expiration date of the agreement. Upon expiration of each agreement, if the closing market price of the Company’s common stock is above the pre-determined price, the Company will have its cash investment returned plus a yield substantially above the yield currently available for short-term cash investments. If the closing market price is at or below the pre-determined price, the Company will receive the number of shares specified at the agreement’s inception. As the outcome of these arrangements is based entirely on the Company’s stock price and does not require the Company to deliver either shares or cash, other than the original investment, the entire transaction is recorded in equity.

The Company enters into a yield enhanced structured agreement based upon a comparison of the yields available in the financial markets for similar maturities against the expected yield to be realized per the structured agreement and the related risks associated with this type of arrangement. The Company believes the risk associated with these types of agreements is no different than alternative investments available to the Company with equivalent counterparty credit ratings. All counterparties to a yield enhancement program have a credit rating of at least Aa2 or A as rated by major independent rating agencies. For all such agreements that matured to date, the yields of the structured agreements were far superior to the yields available in the financial markets primarily due to the volatility of the Company’s stock price and the pre-payment aspect of the agreements. The counterparty is willing to pay a premium over the yields available in the financial markets due to the structure of the agreement.

The Company had no activity related to yield enhanced structured agreements during fiscal 2013. The following table summarizes the activity of the Company’s settled yield enhanced structured agreements during fiscal 2015 and 2014:

Periods	Aggregate Price Paid		Total Cash Proceeds Received Upon Maturity		Yield Realized		Total Number of Shares Received Upon Maturity		Average Price Paid per Share
Fiscal 2015:	(in thousands)
Settled through cash proceeds	$	28,966	$	29,353	$	387		—	$	—
Settled through issuance of common stock		9,601		—		—		1,000,000		9.6
Total for fiscal 2015	$	38,567	$	29,353	$	387		1,000,000		9.6
Fiscal 2014:
Settled through cash proceeds	$	19,415	$	19,733	$	318		—	$	—
Settled through issuance of common stock		—		—		—		—		—
Total for fiscal 2014	$	19,415	$	19,733	$	318		—	$	—

.

Dividends

During fiscal 2015, the Company paid total cash dividends of $128.0 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 9, 2015 the Company’s Board declared a cash dividend of $0.11 per share payable to holders of record of the Company’s common stock at the close of business day on December 31, 2015. This cash dividend was paid on January 21, 2016 and totaled $36.5 million.

During fiscal 2014, the Company paid total cash dividends of $69.2 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 24, 2014 the Company’s Board declared a cash dividend of $0.11 per share payable to holders of record of the Company’s common stock at the close of business day on December 26, 2014. This cash dividend was paid on January 15, 2015 and totaled $17.9 million.

During fiscal 2013, the Company paid total cash dividends of $64.8 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 1, 2013 the Company’s Board declared a cash dividend of $0.11 per share payable to holders of record of the Company’s common stock at the close of business day on December 23, 2013. This cash dividend was paid on January 15, 2014 and totaled $16.9 million.

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EQUITY METHOD INVESTMENT

12 Months Ended

Jan. 03, 2016

Equity Method Investments And Joint Ventures [Abstract]

EQUITY METHOD INVESTMENT

NOTE 15. EQUITY METHOD INVESTMENT

During fiscal 2014, the Company invested an additional $15 million in a company that designs, develops and manufactures products in the area of advanced batter storage for mobile consumer devices. The additional investment in this company increased the Company’s ownership interest in the company’s outstanding stock from 17.6% to 26.2% as of December 28, 2014 and required the Company to change from the cost method of accounting to the equity method of accounting for this investment. Under the equity method of accounting, the Company is required to record its interest in the investee's reported net income or loss for each reporting period. Additionally, the Company is required to present its prior period financial results to reflect the equity method of accounting from the date of the initial investment in the company.

During fiscal 2015, the Company invested an additional $28.0 million, which increased its cumulative total investment to $41.3 million, representing 38.7% of such investee's outstanding voting shares as of January 3, 2016.

Cypress's results of operations include charges of $7.1 million, $5.1 million and $1.9 million, respectively, for the fiscal years ended 2015, 2014 and 2013, for this investment which were recorded in "Equity in Net loss of equity method investee" in the Company's Consolidated Statements of Operations.

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NET INCOME (LOSS) PER SHARE

12 Months Ended

Jan. 03, 2016

Earnings Per Share [Abstract]

NET INCOME (LOSS) PER SHARE

NOTE 16. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed using the weighted-average common shares outstanding. Diluted net income per share is computed using the weighted-average common shares outstanding and any dilutive potential common shares. Diluted net loss per common share is computed using the weighted-average common shares outstanding and excludes all dilutive potential common shares when the Company is in a net loss position their inclusion would be anti-dilutive. The Company’s dilutive securities primarily include stock options, restricted stock units and restricted stock awards.

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Year Ended
	January 3, 2016			December 28, 2014		December 29, 2013
	(In thousands, except per-share amounts)
Net Income (Loss) per Share—Basic:
Net income (loss) attributable to Cypress for basic    computation	$	(378,867	)	$	17,936	$	(48,242	)
Weighted-average common shares for basic computation		302,036			159,031		148,558
Net income (loss) per share—basic	$	(1.25	)	$	0.11	$	(0.32	)
Net Income (Loss) per Share—Diluted:
Net income (loss) attributable to Cypress for diluted    computation	$	(378,867	)	$	17,936	$	(48,242	)
Weighted-average common shares for basic computation		302,036			159,031		148,558
Effect of dilutive securities:
Stock options, restricted stock units, restricted stock    awards and other		—			10,091		—
Weighted-average common shares for diluted computation		302,036			169,122		148,558
Net income (loss) per share—diluted	$	(1.25	)	$	0.11	$	(0.32	)

Anti-Dilutive Securities:

The following securities were excluded from the computation of diluted Net income (loss) per share as their impact was anti-dilutive:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Stock options, restricted stock units and restricted stock    awards		6,828		8,708		8,023

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EMPLOYEE BENEFIT PLANS

12 Months Ended

Jan. 03, 2016

Compensation And Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 17.  EMPLOYEE BENEFIT PLANS

Pension Plans

The Company sponsors defined benefit pension plans covering employees in certain of its international locations. The Company does not have defined-benefit pension plans for its United States-based employees. Pension plan benefits are based primarily on participants’ compensation and years of service credited as specified under the terms of each country’s plan. The funding policy is consistent with the local requirements of each country.

As of January 3, 2016 and December 28, 2014, projected benefit obligations totaled $8.4 million and $9.0 million, respectively, and the fair value of plan assets was $3.3 million and $3.4 million, respectively.

Spansion Innovates Group Cash balance plan (Defined Benefit Plan)

In connection with the Merger, the Company assumed the Spansion Innovates Group Cash Balance Plan (a defined benefit pension plan) in Japan. Defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions such as turnover rates, discount rates and other factors. The discount rate assumption is determined by comparing the projected benefit payments to the Japanese corporate bonds yield curve as of end of the fiscal year. The benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement. This liability is recorded in other long term liabilities on the Consolidated Balance Sheets. Net periodic pension cost is recorded in the Consolidated Statements of Operations and includes service cost. Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money associated with the passage of time on the PBO. Gains or losses resulting from a change in the PBO if actual results differ from actuarial assumptions will be accumulated and amortized over the future life of the plan participants if they exceed 10% of the PBO, being the corridor amount. If the amount of a net gain or loss does not exceed the corridor amount, they will be recorded in other comprehensive income.

Also in connection with the assumption of this pension plan liability, the Company assumed the restricted cash balance, which relates to the underfunded portion of the pension liability. The pension liability will be paid out by fiscal 2017 in annual installments according to the employee's election. As of January 3, 2016 the Company has a pension liability of $3.9 million and $3.7 million recorded as a part of the accrued compensation and employee benefits, and other long-term liabilities, respectively, on the Consolidated Balance Sheet. As of January 3, 2016, the Company has restricted cash of $3.7 million and $3.5 million recorded in other current assets and other long-term assets, respectively, on the Consolidated Balance Sheet.

The plan is unfunded as of January 3, 2016. This status is not indicative of the Company’s ability to pay ongoing pension benefits. The Company recorded a net periodic cost of $0.9 million for the year ended January 3, 2016. The Company has accrued a liability of $1.7 million as of January 3, 2016 which has been recorded in other long term liabilities on the Consolidated Balance Sheet. The Company expects to contribute an immaterial amount towards the Cash Balance Plan for fiscal 2016.

Key Employee Bonus Plan (“KEBP”)

The Company has a key employee bonus plan, which provides for incentive payments to certain key employees including all executive officers except the Chief Executive Officer. Payments under the plan are determined based upon certain performance measures, including the Company’s Non-GAAP actual PBT% compared to a target as well as achievement of strategic, operational and financial goals established for each key employee. The Company recorded total charges of $0.5 million under the plan in fiscal 2015, $2.7 million under the plan in fiscal 2014 and $7.4 million in fiscal 2013.

Performance Bonus Plan

The Company has a performance bonus plan which provides for incentive payments to the Company’s CEO under a shareholder approved Plan. Payments under the plan are determined based upon the attainment and certification of certain objective performance criteria established by the Committee. Under the plan, the Company recorded total charges of less than $0.1 million for fiscal 2015, 2014 and 2013.

Performance Profit Sharing Plan (“PPSP”)

The Company has a performance profit sharing plan, which provides incentive payments to all of its employees. Payments under the plan are determined based upon the Company’s earnings per share and the employees’ percentage of success in achieving certain performance goals. The Company recorded total charges of $0.2 million under the plan in fiscal 2015, $1.1 million under the plan in fiscal 2014 and $2.7 million in fiscal 2013.

Deferred Compensation Plan

The Company has a deferred compensation plan, which provides certain key employees, including its executive management, with the ability to defer the receipt of compensation in order to accumulate funds for retirement on a tax-deferred basis. The Company does not make contributions to the deferred compensation plan or guarantee returns on the investments. Participant deferrals and investment gains and losses remain the Company’s assets and are subject to claims of general creditors.

Under the deferred compensation plan the assets are recorded at fair value in each reporting period with the offset being recorded in “Other income (expense), net.” The liabilities are recorded at fair value in each reporting period with the offset being recorded as an operating expense or income. As of January 3, 2016 and December 28, 2014, the fair value of the assets was $41.2 million and $44.1 million, respectively, and the fair value of the liabilities was $41.5 million and $43.5 million, respectively.

All expense and income recorded under the deferred compensation plan were included in the following line items in the Consolidated Statements of Operations:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Changes in fair value of assets recorded in:
Other income (expense), net	$	(1,353	)	$	3,014		$	6,371
Changes in fair value of liabilities recorded in:
Cost of revenues		38			427			(854	)
Research and development expenses		233			(793	)		(1,744	)
Selling, general and administrative expenses		260			(1,855	)		(3,795	)
Total income (expense), net	$	(822	)	$	793		$	(22	)

401(k) Plan

The Company sponsors a 401(k) plan which provides participating employees with an opportunity to accumulate funds for retirement on a tax deferred basis. The Company does not make contributions to the 401(k) plan and all employee contributions are fully vested.

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INCOME TAXES

12 Months Ended

Jan. 03, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 18. INCOME TAXES

The geographic distribution of income (loss) before income taxes and the components of income tax benefit (provision) are summarized below:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
United States loss	$	(476,014	)	$	(109,307	)	$	(122,162	)
Foreign income		111,836			124,652			64,314
Income (loss) before income taxes		(364,178	)		15,345			(57,848	)
Income tax benefit (provision):
Current tax benefit (expense):
Federal		219			5,551			12,026
State		55			(49	)		(120	)
Foreign		(17,189	)		(4,732	)		(4,292	)
Total current tax benefit (expense)		(16,915	)		770			7,614
Deferred tax benefit (expense):
Federal		(610	)		—			—
State		(155	)		—			—
Foreign		720			403			147
Total deferred tax benefit (expense)		(45	)		403			147
Income tax benefit (provision)	$	(16,960	)	$	1,173		$	7,761

Income tax benefit (provision) differs from the amounts obtained by applying the statutory United States federal income tax rate to income (loss) before taxes as shown below:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Benefit (provision) at U.S. statutory rate of 35%	$	127,462		$	(5,371	)	$	19,589
Foreign income at other than U.S. rates		(22,385	)		37,477			15,425
Future benefits not recognized		(126,846	)		(35,107	)		(41,797	)
Reversal of previously accrued taxes		10,939			8,286			13,872
Tax impact of acquisitions		(6,457	)		(2,538	)		1,061
Foreign withholding taxes		(243	)		(1,195	)		(535	)
State income taxes, net of federal benefit		(138	)		(49	)		93
Other, net		708			(330	)		53
Income tax benefit (provision)	$	(16,960	)	$	1,173		$	7,761

The components of deferred tax assets and liabilities were as follows:

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Deferred tax assets:
Credits and net operating loss carryovers	$	624,086		$	265,827
Reserves and accruals		160,804			55,678
Excess of book over tax depreciation		12,463			32,892
Deferred income		20,059			6,197
Total deferred tax assets		817,412			360,594
Less valuation allowance		(525,021	)		(358,424	)
Deferred tax assets, net		292,391			2,170
Deferred tax liabilities:
Foreign earnings		(184,671	)		—
Intangible assets arising from acquisitions		(108,784	)		—
Total deferred tax liabilities		(293,455	)		—
Net deferred tax assets	$	(1,064	)	$	2,170

The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:

Carryforward	Amount		Expiration Date
	($ in millions)
Federal net operating loss carryforward		1,708	2020-2035
Federal research credit carryforward		136	2018-2035
International foreign tax credit carryforward		13	2016-2023
State research credit carryforward		105	Indefinite
State net operating loss carryforward		761	2016-2035

The federal and state net operating loss carryforward is from acquired companies and the annual use of such loss is subject to significant limitations under Internal Revenue Code Section 382. Foreign tax credits may only be used to offset tax attributable to foreign source income.

As of January 3, 2016 of the total deferred tax assets of $817.4 million, a valuation allowance of $525.0 million has been recorded for the portion which is not more likely than not to be realized. As of December 28, 2014, of the total deferred tax assets of $360.6 million, a valuation allowance of $358.4 million has been recorded for the portion which is not more likely than not to be realized. The Company’s determination of the need for a valuation allowance each year is based on a jurisdictional assessment.

The Company received tax deductions from the gains realized by employees on the exercise of certain non-qualified stock options for which the benefit is recognized as a component of stockholders’ equity. When recognized, the tax benefit related to $648.3 million of the Company’s net operating loss carry forwards will be accounted for as an increase to additional paid-in capital rather than a reduction of the income tax provision.

The Protecting Americans from Tax Hikes (PATH) Act (“Act”) (H.R 2029) was signed into law on December 18, 2015.  The Act contains a number of provisions including, most notably, permanent extension of the United States federal research tax credit and extension of the refundable AMT credit in lieu of bonus depreciation.  The Act did not have a material impact on the Company’s effective tax rate for fiscal 2015 due to the effect of the valuation allowance on the Company's deferred tax assets.

United States income taxes and foreign withholding taxes have not been provided on a cumulative total of $339.1 million and $298.6 million of undistributed earnings for certain non-United States subsidiaries as of January 3, 2016 and December 28, 2014, respectively, because portion of such earnings are intended to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits). It is not practicable to determine the income tax liability that might be incurred if these earnings were to be distributed.

The Company’s global operations involve manufacturing, research and development, and selling activities. The Company’s operations outside the U.S. are in certain countries that impose a statutory tax rate both higher and lower than the U.S. The Company is subject to tax holidays in the Philippines, Malaysia and Thailand where it manufactures and designs certain products. These tax holidays are scheduled to expire at varying times within the next six years. The Company’s tax benefit of these tax holidays for the year ended January 3, 2016 had an insignificant impact on earnings per share. Overall, the Company expects its foreign earnings to be taxed at rates lower than the statutory tax rate in the U.S.

Unrecognized Tax Benefits

The following table is a reconciliation of unrecognized tax benefits:

	(In thousands)
Unrecognized tax benefits, as of December 30, 2012	$	31,466
Decrease related to settlements with taxing authorities		(9,216	)
Increase based on tax positions related to current year		962
Increase based on tax positions related to prior year		163
Decrease related to lapsing of statute of limitation		(4,762	)
Unrecognized tax benefits, as of December 29, 2013	$	18,613
Decrease related to settlements with taxing authorities		(6,361	)
Increase based on tax positions related to current year		993
Decrease related to lapsing of statute of limitation		(1,638	)
Unrecognized tax benefits, as of December 28, 2014	$	11,607
Decrease related to settlements with taxing authorities		(838	)
Decrease related to lapsing of statute of limitation		(818	)
Decrease based on tax positions related to prior year		(10,272	)
Increase based on tax positions related to current year		6,487
Increases in balances related to tax positions taken during prior    periods (including those related to acquisitions made    during the year)		108,677
Unrecognized tax benefits, as of January 3, 2016	$	114,843

Gross unrecognized tax benefits increased by $103 million during fiscal year 2015, resulting in gross unrecognized tax benefits of $115 million as of January 3, 2016. The increase in gross unrecognized tax benefits is primarily a result of our Merger with Spansion. Uncertain tax positions assumed in connection with merger and acquisitions are initially estimated as of the acquisition date.

During fiscal year 2015, the Company recognized $2 million of previously unrecognized tax benefits as a result of either the expiration of the statute of limitations for certain audit periods or settlement with taxing authorities.

The Company recognized interest and penalties related to unrecognized tax benefits within the provision for income taxes line in the accompanying consolidated statements of operations. The Company recognized approximately $6 million of expense related to interest and penalties in fiscal year 2015. Accrued interest and penalties are included within other long-term liabilities in the consolidated balance sheets. As of January 3, 2016 and December 28, 2014, the combined amount of cumulative accrued interest and penalties was approximately $12 million and $3 million, respectively. The increase in cumulative accrued interest and penalties is primarily a result of the Merger with Spansion.

As of January 3, 2016 and December 28, 2014, the amounts of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate totaled $28.4 million and $12.9 million, respectively.

Management believes events that could occur in the next 12 months and cause a material change in unrecognized tax benefits include, but are not limited to, the following:

· completion of examinations by the U.S. or foreign taxing authorities; and

· expiration of statute of limitations on the Company’s tax returns.

The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. The Company regularly assesses its tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which it does business. The Company believes it is possible that it may recognize approximately $7.0 million of its existing unrecognized tax benefits within the next twelve months as a result of the lapse of statutes of limitations and the resolution of agreements with domestic and various foreign tax authorities.

Classification of Interest and Penalties

Our policy is to classify interest expense and penalties, if any, as components of income tax provision in the Consolidated Statements of Operations. As of January 3, 2016 and December 28, 2014, the amount of accrued interest and penalties totaled $12.0 million and $3.0 million, respectively. The Company recorded a charge or (benefit) from interest and penalties of $9.1 million, ($2.8) million and $1.9 million during fiscal 2015, 2014 and 2013, respectively.

Tax Examinations

The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by such jurisdictions as of January 3, 2016:

Tax Jurisdictions	Tax Years
United States	2009 and onward
Philippines	2011 and onward
Israel	2014 and onward
India	2009 and onward
Thailand	2010 and onward
Malaysia	2007 and onward
Switzerland	2008 and onward
California	2010 and onward

Non-U.S. tax authorities have completed their income tax examinations of the Company’s subsidiary in Israel for fiscal years 2008-2013 and its branch in Germany for fiscal years 2010 to 2013. Both Israel and Germany examinations did not result in material adjustments to the Company’s tax liabilities. Income tax examinations of the Company’s Malaysian subsidiary for the fiscal years 2007 to 2012 and its Thailand subsidiary for fiscal year 2010 are in progress. The Company does not believe the ultimate outcome of these examinations will result in a material increase to its tax liability.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jan. 03, 2016

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 19.  COMMITMENTS AND CONTINGENCIES

Product Warranties

The Company 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 warranty costs based on 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 properly reflects the remaining obligations based on the anticipated returns over the balance of the obligation period.

The following table presents warranty reserve activities:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Beginning balance	$	2,370		$	2,628		$	3,360
Warranties assumed as part of the merger		1,254			—			—
Provisions		2,820			1,449			390
Settlements made		(2,348	)		(1,707	)		(1,122	)
Ending balance	$	4,096		$	2,370		$	2,628

Patent License Agreement

In December 2015, the Company entered into a strategic Patent License Agreement (“Agreement”) with Round Rock LLC (“Round Rock”) under which the Company and its majority-owned subsidiaries received a license to Round Rock’s substantial patent portfolio. This transaction allowed the Company and Round Rock to continue to develop its strategic relationship regarding patent monetization and litigation defense. Under the terms of the Agreement, the Company paid a license fee of $6 million.  One of the benefits that the Company received from the Agreement was the avoidance of future litigation expenses as well as future customer disruption and based upon its analysis, it determined that a portion of the license fee that the Company will pay Round Rock represents the cumulative cost relating to prior years. As such, the Company recorded, $2.2 million charge to cost of revenues in fiscal 2015. The Company capitalized $3.8 million on the Consolidated Balance Sheet of which $0.8 million in Current assets, and $3.0 million in Long-term assets on the Consolidated Balance Sheet as of January 3, 2016 and will amortize over the purchased life of the patent portfolio.

On April 30, 2012, the Company entered into a strategic Patent License Agreement (“PLA”) with IV Global Licensing LLC (“IV”) under which the Company and its majority-owned subsidiaries received a license to IV’s substantial patent portfolio. This transaction allowed the Company and IV to continue to develop their strategic relationship regarding patent monetization and litigation defense. Under the terms of the PLA, the Company paid a license fee of $14 million and to purchase certain litigation defense services from IV in the future. In addition, in a related agreement, IV is expected to make certain patent purchases from the Company in the near term. The exact terms and conditions of the PLA are subject to confidentiality provisions, and are the subject of an application for confidential treatment to be filed with the SEC. In June 2015, the Company paid an additional license fee of $18.5 million under the existing license agreement due to the merger with Spansion in March 2015.

One of the benefits that the Company received from the PLA was the avoidance of future litigation expenses as well as future customer disruption and based upon the Company’s analysis, using a relief from royalty method, the Company determined that a portion of the license fee that it will pay IV represents the cumulative cost relating to prior years. As such, the Company recorded, $7.1 million which was recorded as a charge to cost of revenues in fiscal 2012. The Company originally capitalized $6.9 million on the Consolidated Balance Sheet and an additional $18.5 million due to the acquisition of Spansion as discussed above and are amortizing over the remaining life of the patent portfolio. Amortization expense was $4.4 million, $0.8 million and $0.8 million in fiscal years January 3, 2016, December 28, 2014 and December 29, 2013, respectively. The remaining capitalized balance of the PLA is $18.7 million and $5.6 million in Current assets, and $13.2 million and $3.8 million in Long-term assets on the Consolidated Balance Sheet as of January 3, 2016 and December 28, 2014, respectively.

Capital Leases

On July 19, 2011, we entered into a capital lease agreement which allows us to borrow up to $35.0 million to finance the acquisition of certain manufacturing equipment. We have the option of purchasing the tools from the lessor at specified intervals during the lease term. The master lease contains standard covenants. Assets purchased under the capital lease are included in “Property, plant and equipment, net” as manufacturing equipment and the amortization is included in depreciation. As of January 3, 2016 the gross value and net book value of manufacturing equipment purchased under capital lease was $20.5 million and $11.9 million, respectively. As of January 3, 2016, the total minimum lease payments under our capital leases amounted to $7.2 million.

Future minimum payments, by year and in the aggregate, under the capitalized lease consist of the following:

Fiscal Year	(In thousands)
2016	$	6,715
2017		599
2018		—
Total minimum lease payments		7,314
Less: amount representing interest		(125	)
Present value of net minimum lease payments	$	7,189

Operating Lease Commitments

We lease certain facilities and equipment under non-cancelable operating lease agreements that expire at various dates through fiscal 2018. Some leases include renewal options, which would permit extensions of the expiration dates at rates approximating fair market rental values.

As of January 3, 2016 future minimum lease payments under non-cancelable operating leases were as follows:

Fiscal Year	(In thousands)
2016		16,171
2017		13,076
2018		9,164
2019		6,541
2020		6,028
2021 and Thereafter		23,835
Total	$	74,815

Rental expenses totaled $17.1 million, $6.8 million and $7.2 million in fiscal 2015, 2014 and 2013, respectively.

Equity Investment Commitments

We have committed to purchase additional preferred stock from a company that works in the area of advanced battery storage. In fiscal 2015, we invested $28.0 million in this company. Subject to the attainment of certain milestones, we intend to purchase additional preferred stock in this company.

Litigation and Asserted Claims

In a matter associated with Ramtron International Corporation (“Ramtron”), a wholly owned subsidiary of Cypress, bankruptcy proceedings are ongoing in Italy where the trustee for four bankrupt entities of Finmek S.pA. is seeking refunds of payments made by Finmek to Ramtron prior to Finmek’s bankruptcy in 2004. In November 2014, one of the courts presiding over these proceedings found that two payments should be refunded to Finmek, which currently total $0.5 million, including interest and fees. We believe this ruling was made in error and are appealing this decision. Due to the current stage of the proceedings and the appellate process, the Company cannot reasonably estimate the range of possible loss, if any.

In 2013, a former employee filed a grievance against the Company seeking back pay and reinstatement or front pay. That matter was tried before an administrative law judge in July 2014. In December 2014, the administrative law judge issued a ruling in favor of the former employee for amounts totaling $1.3 million. We believe the ruling was erroneous and are currently appealing the decision. Due to the current stage of the proceedings and the appellate process, the Company cannot reasonably estimate the range of possible loss, if any.

On May 6, 2015, the Company entered into a confidential settlement agreement with GSI Technology, Inc. under which all outstanding patent and antitrust disputes and actions between the companies were settled. As a part of the settlement, both companies agreed to dismiss with prejudice all pending litigation.  The settlement did not have a material effect on the Company’s business, financial condition, cash flows or results of operations.

In the LongPath Capital, LLC (“LongPath”) appraisal case, Petitioner LongPath sought an appraisal of the fair value of the shares of Ramtron common stock held by LongPath prior to the Company's acquisition of Ramtron in 2012. In June 2013, the Company paid the purchase price of $3.10 per share to LongPath, or $1.5 million, to cut off the accrual of statutory interest on the principal. As a result, the Company's potential exposure was limited to any premium on the purchase price that might be awarded by the court plus the interest accrued prior to June 2013. On June 30, 2015, the Delaware Court of Chancery ruled that the fair value of Ramtron as of the merger date was $3.07 per share, $0.03 below the purchase price, rejecting LongPath's claim that Ramtron should have been valued at over $4.00 per share.  LongPath did not appeal the ruling and the case is now closed and did not have a material impact on the Company’s financial statements.

Pursuant to a confidential settlement agreement, the Company’s six-patent infringement case against LG Electronics, Inc. (“LG”) (Case No. 13-cv-04034-SBA), which was filed in August 2013, and the six petitions filed by LG for inter partes review of the asserted patents were settled effective as of July 28, 2015. The settlement did not have a material effect on the Company’s business, financial condition, cash flows or results of operations.

The Company has reached a settlement in the pending class action claims in three Canadian provinces relating to the original SRAM class action case that was resolved in the United States in 2010. As with the case in the United States, the Company is confident that it did not engage in any antitrust activity, however given that it was the last remaining defendant and the cost of continued litigation would far exceed the cost of a nominal settlement, the Company agreed to settle the case. The settlement did not have a material effect on the Company’s business, financial condition, cash flows or results of operations.

After our announcement of the Merger in December 2014, two separate putative class action complaints (Walter Jeter v. Spansion Inc., et. al. (No. 114CV274635) and Shiva Y. Stein v. Spansion Inc., el. al. (No. 114CV274924)) were filed in Santa Clara County Superior Court, alleging claims of breach of fiduciary duty against the Spansion’s board of directors and naming Cypress as a defendant for aiding and abetting the alleged breach of fiduciary duty. While Cypress believes these lawsuits to be meritless, Spansion and Cypress entered into a memorandum of understanding with plaintiffs, the terms of which required additional disclosures by the Company and payment of nominal attorneys’ fees to the class counsel. Final resolution of these litigations will require court approval of a final settlement agreement.  Due to the current stage of the proceedings, the Company cannot reasonably estimate the range of possible loss, if any.

The Company is involved in various trademark opposition proceedings with Kingston Technology Corporation (“Kingston”) concerning Kingston’s “HYPERX” trademark and the Company’s “HYPERRAM trademark. These proceedings are in the early stages, preventing an accurate assessment of potential outcomes.

The Company is currently a party to various other legal proceedings, claims, disputes and litigation arising in the ordinary course of business. Based on its own investigations, the Company believes the ultimate outcome of the current legal proceedings, individually and in the aggregate, will not have a material adverse effect on its business, financial position, cash flows or results of operations. However, because of the nature and inherent uncertainties of the litigation, should the outcome of these actions be unfavorable, the Company's business, financial condition, cash flows or results of operations could be materially and adversely affected.

Indemnification Obligations

We are a party to a variety of agreements pursuant to which we may be obligated to indemnify another party to such agreements with respect to certain matters. Typically, these obligations arise in the context of contracts we have entered into, under which we customarily agree 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 our products, title to assets sold, certain intellectual property claims, defective products, specified environmental matters and certain income taxes. In these circumstances, payment by us is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow us to challenge the other party’s claims and vigorously defend ourselves and the third party against such claims. Further, our obligations under these agreements may be limited in terms of time, amount or the scope of our responsibility and in some instances, we 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 our obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments we have made under these agreements have not had a material effect on our business, financial condition, cash flows or results of operations. We believe that if we were to incur a loss in any of these matters, such loss would not have a material effect on our business, financial condition, cash flows or results of operations, although there can be no assurance of this. As of January 3, 2016 we had no reason to believe a loss exceeding amounts already recognized had been incurred.

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION

12 Months Ended

Jan. 03, 2016

Segment Reporting [Abstract]

SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION

NOTE 20. SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION

Segment Information

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 is considered to be the chief executive officer.

In connection with the Merger, the Company has aligned Spansion's two major product groups with Cypress's existing business segments: legacy Spansion flash memory products are reported in the Company's Memory Products Division and legacy Spansion microcontroller and analog products are reported in the Company's Programmable Systems Division.

The Company operates in the following four reportable business segments:

Business Segments	Description
PSD: Programmable Systems Division	PSD focuses on high-performance, programmable solutions. The programmable portfolio includes high-performance Traveo™ automotive microcontrollers, PSoC® programmable system-on-chip products, ARM® Cortex®-M4, -M3, -M0+ microcontrollers and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive-sensing controllers, TrueTouch® touchscreen and fingerprint reader products, and PSoC Bluetooth Low Energy solutions for the IoT. Effective March 12, 2015, PSD added Spansion’s microcontroller and analog products.
MPD: Memory Products Division	MPD focuses on high-performance parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), and high-reliability F-RAM™ ferroelectric memory devices. Its purpose is to enhance our position in these products and invent new products and derivatives. Effective March 12, 2015, MPD added Spansion’s Flash memory products.
DCD: Data Communications Division	DCD focuses on USB controllers, Bluetooth® Low Energy solutions that leverage Cypress’s PRoC™ programmable radio-on-chip technology, WirelessUSB™ solutions, module solutions such as trackpads and Bluetooth Low Energy modules, and controllers for the new USB Type-C standard, which enables data transmission and power delivery over a single cable with a slimmer plug. DCD focuses primarily on industrial, handset and consumer electronics markets and applications.
ETD: Emerging Technologies Division	Also known as our “startup” division, ETD includes subsidiaries AgigA Tech Inc. and Deca Technologies Inc., as well as our foundry business and other development-stage activities.

The following tables set forth certain information relating to the reportable business segments:

Revenues:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
Programmable Systems Division	$	613,884	$	283,206	$	292,707
Memory Products Division		871,640		347,887		338,986
Data Communications Division		72,791		70,378		79,410
Emerging Technologies and Other		49,538		24,026		11,590
Total revenues	$	1,607,853	$	725,497	$	722,693

Income (Loss) from Operations before Income Taxes:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Programmable Systems Division	$	(70,644	)	$	(18,981	)	$	(20,105	)
Memory Products Division		105,940			134,283			111,667
Data Communications Division		(15,822	)		(10,130	)		(7,452	)
Emerging Technologies and Other		(7,730	)		(13,992	)		(20,860	)
Unallocated items:
Stock-based compensation expense		(93,527	)		(50,170	)		(73,020	)
Restructuring (charges) benefit		(90,084	)		1,180			(15,357	)
Amortization of intangibles and other    acquisition-related costs		(143,487	)		(13,955	)		(34,056	)
Impairment of assets and other		—			(7,760	)		(1,795	)
Gain on divestiture of TrueTouch® Mobile    business		66,472			—			—
Changes in value of deferred compensation    plan		(820	)		—			—
Impact of purchase accounting and other		(107,328	)		(62	)		5,008
Income (loss) from operations before income    taxes	$	(357,030	)	$	20,413		$	(55,970	)

Depreciation:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
Programmable Systems Division	$	10,484	$	13,613	$	14,642
Memory Products Division		89,156		15,998		16,332
Data Communications Division		1,946		3,234		3,851
Emerging Technologies and Other		24,910		6,960		4,680
Total depreciation	$	126,496	$	39,805	$	39,505

Geographical Information

The following table presents our total revenues by geographical locations:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
United States	$	181,913	$	89,521	$	75,052
Europe		181,663		100,510		61,003
Asia:
China		414,299		294,655		254,993
South Korea		68,464		82,089		96,811
Japan		467,823		64,926		81,856
Rest of the world		293,691		93,796		152,978
Total revenues	$	1,607,853	$	725,497	$	722,693

Property, plant and equipment, net, by geographic locations were as follows:    

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
United States	$	269,304	$	128,544
Philippines		90,356		90,641
Thailand		34,233		—
Japan		9,537		67
Other		21,573		18,511
Total property, plant and equipment, net	$	425,003	$	237,763

We track our assets by physical location. Although management reviews asset information on a corporate level and allocates depreciation expense by segment, our chief operating decision maker does not review asset information on a segment basis.

Customer Information

Outstanding accounts receivable from three of our distributors, accounted for 42%, 11% and 9% , respectively, of our consolidated accounts receivable as of January 3, 2016 .Outstanding accounts receivable from three of our distributors, accounted for 12%, 11% and 9% , respectively, of our consolidated accounts receivable as of December 28, 2014 .

Revenue generated through three of our distributors, accounted for 25%, 10% and 7% respectively, of our consolidated revenue for fiscal 2015.  No end customer accounted for 10% or more of the Company’s revenue for fiscal 2015.

Revenue generated through three of our distributors, accounted for 13%, 10% and 10% respectively, of our consolidated revenue for fiscal 2014.

Revenue generated through two of our distributors accounted for 11%, and 10%, respectively, of our consolidated revenue for fiscal 2013. One end customer purchases our products both from our distributors and directly from us. Shipments to this end customer accounted for 12% of our consolidated revenue for fiscal 2013.

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SUBSEQUENT EVENTS

12 Months Ended

Jan. 03, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 21. SUBSEQUENT EVENT

Joinder Agreement

On January 6, 2016, we entered into an Incremental Revolving Joinder Agreement to our Credit Facility to increase the amount of revolving commitments under our Credit Facility by an additional $90 million. The total aggregate amount of revolving commitments under the Credit Facility starting January 6, 2016 is $540 million.

$450million stock buyback program

From January 3, 2016 through February 26, 2016, the Company repurchased 23.7 million shares for a total cost of $181.3 million.

Under the new program authorized in October, 2015 through February 26, 2016, the Company repurchased a total of 29.3 million shares for a total cost of $237.8 million.  As of February 26, 2016, the total dollar value of shares that may yet be purchased under the program is approximately $212.2 million.

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Jan. 03, 2016

Valuation And Qualifying Accounts [Abstract]

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

	Balance at Beginning of Period		Charges (Releases) to Expenses/Revenues			Deductions			Balance at End of Period
	(In thousands)
Allowance for doubtful accounts receivable:
Year ended January 3, 2016	$	738	$	576		$	(125	)	$	1,189
Year ended December 28, 2014	$	719	$	39		$	(20	)	$	738
Year ended December 29, 2013	$	769	$	51		$	(101	)	$	719
Deferred tax valuation allowance
Year ended January 3, 2016	$	358,424	$	166,597	(1)	$	—		$	525,021
Year ended December 28, 2014	$	334,671	$	23,753	(1)	$	—		$	358,424
Year ended December 29, 2013	$	307,199	$	27,472	(1)	$	—		$	334,671

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jan. 03, 2016

Description Of Business And Summary Of Significant Accounting Policies [Abstract]

Basis of Preparation

Basis of Preparation

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 2015 ended on January 3, 2016, Fiscal 2014 ended on December 28, 2014 and fiscal 2013 ended on December 29, 2013. Fiscal 2015 contained 53 weeks. Fiscal years 2014 and 2013 each contained 52 weeks.   The additional week in 2015 did not materially affect the Company's results of operations or financial position.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and include the accounts of Cypress and all of its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The following reclassifications have been made in the presentation of Cypress’s Consolidated Balance Sheet as of December 28, 2014 to conform to current year classification:

·$6.1 million reclassified from other current liabilities to current portion of long-term debt,

·$10.1 million reclassified from other long-term liabilities to revolving credit facility and long-term debt, and

·$19.6 million reclassified from deferred margin on sales to distributors to other current liabilities.

During fiscal 2014, the Company recorded out-of-period correcting adjustments to write off certain manufacturing and subcontractor costs that were capitalized within other current assets in previous periods. These corrections resulted in a decrease of net income of $2.6 million for the twelve months ended December 28, 2014. The Company recorded these corrections in the aggregate totaling $2.6 million in cost of revenues in the twelve months ended December 28, 2014. Management assessed the impact of these errors and concluded that the amounts were not material, either individually or in the aggregate, to any prior periods.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these items. See Note 5 for a detailed discussion of fair value measurements.

Cash and Cash Equivalents

Cash and Cash Equivalents

Highly liquid investments with original or remaining maturities of ninety days or less at the date of purchase are considered cash equivalents.

Investments

Investments

All of the Company’s investments in equity securities in publicly traded companies are classified as trading securities. All of the Company’s investments in debt securities are classified as available-for-sale securities. Available-for-sale debt securities with maturities greater than twelve months are classified as short-term when they are intended for use in current operations. Investments in available-for-sale securities are reported at fair value with unrealized gains and losses, net of tax, as a component of “Accumulated other comprehensive income (loss)” in the Consolidated Balance Sheets. The Company also has minority equity investments in privately-held companies. Minority equity investments in which the Company’s ownership interest is less than 20% are carried at cost less any other than temporary impairment write-downs. Minority equity investments in which the Company’s ownership interest is 20% or greater are accounted for using the equity method of accounting. Under the equity method of accounting, the Company is required to record its interest in the investee's reported net income or loss for each reporting period. None of the Company’s equity investments are a variable interest entity. The Company’s minority equity investments are included in “Other assets” in the Consolidated Balance Sheets.

The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary. See Note 5 for a detailed discussion of the impairment losses recorded on the Company’s investments.

Inventories

Inventories

Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market. Market is based on estimated net realizable value. The Company writes down its inventories which have become obsolete or are in excess of anticipated demand or net realizable value based upon assumptions about demand forecasts, product life cycle status, product development plans and current sales levels. Inventory reserves are not relieved until the related inventory has been sold or scrapped.

Long-Lived Assets

Long-Lived Assets

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. Leasehold improvements and leasehold interests are amortized over the shorter of the estimated useful lives of the assets or the remaining term of the lease. Estimated useful lives are as follows:

Equipment	3 to 10 years
Buildings and leasehold improvements	5 to 20 years
Furniture and fixtures	3 to 7 years

The Company evaluates its long-lived assets, including property, plant and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors considered important that could result in an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of assets, significant negative industry or economic trends, and a significant decline in the Company’s stock price for a sustained period of time. Impairment is recognized based on the difference between the estimated fair value of the asset and its carrying value. Estimated fair value is generally measured based on quoted market prices, if available, appraisals or discounted cash flow analyses.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

The Company assesses goodwill for impairment on an annual basis on the first day of the fourth quarter of our fiscal year and if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. In accordance with ASU 2011-08, Testing Goodwill for Impairment, qualitative factors can be assessed to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required.

Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and are reviewed for impairment as discussed above. See Note 4 for more information.

Revenue Recognition

Revenue Recognition

The Company generates revenues by selling products to distributors, various types of manufacturers including original equipment manufacturers (“OEMs”) and electronic manufacturing service providers (“EMSs”). The Company recognizes revenues on sales to OEMs and EMSs upon shipment provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no significant remaining obligations.

Sales to certain distributors are made under agreements which provide the distributors with price protection, stock rotation and other allowances under certain circumstances. When the Company determines that the uncertainties exist for the rights given to these distributors, revenues and costs related to distributor sales are deferred until products are sold by the distributors to the end customers. In those circumstances, revenues are recognized upon receiving notification from the distributors that products have been sold to the end customers. In these cases, at the time of shipment to distributors, the Company records a trade receivable for the selling price since there is a legally enforceable right to receive payment, relieves inventory for the value of goods shipped since legal title has passed to the distributors, and defers the related margin and price adjustment as deferred income on sales to distributors on the Consolidated Balance Sheets. Any effects of distributor price adjustments are recorded as a reduction to deferred income at the time the distributors sell the products to the end customers and the distributor submits a valid claim for the price adjustment.

The Company has historically recognized a significant portion of revenue through distributors at the time the distributor resold the product to its end customer (also referred to as the sell-through basis of revenue recognition) given the difficulty in estimating the ultimate price of these product shipments and amount of potential returns. The Company continuously reassesses its ability to reliably estimate the ultimate price of these products and, over the past several years, has made investments in its systems and process around the distribution channel to improve the quality of the information it receives from its distributors. Given these ongoing investments, and based on the financial framework for estimating potential price adjustments, beginning the fourth quarter of 2014, the Company concluded that it was able to reasonably estimate returns and pricing concessions on certain product families and with certain distributors, and recognized revenue at the time it shipped these specific products to the identified distributors, less its estimate of future price adjustments and returns. As a result of this change, the Company recognized an incremental $12.3 million of revenue during the fourth quarter of fiscal 2014. The impact of this change resulted in an increase of $6.2 million to net income attributable to Cypress for fiscal 2014, or $0.04 per basic and diluted share. During fiscal 2015, the Company recognized $40.9 million of incremental revenue from this change on additional product families, which resulted in a decrease to the net loss of $25.0 million or $0.07 per basic and diluted shares.

The Company records as a reduction to revenues reserves for sales returns, price protection and allowances based upon historical experience rates and for any specific known customer amounts. The Company also provides certain distributors and EMSs with volume-pricing discounts, such as rebates and incentives, which are recorded as a reduction to revenues at the time of sale. Historically these volume discounts have not been significant.

Employee Benefit Plans

Employee Benefit Plans

In connection with the Merger, the Company assumed the Spansion Innovates Group Cash Balance Plan (a defined benefit pension plan) in Japan. A defined benefit pension plan is accounted for on an actuarial basis, which requires the selection of various assumptions such as turnover rates, discount rates and other factors. The discount rate assumption is determined by comparing the projected benefit payments to the Japanese corporate bonds yield curve as of end of the most recently completed fiscal year. The benefit obligation is the projected benefit obligation (PBO), which represents the actuarial present value of benefits expected to be paid upon retirement. This liability is recorded in other long term liabilities on the Consolidated Balance Sheets. Net periodic pension cost is recorded in the Consolidated Statements of Operations and includes service cost. Service cost represents the actuarial present value of participant benefits earned in the current year. Interest cost represents the time value of money associated with the passage of time on the PBO. Gains or losses resulting from a change in the PBO if actual results differ from actuarial assumptions will be accumulated and amortized over the future life of the plan participants if they exceed 10% of the PBO, being the corridor amount. If the amount of a net gain or loss does not exceed the corridor amount, it will be recorded to other comprehensive income (loss). See Note 17 for further details of the pension plans.

Cash Flow Hedges

Cash Flow Hedges

The Company enters into cash flow hedges to protect non-functional currency inventory purchases and certain other operational expenses and has an 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 does not enter into derivative securities for speculative purposes. The Company’s foreign currency forward contracts that were designated as cash flow hedges have maturities between three and nine months. The maximum original duration of any contract allowable under the Company’s hedging policy is 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 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 other income (expense), net in the 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 other income (expense), net in its Consolidated Statements of Operations at that time.

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 other income (expense), net in its Consolidated Statements of Operations.

See Note 11 for further details of the contracts.

Shipping and Handling Costs

Shipping and Handling Costs

The Company records costs related to shipping and handling in cost of revenues.

Advertising Costs

Advertising Costs

Advertising costs consist of development and placement costs of the Company’s advertising campaigns and are charged to expense when incurred. Advertising expense was $5.0 million, $3.7 million and $2.9 million for fiscal years 2015, 2014 and 2013, respectively.

Foreign Currency Transactions

Foreign Currency Transactions

The Company uses the United States dollar as the functional currency for all of its foreign entities. Assets and liabilities of these entities are remeasured into the United States dollar using exchange rates in effect at the end of the period, except for non-monetary assets and liabilities, such as property, plant and equipment, which are remeasured using historical exchange rates. Revenues and expenses are remeasured using average exchange rates in effect for the period, except for items related to assets and liabilities, such as depreciation, that are remeasured using historical exchange rates. The total gains (losses) from foreign currency re-measurement for fiscal years 2015, 2014 and 2013 were $0.7 million, $1.4 million and $2.8 million, respectively and are included in “Other income (expense), net” in the Consolidated Statements of Operations. For additional details related to items included in “Other income (expense), net,” see Note 13.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash equivalents, debt investments and trade accounts receivable. The Company’s investment policy requires cash investments to be placed with high-credit quality institutions and limits the amount of credit risk from any one issuer. The Company performs ongoing credit evaluations of its customers’ financial condition whenever deemed necessary and generally does not require collateral. The Company maintains an allowance for doubtful accounts based upon the expected collectability of all accounts receivable.

Outstanding accounts receivable from three of the Company’s distributors, accounted for 42%, 11% and 9%, respectively, of the consolidated accounts receivable as of January 3, 2016. Outstanding accounts receivable from three of the Company’s distributors, accounted for 12%, 11% and 9%, of the consolidated accounts receivable as of December 28, 2014.

Revenue generated through three of the Company’s distributors accounted for 25%, 10%, and 7%, respectively, of the consolidated revenue for fiscal 2015 . No end customer accounted for 10% of the consolidated revenue for fiscal 2015.

Revenue generated through three of the Company’s distributors, accounted for 13%, 10% and 10% respectively, of the consolidated revenue for fiscal 2014. No end customers accounted for 10% or more of the consolidated revenue for fiscal 2014.

Revenue generated through two of the Company’s distributors accounted for 11% and 10%, respectively, of the consolidated revenue for fiscal 2013. One end customer purchased the Company’s products both from the Company’s distributors and directly from the Company. Shipments to this end customer accounted for 12% of the consolidated revenue for fiscal 2013.

Income Taxes

Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when management cannot conclude that it is more likely than not that a tax benefit will be realized.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The Company recognizes potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

Impact Of Recently Issued Accounting Pronouncements

Impact ofRecently Issued Accounting Pronouncements

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2015-02, Amendments to the Consolidation Analysis, which is intended to improve upon and simplify the consolidation assessment required to evaluate whether organizations should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. The new accounting guidance is effective for interim and fiscal years beginning after December 15, 2015. The Company does not believe that the adoption of this guidance will have any material impact on its financial condition or results of operations.

In May 2014, the FASB issued an ASU on revenue from contracts with customers, ASU No. 2014-09, "Revenue from Contracts with Customers." This standard update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The guidance is effective for annual reporting periods including interim reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods including interim reporting periods beginning after December 15, 2016. As the new standard will supersede substantially all existing revenue guidance affecting the Company under GAAP, it could impact revenue and cost recognition on sales across all the Company's business segments, in addition to its business processes and its information technology systems. The Company is currently evaluating the impact, if any, the adoption of this standard will have on its Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact the pronouncement will have on the Company’s financial statements and related disclosures.

In February 2016, the FASB issued an ASU 2016-02, “Leases (Topic 842).” The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases.  This ASU is effective for annual and interim periods beginning after December 15, 2018.  Early adoption is permitted. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  The Company is currently evaluating the impact the pronouncement will have on the Company’s financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in the financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The new accounting guidance is effective for interim and fiscal years beginning after December 15, 2015. The Company early adopted ASU 2015-03 for the fiscal year 2015 and presented the debt issuance costs related to the new Term Loan debt as a direct deduction from the related debt liability.

In August 2015, FASB issued ASU No. 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting”. FASB ASU No. 2015-15 amends subtopic 835-30 to include that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.  The Company early adopted ASU 2015-15 for the fiscal year ended January 3, 2016.  The Company has chosen to continue presentation of debt issuance costs as an asset for its revolving line of credit borrowings.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This ASU simplifies the treatment of adjustments to provisional amounts recognized in the period for items in a business combination for which the accounting is incomplete at the end of the reporting period. The amendments require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU are effective for fiscal years beginning after December 15, 2015 and for interim periods therein. The Company early adopted ASU 2015-16 standard for the fiscal year ended January 3, 2016.  

In November 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. The standard is effective in the annual reporting periods beginning after December 15, 2018. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. The Company early adopted ASU 2015-17 and prospectively applied ASU 2015-17 to fiscal year 2015.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Jan. 03, 2016

Description Of Business And Summary Of Significant Accounting Policies [Abstract]

Property And Equipment Useful Life

Estimated useful lives are as follows:

Equipment	3 to 10 years
Buildings and leasehold improvements	5 to 20 years
Furniture and fixtures	3 to 7 years

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MERGER WITH SPANSION (Tables)

12 Months Ended

Jan. 03, 2016

Business Combinations [Abstract]

Schedule of Business Acquisitions

The total purchase consideration of approximately $2.8 billion consists of the following:

	Purchase Consideration
	(In thousands)
Fair value of Cypress common stock issued to Spansion shareholders	$	2,570,458
Fair value of partially vested Spansion equity awards assumed by Cypress		6,825
Fair value of vested Spansion options assumed by Cypress		89,582
Cash provided by Cypress to repay Spansion term loan		150,000
Total purchase consideration	$	2,816,865

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The table below represents the final allocation of the purchase price to the net assets acquired based on their estimated fair values as of March 12, 2015.

	Fair Values as of March 12, 2015			Changes through January 3, 2016				Final allocation as of January 3, 2016
	(In thousands)
Cash and cash equivalents	$	44,870			—			$	44,870
Short-term investments		1,433			—				1,433
Accounts receivable, net		99,977			(590	)	(2)		99,387
Inventories		450,634			—				450,634
Other current assets		58,959			(2,329	)	(3)		56,630
Property, plant and equipment, net		356,908			—				356,908
Intangible assets, net		860,700			—				860,700
Goodwill (2)		1,676,036			(2,850	)			1,673,186
Other long-term assets		63,497			—				63,497
Total assets acquired		3,613,014			(5,769	)			3,607,245
Accounts payable		(155,336	)		—				(155,336	)
Accrued compensation and benefits		(44,669	)		—				(44,669	)
Income taxes payable		(1,399	)		—				(1,399	)
Other current liabilities		(158,083	)		(30	)	(4)		(158,113	)
Deferred income taxes and other long term liabilities		(24,001	)		5,799		(5)		(18,202	)
Other non current liabilities		(21,477	)		—				(21,477	)
Long-term debt (1)		(391,184	)		—				(391,184	)
Total liabilities assumed		(796,149	)		5,769				(790,380	)
Fair value of net assets acquired	$	2,816,865		$	—			$	2,816,865

(1)        Includes the fair value of the debt and equity components of Spansion's Exchangeable 2.00% Senior Notes assumed by the   Company.

(2)       The Company determined that one customer account receivable balance that the Company assessed as collectible at the time of the Merger was determined uncollectible which led to a decrease of $0.6 million in the fair value of accounts receivables with a corresponding increase in goodwill.

(3)       The Company obtained new information regarding the valuation of other receivables as of the acquisition date which led to a decrease in the fair value of current assets of $2.3 million, and a corresponding increase in goodwill.

(4)       The Company obtained new information regarding the valuation of accrued liabilities as of the acquisition date which led to a net increase in the fair value of other current liabilities of $30 thousand, and a corresponding increase in goodwill.

(5)       The Company obtained additional information related to its deferred income taxes which led to an increase in the deferred income taxes and other long term liabilities and a corresponding decrease in goodwill.

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination

The table below shows the valuation of the intangible assets acquired from Spansion Inc. along with their estimated remaining useful lives:.

	As of March 12, 2015		Estimated range of lives (in years)
	Gross
	(In thousands)
Existing Technology	$	507,100	4 to 6
In-Process Research and Development Technology		212,300	N/A
Backlog		14,500	1
Customer/Distributor Relationships		97,300	9
License Agreements		9,400	3
Trade Name / Trademarks		20,100	10
Total intangible assets	$	860,700

Pro Forma Information

Consequently, actual results will differ from the unaudited pro forma information presented below.

	Years Ended
	January 3, 2016			December 28, 2014
	(In thousands)
Revenues	$	1,796,266		$	1,977,352
Net loss	$	(340,465	)	$	(597,980	)
Net loss per share attributable to Cypress
Basic	$	(0.76	)	$	(2.72	)
Diluted	$	(0.76	)	$	(2.72	)

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DIVESTITURES (Tables)

12 Months Ended

Jan. 03, 2016

Discontinued Operations And Disposal Groups [Abstract]

Summary of Components of Gain on Divestiture

The following table summarizes the components of the gain:

	(In thousands)
Cash Proceeds (a)	$	98,635
Deferred Revenue		(19,867	)
Assets Sold:
Property, plant and equipment, net		(69	)
Inventories		(9,290	)
Prepaid Expenses		(1,115	)
Transaction and other costs		(1,822	)
Gain on Divestiture	$	66,472

(a) Includes $10.0 million held in escrow account until January 2017 per the terms of the agreement.

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GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Jan. 03, 2016

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the year ended January 3, 2016, are as follows:

	MPD			PSD		Total
	(in thousands)
Goodwill as of December 28, 2014	$	33,860		$	31,836	$	65,696
Goodwill from merger with Spansion (1)		739,036			937,000		1,676,036
Measurement period adjustments		(2,850	)		—		(2,850	)
Goodwill as of January 3, 2016	$	770,046		$	968,836	$	1,738,882

(1) Refer Note 2 for further details.

Total Intangible Assets

The following tables present details of the Company’s total intangible assets:

	As of January 3, 2016							As of December 28, 2014
	Gross		Accumulated Amortization			Net (c)		Gross		Accumulated Amortization			Net
	(In thousands)
Acquisition-related intangible    assets (a)	$	1,012,472	$	(226,417	)	$	786,055	$	151,773	$	(118,357	)	$	33,416
Non-acquisition related    intangible assets (b)		13,368		(10,228	)		3,140		10,523		(10,021	)		502
Total intangible assets	$	1,025,840	$	(236,645	)	$	789,195	$	162,296	$	(128,378	)	$	33,918

(a) Refer Note 2 for details on valuation of the intangible assets acquired from Spansion Inc.

(b) The increase in the Gross Carrying value relates to new license agreement entered into during fiscal 2015.

(c) The Net Acquisition-related intangible assets contains $176.1 million of IPR&D which remain to attain technological feasibility and commercial production.

Estimated Future Amortization Expense of Intangible Assets

As of January 3, 2016, the estimated future amortization expense of intangible assets was as follows:

Fiscal Year	(In thousands)
2016		123,968
2017		120,966
2018		118,477
2019		111,249
2020 and future		138,319
Total future amortization expense	$	612,979

Programmable Systems Division

Income Approach Valuations Assumptions

The income approach valuations for PSD included the following assumptions for 2015:

	Year Ended
	January 3, 2016
Discount rate		9%
Long-term growth rate		4%
Tax rate		28%
Risk free rate		4%
Peer company beta		0.97

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Jan. 03, 2016

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value

The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of January 3, 2016 and December 28, 2014:

	As of January 3, 2016						As of December 28, 2014
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In thousands)
Financial Assets
Reported as cash equivalents:
Money market funds	$	119	$	—	$	119	$	7,665	$	—	$	7,665
Total cash equivalents		119		—		119		7,665		—		7,665
Reported as short-term investments:
U.S. treasuries		—		—		—		4,993		—		4,993
Corporate notes and bonds		—		—		—		—		5,599		5,599
Federal agency		—		—		—		—		3,615		3,615
Certificates of deposit		—		871		871		—		869		869
Total short-term investments		—		871		871		4,993		10,083		15,076
Reported as long-term investments:
Marketable equity securities		6,516		—		6,516		8,493		—		8,493
Total long-term investments		6,516		—		6,516		8,493		—		8,493
Employee deferred compensation    plan assets:
Cash equivalents		3,333		—		3,333		2,957		—		2,957
Mutual funds		22,023		—		22,023		24,114		—		24,114
Equity securities		8,624		—		8,624		9,352		—		9,352
Fixed income		—		3,227		3,227		—		3,798		3,798
Money market funds		4,042		—		4,042		3,895		—		3,895
Total employee deferred    compensation plan assets		38,022		3,227		41,249		40,318		3,798		44,116
Foreign Exchange Forward Contracts		—		966		966		—		—		—
Total financial assets	$	44,657	$	5,064	$	49,721	$	61,469	$	13,881	$	75,350
Financial Liabilities
Foreign Exchange Forward Contracts		—		1,283		1,283		—		—		—
Employee deferred compensation    plan liability		—		41,457		41,457		—		43,452		43,452
Total financial liabilities	$	—	$	42,740	$	42,740	$	—	$	43,452	$	43,452

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INVESTMENTS (Tables)

12 Months Ended

Jan. 03, 2016

Investments Debt And Equity Securities [Abstract]

Available-For-Sale Securities and Other Investments

The following tables summarize the Company’s available-for-sale securities and other investments:

	As of January 3, 2016								As of December 28, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Reported as cash equivalents:
Money market funds	$	119	$	—	$	—	$	119	$	7,665	$	—	$	—		$	7,665
Total cash equivalents		119		—		—		119		7,665		—		—			7,665
Reported as short-term investments:
Corporate notes and bonds		—		—		—		—		5,616		—		(17	)		5,599
Federal agency		—		—		—		—		3,617		—		(2	)		3,615
U.S. treasuries		—		—		—		—		5,002		—		(9	)		4,993
Commercial paper		—		—		—		—		—		—		—			—
Certificates of deposit		871		—		—		871		869		—		—			869
Total short-term investments		871		—		—		871		15,104		—		(28	)		15,076
Total available-for-sale securities and    other investments	$	990	$	—	$	—	$	990	$	22,769	$	—	$	(28	)	$	22,741

Contractual Maturities of Available-For-Sale Investments and Certificates of Deposit

As of January 3, 2016, the contractual maturities of the Company’s available-for-sale investments and certificates of deposit were as follows (the table below does not include our investments in marketable equity securities):

	Cost		Fair Value
	(In thousands)
Maturing within one year	$	990	$	990
Total	$	990	$	990

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Jan. 03, 2016

Schedule of Stock-Based Compensation Expenses

The following table summarizes the stock-based compensation expense by line item in the Consolidated Statement of Operations:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Cost of revenues	$	16,459	$	13,209	$	12,789
Research and development		25,719		16,187		26,042
Selling, general and administrative		51,349		20,774		34,189
Total stock-based compensation expense	$	93,527	$	50,170	$	73,020

Schedule of Stock-Based Compensation Expense Award Type

The following table summarizes the stock-based compensation expense by type of awards:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Stock options	$	1,920	$	4,717	$	8,747
Restricted stock units and restricted stock awards		74,897		37,837		54,359
ESPP		16,710		7,616		9,914
Total stock-based compensation expense	$	93,527	$	50,170	$	73,020

Schedule of Unrecognized Stock-Based Compensation Balance, Net by Award Type

The following table summarizes the unrecognized stock-based compensation balance, net of estimated forfeitures, by type of awards as of January 3, 2016:

(In thousands)			Weighted-Average Amortization Period
			(In years)
Stock options	$	2,631		1.27
Restricted stock units and restricted stock awards		82,087		1.57
ESPP		18,364		0.67
Total unrecognized stock-based compensation balance,    net of estimated forfeitures	$	103,082		1.40

Schedule of Stock Option Activities

The following table summarizes the Company’s stock option activities:

	Year Ended
	January 3, 2016					December 28, 2014					December 29, 2013
	Shares			Weighted- Average Exercise Price per Share		Shares			Weighted- Average Exercise Price per Share		Shares				Weighted- Average Exercise Price per Share
	(In thousands, except per-share amounts)
Options outstanding, beginning of year		14,463		$	9.24		19,060		$	8.33		22,760			$	7.25
Options assumed as a part of the Merger		8,976		$	12.86		—		—			—		—
Granted		—		$	—		522		$	10.24		4,122			$	11.40
Exercised		(5,391	)	$	5.71		(4,027	)	$	4.47		(5,622	)		$	5.19
Forfeited or expired		(1,208	)	$	12.75		(1,092	)	$	11.59		(2,200	)		$	11.09
Options outstanding, end of year		16,840		$	7.99		14,463		$	9.24		19,060			$	8.33
Options exercisable, end of year		14,366		$	7.40		9,787		$	8.05		12,346			$	6.39

Summary of Information about Options Outstanding and Exercisable

The following table summarizes information about options outstanding and exercisable as of January 3, 2016:

	Options Outstanding						Options Exercisable
Range of Exercise Price	Shares		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price per Share		Shares		Weighted- Average Exercise Price per Share
			(In years)
$2.72-$3.99		1,821,541		0.81	$	3.57		1,812,477	$	3.57
$4.01-$4.09		1,815,277		3.01	$	4.09		1,815,277	$	4.09
$4.15-$4.22		173,644		0.51	$	4.17		173,644	$	4.17
$4.28-$4.28		1,981,218		1.35	$	4.28		1,981,218	$	4.28
$4.30-$6.17		2,162,508		2.80	$	5.44		2,150,857	$	5.44
$6.22-$8.10		2,112,745		2.11	$	7.61		2,112,745	$	7.61
$8.43-$10.92		1,133,060		4.38	$	9.97		697,698	$	9.90
$11.27-$11.27		1,812,686		4.87	$	11.27		1,072,597	$	11.27
$11.32-$11.40		181,205		3.02	$	11.33		167,965	$	11.33
$11.55-$23.23		3,645,837		4.54	$	13.67		2,381,600	$	14.50
		16,839,721		3.04	$	7.99		14,366,078	$	7.40

Schedule of Restricted Stock Unit and Restricted Stock Award Activities

The following table summarizes the Company’s restricted stock unit and restricted stock award activities:

	Year Ended
	January 3, 2016					December 28, 2014					December 29, 2013
	Shares			Weighted- Average Grant Date Fair Value per Share		Shares			Weighted- Average Grant Date Fair Value per Share		Shares			Weighted- Average Grant Date Fair Value per Share
	(In thousands, except per-share amounts)
Non-vested, beginning of year		7,838		$	10.98		8,652		$	11.97		7,887		$	14.52
Granted and assumed		10,172		$	14.78		6,344		$	10.16		7,040		$	11.40
Released		(3,594	)	$	5.60		(4,363	)	$	11.58		(2,378	)	$	9.77
Forfeited		(3,363	)	$	11.66		(2,795	)	$	11.21		(3,897	)	$	14.74
Non-vested, end of year		11,053		$	13.43		7,838		$	10.98		8,652		$	11.97

Black Scholes Option Pricing Model

Schedule of Valuation Assumptions

Assumptions used in the Black-Scholes valuation model were as follows:

	Year Ended
	January 3, 2016		December 28, 2014	December 29, 2013
Stock Option Plans:
Expected life		—	4.4-5.7 years	4.2-5.3 years
Volatility		—	39.7%-41.1%	38.2%-41.9%
Risk-free interest rate		—	0.26%-1.75%	0.93%-1.85%
Dividend yield		—	4.2%-4.4%	3.8%-4.5%
ESPP:
Expected life	0.5-1.5 years		0.5-1.5 years	0.5-1.5 years
Volatility	35.9%-46.6%		31.0%-36.1%	38.4%-46.3%
Risk-free interest rate	0.09%-0.86%		0.03%-0.35%	0.08%-0.32%
Dividend yield	4.5%-5.2%		4.2%-4.4%	3.8%-4.5%

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BALANCE SHEET COMPONENTS (Tables)

12 Months Ended

Jan. 03, 2016

Balance Sheet Component [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Accounts receivable, gross	$	295,803		$	79,091
Allowances for doubtful accounts receivable and sales returns		(3,067	)		(3,107	)
Accounts receivable, net	$	292,736		$	75,984

Inventories

Inventories

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Raw materials	$	13,516	$	4,753
Work-in-process		192,245		64,003
Finished goods		37,834		19,471
Total inventories	$	243,595	$	88,227

Other Current Assets

Other Current Assets

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Prepaid tooling assets	$	19,379	$	3,880
Restricted cash relating to pension plan (see Note 17)		3,730		—
Foundry service prepayments - ST		5,753		—
Prepaid expenses		30,934		17,897
Other current assets		27,084		7,511
Total other current assets	$	86,880	$	29,288

Property, Plant and Equipment, Net

Property, Plant and Equipment, Net

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Land	$	37,819		$	18,570
Equipment		1,191,469			1,017,121
Buildings, building and leasehold improvements		314,017			221,465
Construction in progress		28,050			12,093
Furniture and fixtures		12,946			6,902
Total property, plant and equipment, gross		1,584,301			1,276,151
Less: accumulated depreciation and amortization		(1,159,298	)		(1,038,388	)
Total property, plant and equipment, net	$	425,003		$	237,763

Other Long-term Assets

Other Long-term Assets

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Employee deferred compensation plan	$	41,249	$	44,116
Investments in Equity securities		57,030		34,992
Deferred tax assets		4,080		1,187
Long term license		24,079		4,633
Restricted cash relating to pension plan (see Note 17)		3,462		—
Long term receivable from sale of TrueTouch ®    Mobile business (see Note 3)		10,000		—
Foundry service prepayments - LT		26,237		—
Other assets		34,272		8,665
Total other long-term assets	$	200,409	$	93,593

Other Current Liabilities

Other Current Liabilities

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Employee deferred compensation plan	$	41,457	$	43,452
Restructuring accrual - ST (see Note 10)		7,270		1,177
License commitment		18,496		—
Deferred Revenue on sale of TrueTouch® mobile business    (see Note 3)		15,295		—
Deferred liability - distributor price adjustments		52,712		19,618
Other current liabilities		67,175		30,372
Total other current liabilities	$	202,405	$	94,619

Other Long-Term Liabilities

Other Long-Term Liabilities

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Long-term pension liabilities	$	8,712	$	5,768
Restructuring accrual - LT (see Note 10)		14,217		—
Other long-term liabilities		14,855		4,925
Total other long-term liabilities	$	37,784	$	10,693

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RESTRUCTURING (Tables)

12 Months Ended

Jan. 03, 2016

Restructuring And Related Activities [Abstract]

Schedule of Restructuring Reserve by Type

The following table summarizes the restructuring charges recorded in the Company’s Consolidated Statements of Operations for the periods presented pursuant to the Spansion Integration-Related Restructuring Plan:

	Year Ended
	January 3, 2016
	(In thousands)
Personnel costs	$	58,972
Lease termination costs and other related charges		18,016
Impairment of property, plant and equipment		12,531
Other		565
Total restructuring and other charges	$	90,084

Schedule of Restructuring Costs

Restructuring activity under the Spansion Integration – Related Restructuring Plan during fiscal year ended January 3, 2016:

	Year Ended
	January 3, 2016
	(In thousands)
Accrued restructuring balance as of December 28, 2014	$	—
Provision		81,041
Cash payments and other		(59,554	)
Accrued restructuring balance as of January 3, 2016	$	21,487

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FOREIGN CURRENCY DERIVATIVES (Tables)

12 Months Ended

Jan. 03, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

Total notional amounts of outstanding contracts were as summarized below.  The duration or each contract is approximately thirty days:

Buy / Sell	January 3, 2016
	(in millions)
US dollar / Japanese Yen	$19.4 / ¥2,333
US dollar / EUR	$7.3/€6.8

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Jan. 03, 2016

Equity [Abstract]

Components of Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss were as follows:

	Accumulated net unrealizedlosses on available-for-sale investments			Cumulative translation adjustment and other		Unrecognized Gain on the Defined Benefit Plan		Accumulated other comprehensive loss (income)
	(in thousands)
Balance as of December 29, 2013	$	(183	)	$	6	$	—	$	(177	)
Other comprehensive income (loss) before    reclassification		131			—		—		131
Balance as of December 28, 2014	$	(52	)	$	6	$	—	$	(46	)
Other comprehensive income (loss) before    reclassification		(1,623	)		—		—		(1,623	)
Amounts reclassified to earnings		1,416			—		—		1,416
Net unrecognized gain on the Defined    Benefit Plan		—			—		26		26
Balance as of January 3, 2016	$	(259	)	$	6	$	26	$	(227	)

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OTHER INCOME (EXPENSE), NET (Tables)

12 Months Ended

Jan. 03, 2016

Other Income And Expenses [Abstract]

Components of Other Income (Expense), Net

The following table summarizes the components of “other income (expense), net,” recorded in the Consolidated Statements of Operations:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Interest income	$	885		$	362		$	301
Changes in fair value of investments under the    deferred compensation plan		(1,354	)		3,014			6,371
Unrealized loss on marketable securities		(4,655	)		(1,495	)		—
Impairment of investments		—			—			25
Foreign currency exchange gains (losses), net		744			1,382			2,791
Gain on sale of equity investments		276			—			908
Other		335			40			(59	)
Other income (expense), net	$	(3,769	)	$	3,303		$	10,337

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DEBT AND EQUITY TRANSACTIONS (Tables)

12 Months Ended

Jan. 03, 2016

Debt And Equity Transactions [Abstract]

Schedule of Debt

Debt is comprised of the following:

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
Current portion of long-term debt
Capital lease obligations	$	6,603	$	3,227
Equipment loans		3,003		2,916
Term Loan A		5,000		—
Current portion of long-term debt		14,606		6,143
Revolving credit facility and long-term debt
Credit facility		449,000		227,000
Term Loan A		92,228		—
2% Senior Exchangeable Notes		131,845		—
Capital lease obligations		586		7,105
Equipment loans		—		3,002
Revolving credit facility and long-term debt		673,659		237,107
Total debt	$	688,265	$	243,250

Schedule of Long-term Debt Instruments

The net carrying amount of liability component of the Notes as of January 3, 2016 consists of the following:

	(in thousands)
Principal amount	$	150,000
Settlement due to notice from bondholder		(10	)
Unamortized debt discount		(18,145	)
Net carrying value	$	131,845

The following table presents the interest expense recognized on the Notes during the fiscal year ended January 3, 2016:

	Year Ended
	January 3, 2016
	( in thousands)
Contractual interest expense at 2% per annum	$	2,441
Accretion of debt discount		2,700
Total	$	5,141

Schedule of Principal Payments Under Equipment Loans

The schedule of principal payments under equipment loans is as follows:

Fiscal Year	(In thousands)
2016	$	3,003
Total	$	3,003

Yield Enhancement Structured Agreements

The following table summarizes the activity of the Company’s settled yield enhanced structured agreements during fiscal 2015 and 2014:

Periods	Aggregate Price Paid		Total Cash Proceeds Received Upon Maturity		Yield Realized		Total Number of Shares Received Upon Maturity		Average Price Paid per Share
Fiscal 2015:	(in thousands)
Settled through cash proceeds	$	28,966	$	29,353	$	387		—	$	—
Settled through issuance of common stock		9,601		—		—		1,000,000		9.6
Total for fiscal 2015	$	38,567	$	29,353	$	387		1,000,000		9.6
Fiscal 2014:
Settled through cash proceeds	$	19,415	$	19,733	$	318		—	$	—
Settled through issuance of common stock		—		—		—		—		—
Total for fiscal 2014	$	19,415	$	19,733	$	318		—	$	—

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NET INCOME (LOSS) PER SHARE (Tables)

12 Months Ended

Jan. 03, 2016

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:

	Year Ended
	January 3, 2016			December 28, 2014		December 29, 2013
	(In thousands, except per-share amounts)
Net Income (Loss) per Share—Basic:
Net income (loss) attributable to Cypress for basic    computation	$	(378,867	)	$	17,936	$	(48,242	)
Weighted-average common shares for basic computation		302,036			159,031		148,558
Net income (loss) per share—basic	$	(1.25	)	$	0.11	$	(0.32	)
Net Income (Loss) per Share—Diluted:
Net income (loss) attributable to Cypress for diluted    computation	$	(378,867	)	$	17,936	$	(48,242	)
Weighted-average common shares for basic computation		302,036			159,031		148,558
Effect of dilutive securities:
Stock options, restricted stock units, restricted stock    awards and other		—			10,091		—
Weighted-average common shares for diluted computation		302,036			169,122		148,558
Net income (loss) per share—diluted	$	(1.25	)	$	0.11	$	(0.32	)

Anti-Dilutive Securities Excluded from Computation of Diluted Net Income (Loss) Per Share

The following securities were excluded from the computation of diluted Net income (loss) per share as their impact was anti-dilutive:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
			(In thousands)
Stock options, restricted stock units and restricted stock    awards		6,828		8,708		8,023

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EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Jan. 03, 2016

Compensation And Retirement Disclosure [Abstract]

Schedule of Defined Benefit Plans Disclosures

All expense and income recorded under the deferred compensation plan were included in the following line items in the Consolidated Statements of Operations:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Changes in fair value of assets recorded in:
Other income (expense), net	$	(1,353	)	$	3,014		$	6,371
Changes in fair value of liabilities recorded in:
Cost of revenues		38			427			(854	)
Research and development expenses		233			(793	)		(1,744	)
Selling, general and administrative expenses		260			(1,855	)		(3,795	)
Total income (expense), net	$	(822	)	$	793		$	(22	)

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INCOME TAXES (Tables)

12 Months Ended

Jan. 03, 2016

Income Tax Disclosure [Abstract]

Summary Of Geographic Distribution Of Income Loss Before Income Taxes Components Of Income Tax Benefit Provision Table Text Block

The geographic distribution of income (loss) before income taxes and the components of income tax benefit (provision) are summarized below:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
United States loss	$	(476,014	)	$	(109,307	)	$	(122,162	)
Foreign income		111,836			124,652			64,314
Income (loss) before income taxes		(364,178	)		15,345			(57,848	)
Income tax benefit (provision):
Current tax benefit (expense):
Federal		219			5,551			12,026
State		55			(49	)		(120	)
Foreign		(17,189	)		(4,732	)		(4,292	)
Total current tax benefit (expense)		(16,915	)		770			7,614
Deferred tax benefit (expense):
Federal		(610	)		—			—
State		(155	)		—			—
Foreign		720			403			147
Total deferred tax benefit (expense)		(45	)		403			147
Income tax benefit (provision)	$	(16,960	)	$	1,173		$	7,761

Income Tax Benefit (Provision) Differs from Amounts Obtained by Applying Statutory United States Federal Income Tax Rate

Income tax benefit (provision) differs from the amounts obtained by applying the statutory United States federal income tax rate to income (loss) before taxes as shown below:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
				(In thousands)
Benefit (provision) at U.S. statutory rate of 35%	$	127,462		$	(5,371	)	$	19,589
Foreign income at other than U.S. rates		(22,385	)		37,477			15,425
Future benefits not recognized		(126,846	)		(35,107	)		(41,797	)
Reversal of previously accrued taxes		10,939			8,286			13,872
Tax impact of acquisitions		(6,457	)		(2,538	)		1,061
Foreign withholding taxes		(243	)		(1,195	)		(535	)
State income taxes, net of federal benefit		(138	)		(49	)		93
Other, net		708			(330	)		53
Income tax benefit (provision)	$	(16,960	)	$	1,173		$	7,761

Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities were as follows:

	As of
	January 3, 2016			December 28, 2014
	(In thousands)
Deferred tax assets:
Credits and net operating loss carryovers	$	624,086		$	265,827
Reserves and accruals		160,804			55,678
Excess of book over tax depreciation		12,463			32,892
Deferred income		20,059			6,197
Total deferred tax assets		817,412			360,594
Less valuation allowance		(525,021	)		(358,424	)
Deferred tax assets, net		292,391			2,170
Deferred tax liabilities:
Foreign earnings		(184,671	)		—
Intangible assets arising from acquisitions		(108,784	)		—
Total deferred tax liabilities		(293,455	)		—
Net deferred tax assets	$	(1,064	)	$	2,170

Schedule of Tax Loss and Credit Carryforwards Available to Offset Future Income Tax Liabilities

The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:

Carryforward	Amount		Expiration Date
	($ in millions)
Federal net operating loss carryforward		1,708	2020-2035
Federal research credit carryforward		136	2018-2035
International foreign tax credit carryforward		13	2016-2023
State research credit carryforward		105	Indefinite
State net operating loss carryforward		761	2016-2035

Reconciliation of Unrecognized Tax Benefits

The following table is a reconciliation of unrecognized tax benefits:

	(In thousands)
Unrecognized tax benefits, as of December 30, 2012	$	31,466
Decrease related to settlements with taxing authorities		(9,216	)
Increase based on tax positions related to current year		962
Increase based on tax positions related to prior year		163
Decrease related to lapsing of statute of limitation		(4,762	)
Unrecognized tax benefits, as of December 29, 2013	$	18,613
Decrease related to settlements with taxing authorities		(6,361	)
Increase based on tax positions related to current year		993
Decrease related to lapsing of statute of limitation		(1,638	)
Unrecognized tax benefits, as of December 28, 2014	$	11,607
Decrease related to settlements with taxing authorities		(838	)
Decrease related to lapsing of statute of limitation		(818	)
Decrease based on tax positions related to prior year		(10,272	)
Increase based on tax positions related to current year		6,487
Increases in balances related to tax positions taken during prior    periods (including those related to acquisitions made    during the year)		108,677
Unrecognized tax benefits, as of January 3, 2016	$	114,843

Summary Of Major Tax Jurisdictions

The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by such jurisdictions as of January 3, 2016:

Tax Jurisdictions	Tax Years
United States	2009 and onward
Philippines	2011 and onward
Israel	2014 and onward
India	2009 and onward
Thailand	2010 and onward
Malaysia	2007 and onward
Switzerland	2008 and onward
California	2010 and onward

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Jan. 03, 2016

Commitments And Contingencies Disclosure [Abstract]

Schedule of Warranty Reserve Activities

The following table presents warranty reserve activities:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Beginning balance	$	2,370		$	2,628		$	3,360
Warranties assumed as part of the merger		1,254			—			—
Provisions		2,820			1,449			390
Settlements made		(2,348	)		(1,707	)		(1,122	)
Ending balance	$	4,096		$	2,370		$	2,628

Future Minimum Payments Under Capitalized Lease

Future minimum payments, by year and in the aggregate, under the capitalized lease consist of the following:

Fiscal Year	(In thousands)
2016	$	6,715
2017		599
2018		—
Total minimum lease payments		7,314
Less: amount representing interest		(125	)
Present value of net minimum lease payments	$	7,189

Future Minimum Lease Payments Under Non-Cancelable Operating Leases

As of January 3, 2016 future minimum lease payments under non-cancelable operating leases were as follows:

Fiscal Year	(In thousands)
2016		16,171
2017		13,076
2018		9,164
2019		6,541
2020		6,028
2021 and Thereafter		23,835
Total	$	74,815

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION (Tables)

12 Months Ended

Jan. 03, 2016

Segment Reporting [Abstract]

Revenue

Revenues:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
Programmable Systems Division	$	613,884	$	283,206	$	292,707
Memory Products Division		871,640		347,887		338,986
Data Communications Division		72,791		70,378		79,410
Emerging Technologies and Other		49,538		24,026		11,590
Total revenues	$	1,607,853	$	725,497	$	722,693

Income (Loss) from Operations before Income Taxes

Income (Loss) from Operations before Income Taxes:

	Year Ended
	January 3, 2016			December 28, 2014			December 29, 2013
	(In thousands)
Programmable Systems Division	$	(70,644	)	$	(18,981	)	$	(20,105	)
Memory Products Division		105,940			134,283			111,667
Data Communications Division		(15,822	)		(10,130	)		(7,452	)
Emerging Technologies and Other		(7,730	)		(13,992	)		(20,860	)
Unallocated items:
Stock-based compensation expense		(93,527	)		(50,170	)		(73,020	)
Restructuring (charges) benefit		(90,084	)		1,180			(15,357	)
Amortization of intangibles and other    acquisition-related costs		(143,487	)		(13,955	)		(34,056	)
Impairment of assets and other		—			(7,760	)		(1,795	)
Gain on divestiture of TrueTouch® Mobile    business		66,472			—			—
Changes in value of deferred compensation    plan		(820	)		—			—
Impact of purchase accounting and other		(107,328	)		(62	)		5,008
Income (loss) from operations before income    taxes	$	(357,030	)	$	20,413		$	(55,970	)

Depreciation

Depreciation:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
Programmable Systems Division	$	10,484	$	13,613	$	14,642
Memory Products Division		89,156		15,998		16,332
Data Communications Division		1,946		3,234		3,851
Emerging Technologies and Other		24,910		6,960		4,680
Total depreciation	$	126,496	$	39,805	$	39,505

Total Revenues by Geographical Locations

The following table presents our total revenues by geographical locations:

	Year Ended
	January 3, 2016		December 28, 2014		December 29, 2013
	(In thousands)
United States	$	181,913	$	89,521	$	75,052
Europe		181,663		100,510		61,003
Asia:
China		414,299		294,655		254,993
South Korea		68,464		82,089		96,811
Japan		467,823		64,926		81,856
Rest of the world		293,691		93,796		152,978
Total revenues	$	1,607,853	$	725,497	$	722,693

Property Plant and Equipment, Net, by Geographic Locations

Property, plant and equipment, net, by geographic locations were as follows:    

	As of
	January 3, 2016		December 28, 2014
	(In thousands)
United States	$	269,304	$	128,544
Philippines		90,356		90,641
Thailand		34,233		—
Japan		9,537		67
Other		21,573		18,511
Total property, plant and equipment, net	$	425,003	$	237,763

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	12 Months Ended
	Mar. 12, 2015	Dec. 28, 2014	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Description Of Business And Significant Accounting Policies [Line Items]
Current portion of long-term debt		$ 6,143	$ 14,606	$ 6,143
Other current liabilities		94,619	202,405	94,619
Cost of revenues			$ 1,207,850	361,820	$ 384,121
Investments original or remaining maturities date			90 days
Additional revenue		12,300	$ 40,900
Additional net income before taxes			$ 25,000	$ 6,200
Earnings per basic and diluted share (USD per share)			$ 0.07	$ 0.04
Maximum term of derivative contracts			13 months
Advertising expense			$ 5,000	$ 3,700	2,900
Gains (losses) for foreign currency re-measurement			$ 700	$ 1,400	$ 2,800
Accounts Receivable | Distributor 1
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			42.00%	12.00%
Accounts Receivable | Distributor 2
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			11.00%	11.00%
Accounts Receivable | Distributor 3
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			9.00%	9.00%
Sales Revenue, Net | Distributor 1
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			25.00%	13.00%	11.00%
Sales Revenue, Net | Distributor 2
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			10.00%	10.00%	10.00%
Sales Revenue, Net | Distributor 3
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			7.00%	10.00%
Sales Revenue, Net | End Customer
Description Of Business And Significant Accounting Policies [Line Items]
Concentration Risk			10.00%	10.00%	12.00%
Foreign currency forward contracts
Description Of Business And Significant Accounting Policies [Line Items]
Maximum term of derivative contracts			13 months
Minimum | Foreign currency forward contracts
Description Of Business And Significant Accounting Policies [Line Items]
Derivative Term Of Contract			3 months
Maximum | Foreign currency forward contracts
Description Of Business And Significant Accounting Policies [Line Items]
Derivative Term Of Contract			9 months
Scenario, Adjustment
Description Of Business And Significant Accounting Policies [Line Items]
Current portion of long-term debt		6,100		$ 6,100
Revolving credit facility and long-term debt		10,100		10,100
Other current liabilities		$ 19,600		19,600
Cost of revenues				$ 2,600
Spansion Inc
Description Of Business And Significant Accounting Policies [Line Items]
Total purchase consideration	$ 2,816,865
Business Acquisition, Equity Interest Issued or Issuable, Conversion Rate of Shares Issued	2.457
Ownership of Remaining Entity by Acquired Entity	50.00%

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Useful Lives (Detail)	12 Months Ended
	Jan. 03, 2016
Minimum | Equipment
Property Plant And Equipment [Line Items]
Estimated useful lives	3 years
Minimum | Buildings and Leasehold Improvements
Property Plant And Equipment [Line Items]
Estimated useful lives	5 years
Minimum | Furniture and fixtures
Property Plant And Equipment [Line Items]
Estimated useful lives	3 years
Maximum | Equipment
Property Plant And Equipment [Line Items]
Estimated useful lives	10 years
Maximum | Buildings and Leasehold Improvements
Property Plant And Equipment [Line Items]
Estimated useful lives	20 years
Maximum | Furniture and fixtures
Property Plant And Equipment [Line Items]
Estimated useful lives	7 years

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MERGER WITH SPANSION - Narrative (Details)		12 Months Ended
	Mar. 12, 2015 USD ($) project $ / shares shares	Jan. 03, 2016 USD ($) project	Dec. 28, 2014 USD ($)
Business Acquisition [Line Items]
Intangible Assets, Gross		$ 1,025,840,000	$ 162,296,000
In Process Research and Development
Business Acquisition [Line Items]
Intangible assets acquired		212,300,000
Developed Technology
Business Acquisition [Line Items]
Intangible Assets, Gross		36,200,000
Spansion Inc
Business Acquisition [Line Items]
Total purchase consideration	$ 2,816,865,000
Shares issued for acquisition | shares	2.457
Share price | $ / shares	$ 15.68
Spansion Inc | In Process Research and Development
Business Acquisition [Line Items]
Number of R&D projects | project	21
Estimated cost to complete IPR&D		$ 15,300,000
Estimated time to complete IPR&D	2 years
Number of identified projects | project		5
Intangible assets acquired		$ 212,300,000
Intangible Asset Impairment		0
Discount rate	10.50%
Spansion Inc | Existing Technology
Business Acquisition [Line Items]
Discount rate	7.50%
Spansion Inc | Trade Name / Trademarks
Business Acquisition [Line Items]
Estimated range of lives (in years)	10 years
Discount rate	9.00%
Spansion Inc | License Agreements
Business Acquisition [Line Items]
Estimated range of lives (in years)	3 years
Discount rate	5.00%
Spansion Inc | Minimum | In Process Research and Development
Business Acquisition [Line Items]
Estimated range of lives (in years)	4 years
Spansion Inc | Minimum | Existing Technology
Business Acquisition [Line Items]
Estimated range of lives (in years)	4 years
Spansion Inc | Maximum | In Process Research and Development
Business Acquisition [Line Items]
Estimated range of lives (in years)	6 years
Spansion Inc | Maximum | Existing Technology
Business Acquisition [Line Items]
Estimated range of lives (in years)	6 years
Spansion Inc | Selling, General and Administrative Expenses
Business Acquisition [Line Items]
Acquisition related costs		$ 37,500,000

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MERGER WITH SPANSION - Schedule of Purchase Price (Details) - Spansion Inc $ in Thousands	Mar. 12, 2015 USD ($)
Business Acquisition [Line Items]
Fair value of Cypress common stock issued to Spansion shareholders	$ 2,570,458
Fair value of partially vested Spansion equity awards assumed by Cypress	6,825
Fair value of vested Spansion options assumed by Cypress	89,582
Cash provided by Cypress to repay Spansion term loan	150,000
Total purchase consideration	$ 2,816,865

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MERGER WITH SPANSION - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jan. 03, 2016	Mar. 12, 2015	Dec. 28, 2014
Business Acquisition [Line Items]
Goodwill	$ 1,738,882		$ 65,696
Spansion Inc
Business Acquisition [Line Items]
Cash and cash equivalents	44,870
Short-term investments	1,433
Accounts receivable, net	99,387
Inventories	450,634
Other current assets	56,630
Property, plant and equipment, net	356,908
Intangible assets, net	860,700
Goodwill	1,673,186
Other long-term assets	63,497
Total assets acquired	3,607,245
Accounts payable	(155,336)
Accrued compensation and benefits	(44,669)
Income taxes payable	(1,399)
Other current liabilities	(158,113)
Deferred income taxes and other long term liabilities	(18,202)
Other non current liabilities	(21,477)
Long-term debt	(391,184)
Total liabilities assumed	(790,380)
Fair value of net assets acquired	2,816,865
Spansion Inc | Estimated Fair Value
Business Acquisition [Line Items]
Cash and cash equivalents		$ 44,870
Short-term investments		1,433
Accounts receivable, net		99,977
Inventories		450,634
Other current assets		58,959
Property, plant and equipment, net		356,908
Intangible assets, net		860,700
Goodwill		1,676,036
Other long-term assets		63,497
Total assets acquired		3,613,014
Accounts payable		(155,336)
Accrued compensation and benefits		(44,669)
Income taxes payable		(1,399)
Other current liabilities		(158,083)
Deferred income taxes and other long term liabilities		(24,001)
Other non current liabilities		(21,477)
Long-term debt		(391,184)
Total liabilities assumed		(796,149)
Fair value of net assets acquired		$ 2,816,865
Spansion Inc | Scenario, Adjustment
Business Acquisition [Line Items]
Accounts receivable, net	(590)
Other current assets	(2,329)
Goodwill	(2,850)
Total assets acquired	(5,769)
Other current liabilities	(30)
Deferred income taxes and other long term liabilities	5,799
Total liabilities assumed	$ 5,769

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MERGER WITH SPANSION - Assets Acquired and Liabilities Assumed (Parenthetical) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Business Acquisition [Line Items]
Decrease in fair value of accounts receivables	$ 117,371	$ (5,099)	$ (1,837)
Convertible Debt
Business Acquisition [Line Items]
Interest rate	2.00%
Spansion Inc | Convertible Debt
Business Acquisition [Line Items]
Interest rate	2.00%
Spansion Inc | Change During Period Fair Value Disclosure
Business Acquisition [Line Items]
Decrease in fair value of accounts receivables	$ (600)
Decrease in fair value of other current assets	(2,300)
Increase in fair value of other current liabilities	$ 30

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MERGER WITH SPANSION - Definite and Indefinite Intangible Assets Acquired (Details) - Spansion Inc $ in Thousands	Mar. 12, 2015 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets acquired	$ 212,300
Finite and indefinite lived assets acquired, gross	860,700
Existing Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Gross	$ 507,100
Existing Technology | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated range of lives (in years)	4 years
Existing Technology | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated range of lives (in years)	6 years
Backlog
Acquired Finite-Lived Intangible Assets [Line Items]
Gross	$ 14,500
Estimated range of lives (in years)	1 year
Customer/Distributor Relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Gross	$ 97,300
Estimated range of lives (in years)	9 years
License Agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Gross	$ 9,400
Estimated range of lives (in years)	3 years
Trade Name / Trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Gross	$ 20,100
Estimated range of lives (in years)	10 years

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MERGER WITH SPANSION - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014
Business Combinations [Abstract]
Revenues	$ 1,796,266	$ 1,977,352
Net loss	$ (340,465)	$ (597,980)
Basic (USD per share)	$ (0.76)	$ (2.72)
Diluted (USD per share)	$ (0.76)	$ (2.72)

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DIVESTITURES - Additional Information (Detail) - USD ($) $ in Thousands		2 Months Ended	3 Months Ended	12 Months Ended
	Aug. 01, 2015	Jan. 03, 2016	Sep. 27, 2015	Jan. 03, 2016	Dec. 28, 2014
Discontinued Operations And Disposal Groups [Abstract]
Proceeds from divestiture	$ 98,600			$ 88,635	$ 3,240
Escrow deposits related to business sales	10,000
Cash proceeds held in escrow, year and month		2017-01
Sale of assets, net book value			$ 10,500
Gain on divestiture of TrueTouch business			$ 66,472	66,472
Proceeds from sale of business allocated to MSA	$ 19,900
Revenue recognized from amortization of deferred revenue				$ 5,700

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DIVESTITURES - Summary of Components of Gain on Divestiture (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Aug. 01, 2015	Sep. 27, 2015	Jan. 03, 2016
Assets Sold:
Gain on Divestiture		$ 66,472	$ 66,472
TrueTouch Mobile
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Cash Proceeds (a)	$ 98,635
Deferred Revenue	(19,867)
Assets Sold:
Property, plant and equipment, net	(69)
Inventories	(9,290)
Prepaid Expenses	(1,115)
Transaction and other costs	(1,822)
Gain on Divestiture	$ 66,472

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DIVESTITURES - Summary of Components of Gain on Divestiture (Parenthetical) (Details) $ in Millions	Aug. 01, 2015 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Escrow deposits related to business sales	$ 10.0
TrueTouch Mobile
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Escrow deposits related to business sales	$ 10.0

XML

GOODWILL AND INTANGIBLE ASSETS - Narrative (Detail)	12 Months Ended
	Jan. 03, 2016 USD ($) Segment ReportingUnit	Dec. 28, 2014 USD ($)	Dec. 29, 2013 USD ($)
Goodwill [Line Items]
Number of reportable business segments | Segment	4
Number of reporting units | ReportingUnit	2
Goodwill, Impairment Loss	$ 0	$ 0	$ 0
Intangible Assets, Gross	1,025,840,000	162,296,000
Amortization of acquisition-related intangible assets	108,335,000	$ 6,683,000	$ 7,833,000
Developed Technology
Goodwill [Line Items]
Intangible Assets, Gross	$ 36,200,000
Amortization of finite lived intangible asset useful life	5 years
Amortization of acquisition-related intangible assets	$ 2,600,000
In Process Research and Development
Goodwill [Line Items]
Intangible assets acquired	$ 212,300,000
Memory Products Division
Goodwill [Line Items]
Percentage of fair value in excess of carrying amount	53.00%
Programmable Systems Division
Goodwill [Line Items]
Percentage of fair value in excess of carrying amount	9.00%

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GOODWILL AND INTANGIBLE ASSETS - Changes in Carrying Amount of Goodwill (Detail) $ in Thousands	12 Months Ended
	Jan. 03, 2016 USD ($)
Goodwill [Line Items]
Goodwill, beginning of period	$ 65,696
Goodwill from merger with Spansion	1,676,036
Measurement period adjustments	(2,850)
Goodwill, ending of period	1,738,882
Memory Products Division
Goodwill [Line Items]
Goodwill, beginning of period	33,860
Goodwill from merger with Spansion	739,036
Measurement period adjustments	(2,850)
Goodwill, ending of period	770,046
Programmable Systems Division
Goodwill [Line Items]
Goodwill, beginning of period	31,836
Goodwill from merger with Spansion	937,000
Goodwill, ending of period	$ 968,836

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GOODWILL AND INTANGIBLE ASSETS - Income Approach Valuations Assumption (Detail) - Programmable Systems Division	12 Months Ended
	Jan. 03, 2016
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	9.00%
Long-term growth rate	4.00%
Tax rate	28.00%
Risk free rate	4.00%
Peer company beta	0.97%

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GOODWILL AND INTANGIBLE ASSETS - Total Intangible Assets (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	$ 1,025,840	$ 162,296
Intangible Assets, Accumulated Amortization	(236,645)	(128,378)
Intangible Assets, Net	789,195	33,918
Acquisition-Related Intangible Assets
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	1,012,472	151,773
Intangible Assets, Accumulated Amortization	(226,417)	(118,357)
Intangible Assets, Net	786,055	33,416
Non Acquisition Related Intangible Assets
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	13,368	10,523
Intangible Assets, Accumulated Amortization	(10,228)	(10,021)
Intangible Assets, Net	$ 3,140	$ 502

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GOODWILL AND INTANGIBLE ASSETS - Total Intangible Assets (Parenthetical) (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets, net	$ 789,195	$ 33,918
In Process Research and Development
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets, net	$ 176,100

XML

GOODWILL AND INTANGIBLE ASSETS - Estimated Future Amortization Expense of Intangible Assets (Detail) $ in Thousands	Jan. 03, 2016 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
2016	$ 123,968
2017	120,966
2018	118,477
2019	111,249
2020 and future	138,319
Total future amortization expense	$ 612,979

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FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities Measured at Fair Value (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	$ 119	$ 7,665
Employee deferred compensation plan	41,249	44,116
Foreign Exchange Forward Contracts	966
Total financial assets	49,721	75,350
Foreign Exchange Forward Contracts	1,283
Employee deferred compensation plan liability	41,457	43,452
Total financial liabilities	42,740	43,452
Money Market Funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	119	7,665
Employee deferred compensation plan	4,042	3,895
Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	8,624	9,352
Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	3,333	2,957
Mutual Funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	22,023	24,114
Fixed Income
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	3,227	3,798
Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	871	15,076
Short-Term Investments | US Treasury Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		4,993
Short-Term Investments | Corporate Notes and Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		5,599
Short-Term Investments | Federal Agency
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		3,615
Short-Term Investments | Certificates of Deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	871	869
Long Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	6,516	8,493
Long Term Investments | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	6,516	8,493
Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	119	7,665
Employee deferred compensation plan	38,022	40,318
Total financial assets	44,657	61,469
Fair Value, Inputs, Level 1 | Money Market Funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	119	7,665
Employee deferred compensation plan	4,042	3,895
Fair Value, Inputs, Level 1 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	8,624	9,352
Fair Value, Inputs, Level 1 | Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	3,333	2,957
Fair Value, Inputs, Level 1 | Mutual Funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	22,023	24,114
Fair Value, Inputs, Level 1 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		4,993
Fair Value, Inputs, Level 1 | Short-Term Investments | US Treasury Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		4,993
Fair Value, Inputs, Level 1 | Long Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	6,516	8,493
Fair Value, Inputs, Level 1 | Long Term Investments | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	6,516	8,493
Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	3,227	3,798
Foreign Exchange Forward Contracts	966
Total financial assets	5,064	13,881
Foreign Exchange Forward Contracts	1,283
Employee deferred compensation plan liability	41,457	43,452
Total financial liabilities	42,740	43,452
Fair Value, Inputs, Level 2 | Fixed Income
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Employee deferred compensation plan	3,227	3,798
Fair Value, Inputs, Level 2 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	871	10,083
Fair Value, Inputs, Level 2 | Short-Term Investments | Corporate Notes and Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		5,599
Fair Value, Inputs, Level 2 | Short-Term Investments | Federal Agency
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments		3,615
Fair Value, Inputs, Level 2 | Short-Term Investments | Certificates of Deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	$ 871	$ 869

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FAIR VALUE MEASUREMENTS - Narrative (Detail) - USD ($) shares in Millions	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Fair value transfers between level 1, 2 and 3	$ 0	$ 0
Investment in non-marketable equity securities	9,200,000	5,900,000
Equity Method Investments	$ 41,300,000	$ 20,500,000
Equity Method Investment, Ownership Percentage	38.70%	26.20%
Proceeds from sale of shares to noncontrolling interest			$ 1,411,000
Unrealized loss on marketable securities	$ (4,655,000)	$ (1,495,000)
Hua Hong Semiconductor Limited
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Equity securities shares acquired		6.9
Equity Securities | Hua Hong Semiconductor Limited
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Payments to acquire marketable securities		$ 10,000,000
Stock Purchase Agreement
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Investment in non-marketable equity securities	$ 56,000,000
Privately Held Company
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Proceeds from sale of shares to noncontrolling interest			2,200,000
Gain on sale of equity investments			$ 1,100,000
Convertible Debt
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Interest rate	2.00%
Convertible Debt | Reported Value Measurement
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Fair value of debt	$ 131,800,000
Convertible Debt | Estimated Fair Value
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Fair value of debt	279,600,000
Revolving Credit Facility
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Carrying Value of Line of Credit	$ 449,000,000

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INVESTMENTS - Available-For-Sale Securities and Other Investments (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	$ 990	$ 22,769
Available For Sale Securities, Gross Unrealized Loss, Accumulated In Investments		(28)
Available-for-sale Securities	990	22,741
Cash Equivalents
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	119	7,665
Available-for-sale Securities	119	7,665
Short-Term Investments
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	871	15,104
Available For Sale Securities, Gross Unrealized Loss, Accumulated In Investments		(28)
Available-for-sale Securities	871	15,076
Corporate Notes and Bonds | Short-Term Investments
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis		5,616
Available For Sale Securities, Gross Unrealized Loss, Accumulated In Investments		(17)
Available-for-sale Securities		5,599
Federal Agency | Short-Term Investments
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis		3,617
Available For Sale Securities, Gross Unrealized Loss, Accumulated In Investments		(2)
Available-for-sale Securities		3,615
US Treasury Securities | Short-Term Investments
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis		5,002
Available For Sale Securities, Gross Unrealized Loss, Accumulated In Investments		(9)
Available-for-sale Securities		4,993
Certificates of Deposit | Short-Term Investments
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	871	869
Available-for-sale Securities	871	869
Money Market Funds | Cash Equivalents
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	119	7,665
Available-for-sale Securities	$ 119	$ 7,665

XML

INVESTMENTS - Contractual Maturities of Available-For-Sale Investments and Certificates of Deposit (Detail) $ in Thousands	Jan. 03, 2016 USD ($)
Investments Debt And Equity Securities [Abstract]
Maturing within one year, cost	$ 990
Total, cost	990
Maturing within one year, fair value	990
Total, fair value	$ 990

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ASSETS HELD FOR SALE - Narrative (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 28, 2014	Dec. 29, 2013
Long Lived Assets Held For Sale [Line Items]
Gain on sale of building	$ 0.6
Equipment
Long Lived Assets Held For Sale [Line Items]
Assets held for sale write-down amount		$ 6.7
Current Fair Value of Asset		$ 2.3

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Narrative (Detail)				12 Months Ended
	Jan. 30, 2016	Mar. 12, 2015	Jan. 30, 2015	Jan. 03, 2016 USD ($) Period milestone $ / shares shares	Dec. 28, 2014 USD ($) $ / shares shares	Dec. 29, 2013 shares	Dec. 29, 2013 USD ($) $ / shares shares	Dec. 30, 2012 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense | $				$ 93,527,000	$ 50,170,000		$ 73,020,000
Cash proceeds from the issuance of shares under the employee stock plans | $				52,900,000	32,000,000		43,300,000
Tax benefit from stock option exercises | $				0	0		$ 0
Stock-based compensation capitalized in inventories | $				$ 4,300,000	$ 2,000,000
Weighted-average grant-date fair value of options granted | $ / shares				$ 0	$ 2.22		$ 2.63
Aggregate intrinsic value of the options outstanding | $				$ 48,100,000	$ 82,800,000
Aggregate intrinsic value of the options exercisable | $				47,900,000	68,000,000
Intrinsic value of options exercised | $				41,800,000	26,400,000		$ 31,900,000
Fair value of options vested | $				$ 5,600,000	6,900,000		10,100,000
Options exercisable, shares				8,400,000
Stock options vested and expected to vest, shares				16,600,000
Stock options vested and expected to vest, weighted-average remaining contractual life, years				3 years
Stock options vested and expected to vest, weighted-average exercise price | $ / shares				$ 7.95
Stock options vested and expected to vest, aggregated intrinsic value | $				$ 48,000,000
Spansion Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense | $				$ 21,600,000
Shares issued for acquisition		2.457
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				35,100,000
Stock-based compensation expense | $				$ 1,920,000	4,717,000		8,747,000
Restricted stock units and restricted stock awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense | $				$ 74,897,000	$ 37,837,000		$ 54,359,000
Granted and assumed shares				10,172,000	6,344,000		7,040,000
Shares released				3,594,000	4,363,000		2,378,000
Performance-based restricted stock units and restricted stock awards granted under the 1994 Amended and Restated Plan				11,053,000	7,838,000	8,652,000	8,652,000	7,887,000
Restricted Stock Units And Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				23,400,000
Restricted Stock Units And Restricted Stock Awards | Individuals
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted and assumed shares				23,000	300,000	200,000
Shares released				200,000	46,000	100,000
Performance Based Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance-based restricted stock units and restricted stock awards granted under the 1994 Amended and Restated Plan				5,300,000
PARS Number of Milestones | milestone				3
Performance Based Restricted Stock Awards | PARS Milestone 3
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award Vesting Rights, Percentage			75.00%
Performance Based Restricted Stock Awards | PARS Milestone 3 | Subsequent Event
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
PARS remaining vesting percentage	25.00%
Performance Based Restricted Stock Awards | PARS Adjustment, 10th Percentile
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				62.50%
Performance Based Restricted Stock Awards | PARS Adjustment, 10th to 60th Percentile
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				100.00%
Performance Based Restricted Stock Awards | PARS Adjustment, 90th Percentile
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				137.50%
Performance Based Restricted Stock Awards | Minimum | Total Shareholder Return
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
PARS Award Vesting, Percentage				0.00%
PARS, Goal Points Threshold				0.0060
Performance Based Restricted Stock Awards | Minimum | Annualized Target Merger Synergy
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
PARS award to achieve specific revenue				100.00%
Performance Based Restricted Stock Awards | Maximum | Total Shareholder Return
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
PARS Award Vesting, Percentage				100.00%
PARS, Goal Points Threshold				0.0085
Performance Based Restricted Stock Awards | Maximum | Annualized Target Merger Synergy
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
PARS award to achieve specific revenue				0.00%
1999 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				0
Shares Issue and Outstanding under Stock Based Compensation Plan				2,000,000
2013 Stock Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				31,000,000
Maximum expiration term, years				8 years
Maximum aggregate number of shares authorized for issuance				145,200,000
Number of additional shares authorized				29,300,000
Additional shares authorized if shares issued full value				15,600,000
2013 Stock Plan | Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				25,000,000
2013 Stock Plan | Restricted stock units and restricted stock awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				13,300,000
2012 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum expiration term, years				7 years
Additional shares authorized if shares issued full value				1,200,000
Percentage of fair market value on effective date of grant				100.00%
2012 Stock Option Plan | Stock Options | Spansion Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				10,100,000
2012 Stock Option Plan | Restricted Stock Units And Restricted Stock Awards | Spansion Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				10,100,000
2012 Stock Option Plan | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options exercisable, vesting period, in years				5 years
2010 Equity Incentive Award Plan | Spansion Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Additional shares authorized if shares issued full value				10,100,000
2010 Equity Incentive Award Plan | Spansion Inc | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options exercisable, vesting period, in years				2 years
2010 Equity Incentive Award Plan | Spansion Inc | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options exercisable, vesting period, in years				4 years
2010 Equity Incentive Award Plan | Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				2,000,000
2010 Equity Incentive Award Plan | Restricted stock units and restricted stock awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				2,000
Employee Stock Purchase Plan (ESPP)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options available for grant				1,700,000
Offer period composed of three-six month exercise period, months				18 months
Number of Exercise Periods | Period				3
Exercise Period				6 months
Discount rate from fair market value on offering date				85.00%
Maximum percentage of an employee's eligible compensation				10.00%
Maximum employee annual contribution | $				$ 21,250
Shares issued under our ESPP				2,600,000	1,500,000		1,500,000
ESPP Weighted average price | $ / shares				$ 8.69	$ 8.93		$ 9.21
2015 PARS
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognition period				3 years
2015 PARS | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognition period				1 year
2015 PARS | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognition period				3 years
2015 PARS | Restricted Stock Units And Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted and assumed shares				3,200,000
2015 PARS | Performance Based Restricted Stock Awards | Total Shareholder Return
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period				2 years
2015 PARS | Performance Based Restricted Stock Awards | Between 65th and 75th Percentile
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				100.00%
2015 PARS | Performance Based Restricted Stock Awards | Upper 75th Percentile
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				200.00%
2015 PARS | Performance Based Restricted Stock Awards | Lower 25th Percentile
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				0.00%
2015 PARS | Performance Based Restricted Stock Awards | Negative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				50.00%
2015 PARS | Performance Based Restricted Stock Awards | Annualized Target Merger Synergy
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period				3 years
2015 PARS | Performance Based Restricted Stock Awards | Minimum | Total Shareholder Return
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period				1 year
2015 PARS | Performance Based Restricted Stock Awards | Minimum | Annualized Target Merger Synergy Goal 1
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				0.00%
2015 PARS | Performance Based Restricted Stock Awards | Minimum | Annualized Target Merger Synergy Goal 2
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				100.00%
2015 PARS | Performance Based Restricted Stock Awards | Minimum | Non-GAAP EPS Target 1
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				0.00%
2015 PARS | Performance Based Restricted Stock Awards | Minimum | Non-GAAP EPS Target 2
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				100.00%
2015 PARS | Performance Based Restricted Stock Awards | Maximum | Total Shareholder Return
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period				3 years
2015 PARS | Performance Based Restricted Stock Awards | Maximum | Annualized Target Merger Synergy Goal 1
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				100.00%
2015 PARS | Performance Based Restricted Stock Awards | Maximum | Annualized Target Merger Synergy Goal 2
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				200.00%
2015 PARS | Performance Based Restricted Stock Awards | Maximum | Non-GAAP EPS Target 1
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				100.00%
2015 PARS | Performance Based Restricted Stock Awards | Maximum | Non-GAAP EPS Target 2
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Multiplier of performance vesting				200.00%
2014 PARS | Restricted Stock Units And Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted and assumed shares					2,600,000
Shares released				600,000
2013 PARS | Restricted Stock Units And Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted and assumed shares						4,600,000
Shares released					2,400,000
Two Thousand Twelve Performance Accelerated Restricted Stock | Restricted Stock Units And Restricted Stock Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares released						1,000,000

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Expenses (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 93,527	$ 50,170	$ 73,020
Cost of revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	16,459	13,209	12,789
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	25,719	16,187	26,042
Selling, General and Administrative Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 51,349	$ 20,774	$ 34,189

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Expense Award Type (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 93,527	$ 50,170	$ 73,020
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	1,920	4,717	8,747
Restricted stock units and restricted stock awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	74,897	37,837	54,359
Employee Stock Purchase Plan (ESPP)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 16,710	$ 7,616	$ 9,914

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Unrecognized Stock-Based Compensation Balance Net by Award Type (Detail) $ in Thousands	12 Months Ended
	Jan. 03, 2016 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized stock-based compensation balance, net of estimated forfeitures	$ 103,082
Total unrecognized stock-based compensation balance, net of estimated forfeitures, Weighted-Average Amortization Period (In years)	1 year 4 months 24 days
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized stock-based compensation balance, net of estimated forfeitures	$ 2,631
Total unrecognized stock-based compensation balance, net of estimated forfeitures, Weighted-Average Amortization Period (In years)	1 year 3 months 7 days
Restricted stock units and restricted stock awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized stock-based compensation balance, net of estimated forfeitures	$ 82,087
Total unrecognized stock-based compensation balance, net of estimated forfeitures, Weighted-Average Amortization Period (In years)	1 year 6 months 26 days
Employee Stock Purchase Plan (ESPP)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized stock-based compensation balance, net of estimated forfeitures	$ 18,364
Total unrecognized stock-based compensation balance, net of estimated forfeitures, Weighted-Average Amortization Period (In years)	8 months 1 day

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Assumptions used in Black-Scholes Valuation Model - Stock Option Plan and Employee Stock Purchase Plan (Detail)	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Volatility, minimum		39.70%	38.20%
Volatility, maximum		41.10%	41.90%
Risk-free interest rate, minimum		0.26%	0.93%
Risk-free interest rate, maximum		1.75%	1.85%
Stock Options | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life		4 years 4 months 24 days	4 years 2 months 12 days
Dividend yield		4.20%	3.80%
Stock Options | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life		5 years 8 months 12 days	5 years 3 months 18 days
Dividend yield		4.40%	4.50%
Employee Stock Purchase Plan (ESPP)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Volatility, minimum	35.90%	31.00%	38.40%
Volatility, maximum	46.60%	36.10%	46.30%
Risk-free interest rate, minimum	0.09%	0.03%	0.08%
Risk-free interest rate, maximum	0.86%	0.35%	0.32%
Employee Stock Purchase Plan (ESPP) | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life	6 months	6 months	6 months
Dividend yield	4.50%	4.20%	3.80%
Employee Stock Purchase Plan (ESPP) | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life	1 year 6 months	1 year 6 months	1 year 6 months
Dividend yield	5.20%	4.40%	4.50%

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Stock Option Activities (Detail) - $ / shares	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Shares
Options outstanding, Shares, beginning of year	14,463,000	19,060,000	22,760,000
Granted, Shares	8,976,000	522,000	4,122,000
Exercised, Shares	(5,391,000)	(4,027,000)	(5,622,000)
Forfeited or expired, Shares	(1,208,000)	(1,092,000)	(2,200,000)
Options outstanding, Shares, end of year	16,839,721	14,463,000	19,060,000
Options exercisable, Shares, end of year	14,366,000	9,787,000	12,346,000
Weighted-Average Exercise Price Per Share
Options outstanding, Weighted-Average Exercise Price per Share, beginning of year	$ 9.24	$ 8.33	$ 7.25
Granted, Weighted-Average Exercise Price per Share	12.86	10.24	11.40
Exercised, Weighted-Average Exercise Price per Share	5.71	4.47	5.19
Forfeited or expired, Weighted-Average Exercise Price per Share	12.75	11.59	11.09
Options outstanding, Weighted-Average Exercise Price per Share, end of year	7.99	9.24	8.33
Options exercisable, Weighted-Average Exercise Price per Share, end of year	$ 7.40	$ 8.05	$ 6.39

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Summary of Information about Options Outstanding and Exercisable (Detail) - $ / shares	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013	Dec. 30, 2012
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Options Outstanding, Shares	16,839,721	14,463,000	19,060,000	22,760,000
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	3 years 15 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 7.99	$ 9.24	$ 8.33	$ 7.25
Options Exercisable, Shares	14,366,078
Options Exercisable, Weighted-Average Exercise Price per Share	$ 7.40	$ 8.05	$ 6.39
$2.72-$3.99
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0272
Maximum Range of Exercise Price	$ 0.0399
Options Outstanding, Shares	1,821,541
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	9 months 22 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 3.57
Options Exercisable, Shares	1,812,477
Options Exercisable, Weighted-Average Exercise Price per Share	$ 3.57
$4.01-$4.09
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0401
Maximum Range of Exercise Price	$ 0.0409
Options Outstanding, Shares	1,815,277
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	3 years 4 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 4.09
Options Exercisable, Shares	1,815,277
Options Exercisable, Weighted-Average Exercise Price per Share	$ 4.09
$4.15-$4.22
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0415
Maximum Range of Exercise Price	$ 0.0422
Options Outstanding, Shares	173,644
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	6 months 4 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 4.17
Options Exercisable, Shares	173,644
Options Exercisable, Weighted-Average Exercise Price per Share	$ 4.17
$4.28-$4.28
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0428
Maximum Range of Exercise Price	$ 0.0428
Options Outstanding, Shares	1,981,218
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	1 year 4 months 6 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 4.28
Options Exercisable, Shares	1,981,218
Options Exercisable, Weighted-Average Exercise Price per Share	$ 4.28
$4.30-$6.17
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0430
Maximum Range of Exercise Price	$ 0.0617
Options Outstanding, Shares	2,162,508
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	2 years 9 months 18 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 5.44
Options Exercisable, Shares	2,150,857
Options Exercisable, Weighted-Average Exercise Price per Share	$ 5.44
$6.22-$8.10
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0622
Maximum Range of Exercise Price	$ 0.0810
Options Outstanding, Shares	2,112,745
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	2 years 1 month 10 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 7.61
Options Exercisable, Shares	2,112,745
Options Exercisable, Weighted-Average Exercise Price per Share	$ 7.61
$8.43-$10.92
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.0843
Maximum Range of Exercise Price	$ 0.1092
Options Outstanding, Shares	1,133,060
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	4 years 4 months 17 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 9.97
Options Exercisable, Shares	697,698
Options Exercisable, Weighted-Average Exercise Price per Share	$ 9.90
$11.27-$11.27
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.1127
Maximum Range of Exercise Price	$ 0.1127
Options Outstanding, Shares	1,812,686
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	4 years 10 months 13 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 11.27
Options Exercisable, Shares	1,072,597
Options Exercisable, Weighted-Average Exercise Price per Share	$ 11.27
$11.32-$11.40
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.1132
Maximum Range of Exercise Price	$ 0.1140
Options Outstanding, Shares	181,205
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	3 years 7 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 11.33
Options Exercisable, Shares	167,965
Options Exercisable, Weighted-Average Exercise Price per Share	$ 11.33
$11.55-$23.23
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Minimum Range of Exercise Price	0.1155
Maximum Range of Exercise Price	$ 0.2323
Options Outstanding, Shares	3,645,837
Options Outstanding, Weighted-Average Remaining Contractual Life (In years)	4 years 6 months 15 days
Options Outstanding, Weighted-Average Exercise Price per Share	$ 13.67
Options Exercisable, Shares	2,381,600
Options Exercisable, Weighted-Average Exercise Price per Share	$ 14.50

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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Restricted Stock Unit and Restricted Stock Award Activities (Detail) - Restricted stock units and restricted stock awards - $ / shares shares in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Shares
Non-vested, Shares, beginning of year	7,838	8,652	7,887
Granted and assumed, Shares	10,172	6,344	7,040
Released, Shares	(3,594)	(4,363)	(2,378)
Forfeited, Shares	(3,363)	(2,795)	(3,897)
Non-vested, Shares, end of year	11,053	7,838	8,652
Weighted-Average Grant Date Fair Value per Share
Non-vested, Weighted-Average Grant Date Fair Value per Share, beginning of year	$ 10.98	$ 11.97	$ 14.52
Granted and assumed, Weighted-Average Grant Date Fair Value per Share	14.78	10.16	11.40
Released, Weighted-Average Grant Date Fair Value per Share	5.60	11.58	9.77
Forfeited, Weighted-Average Grant Date Fair Value per Share	11.66	11.21	14.74
Non-vested, Weighted-Average Grant Date Fair Value per Share, end of year	$ 13.43	$ 10.98	$ 11.97

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BALANCE SHEET COMPONENTS - Accounts Receivable, Net (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Balance Sheet Component [Abstract]
Accounts receivable, gross	$ 295,803	$ 79,091
Allowances for doubtful accounts receivable and sales returns	(3,067)	(3,107)
Accounts receivable, net	$ 292,736	$ 75,984

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BALANCE SHEET COMPONENTS - Inventories (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Balance Sheet Component [Abstract]
Raw materials	$ 13,516	$ 4,753
Work-in-process	192,245	64,003
Finished goods	37,834	19,471
Total inventories	$ 243,595	$ 88,227

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BALANCE SHEET COMPONENTS - Narrative (Details) $ in Millions		12 Months Ended
	Jan. 23, 2014 USD ($) a ft²	Jan. 03, 2016 USD ($)	Dec. 28, 2014 USD ($)
Property Plant And Equipment [Line Items]
Gross inventory		$ 385.2	$ 121.8
Inventory reserve		141.6	$ 33.5
Write-down on inventory due to merger		$ 133.0
Spansion Inc
Property Plant And Equipment [Line Items]
Net proceeds from sale leaseback transaction	$ 59.0
Area subject to sale leaseback lease | ft²	170,000
Term of sale leaseback lease	24 months
Period of free rent	6 months
Spansion Inc | Sunnyvale Property Sale
Property Plant And Equipment [Line Items]
Area of land sold | a	24.5
Area of real estate sold | ft²	471,000

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BALANCE SHEET COMPONENTS - Other Current Assets (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Balance Sheet Component [Abstract]
Prepaid tooling assets	$ 19,379	$ 3,880
Restricted cash relating to pension plan (see Note 17)	3,730
Foundry service prepayments - ST	5,753
Prepaid expenses	30,934	17,897
Other current assets	27,084	7,511
Total other current assets	$ 86,880	$ 29,288

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BALANCE SHEET COMPONENTS - Property, Plant and Equipment, Net (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 1,584,301	$ 1,276,151
Less: accumulated depreciation and amortization	(1,159,298)	(1,038,388)
Total property, plant and equipment, net	425,003	237,763
Land
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	37,819	18,570
Equipment
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	1,191,469	1,017,121
Buildings, building and leasehold improvements
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	314,017	221,465
Construction in progress
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	28,050	12,093
Furniture and fixtures
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 12,946	$ 6,902

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BALANCE SHEET COMPONENTS - Other Long-Term Assets (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Condensed Balance Sheet Statements Captions [Line Items]
Employee deferred compensation plan	$ 41,249	$ 44,116
Investments in Equity securities	57,030	34,992
Deferred tax assets	4,080	1,187
Long term license	24,079	4,633
Restricted cash relating to pension plan (see Note 17)	3,462
Foundry service prepayments - LT	26,237
Other assets	34,272	8,665
Total other long-term assets	200,409	$ 93,593
TrueTouch Mobile
Condensed Balance Sheet Statements Captions [Line Items]
Long term receivable from sale of TrueTouch ® Mobile business (see Note 3)	$ 10,000

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BALANCE SHEET COMPONENTS - Other Current Liabilities (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Condensed Balance Sheet Statements Captions [Line Items]
Employee deferred compensation plan	$ 41,457	$ 43,452
Restructuring accrual - ST (see Note 10)	7,270	1,177
License commitment	18,496
Deferred margin on sales to distributors	73,370	75,569
Deferred liability - distributor price adjustments	52,712	19,618
Other current liabilities	67,175	30,372
Total other current liabilities	202,405	$ 94,619
TrueTouch Mobile
Condensed Balance Sheet Statements Captions [Line Items]
Deferred margin on sales to distributors	$ 15,295

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BALANCE SHEET COMPONENTS - Other Long-Term Liabilities (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Balance Sheet Component [Abstract]
Long-term pension liabilities	$ 8,712	$ 5,768
Restructuring accrual - LT (see Note 10)	14,217
Other long-term liabilities	14,855	4,925
Total other long-term liabilities	$ 37,784	$ 10,693

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RESTRUCTURING - Narrative (Detail) $ in Millions	12 Months Ended
	Jan. 03, 2016 USD ($) Employee
Restructuring Cost and Reserve [Line Items]
Expected positions to restructure | Employee	1,000
Restructuring charges	$ 90.1
Charge to write off certain leasehold improvements	$ 9.0
Spansion Inc
Restructuring Cost and Reserve [Line Items]
Lease expiration date	Dec. 31, 2026
Contract Termination | Spansion Inc
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 18.0

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RESTRUCTURING - Schedule of Restructuring Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Restructuring Cost and Reserve [Line Items]
Restructuring and other	$ 90,084	$ (1,180)	$ 15,357
Release	565
Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring and other	58,972
Contract Termination
Restructuring Cost and Reserve [Line Items]
Restructuring and other	18,016
Property, Plant and Equipment
Restructuring Cost and Reserve [Line Items]
Restructuring and other	$ 12,531

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RESTRUCTURING - Restructuring Activities Related to Personnel Costs (Detail) $ in Thousands	12 Months Ended
	Jan. 03, 2016 USD ($)
Restructuring Reserve [Roll Forward]
Restructuring reserve, balance	$ 0
Provision (release)	81,041
Cash payments and other	(59,554)
Restructuring reserve, balance	$ 21,487

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FOREIGN CURRENCY DERIVATIVES - Narrative (Details) - 12 months ended Jan. 03, 2016 ¥ in Millions, $ in Millions	USD ($)	JPY (¥)
Derivative [Line Items]
Maximum term of derivative contracts	13 months
Cash Flow Hedging | Forward Contracts | Long
Derivative [Line Items]
Notional derivative contract	$ 22.7	¥ 2,690.0
Cash Flow Hedging | Minimum
Derivative [Line Items]
Derivative Term Of Contract	3 months
Cash Flow Hedging | Maximum
Derivative [Line Items]
Derivative Term Of Contract	9 months

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FOREIGN CURRENCY DERIVATIVES - Schedule of Notational Amounts of Outstanding Contracts (Details) - Jan. 03, 2016 - Forward Contracts € in Millions, ¥ in Millions, $ in Millions	USD ($)	JPY (¥)	EUR (€)
Japanese Yen USD Future | Long
Derivative [Line Items]
Notional derivative contract	$ 19.4
Japanese Yen USD Future | Short
Derivative [Line Items]
Notional derivative contract | ¥		¥ 2,333
Eurodollar Future | Long
Derivative [Line Items]
Notional derivative contract	$ 7.3
Eurodollar Future | Short
Derivative [Line Items]
Notional derivative contract | €			€ 6.8

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Components of Accumulated Other Comprehensive Income Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014
Accumulated Other Comprehensive Income Loss [Line Items]
Balance as of December 29, 2013	$ (46)	$ (177)
Other comprehensive income (loss) before reclassification	(1,623)	131
Amounts reclassified to earnings	1,416
Net unrecognized gain on the Defined Benefit Plan	26
Balance as of December 28, 2014	(227)	(46)
Accumulated net unrealized losses on available-for-sale investments
Accumulated Other Comprehensive Income Loss [Line Items]
Balance as of December 29, 2013	(52)	(183)
Other comprehensive income (loss) before reclassification	(1,623)	131
Amounts reclassified to earnings	1,416
Balance as of December 28, 2014	(259)	(52)
Cumulative Translation Adjustment and Other
Accumulated Other Comprehensive Income Loss [Line Items]
Balance as of December 29, 2013	6	6
Balance as of December 28, 2014	6	$ 6
Unrecognized Gain on the Defined Benefit Plan
Accumulated Other Comprehensive Income Loss [Line Items]
Net unrecognized gain on the Defined Benefit Plan	26
Balance as of December 28, 2014	$ 26

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OTHER INCOME (EXPENSE), NET - Components of Other Income (Expense), Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Other Income And Expenses [Abstract]
Interest income	$ 885	$ 362	$ 301
Changes in fair value of investments under the deferred compensation plan	(1,354)	3,014	6,371
Unrealized loss on marketable securities	(4,655)	(1,495)
Impairment of investments			25
Foreign currency exchange gains (losses), net	744	1,382	2,791
Gain on sale of equity investments	276		908
Other	335	40	(59)
Other income (expense), net	$ (3,769)	$ 3,303	$ 10,337

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DEBT AND EQUITY TRANSACTIONS - Schedule of Debt (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Line Of Credit Facility [Line Items]
Current portion of long-term debt	$ 14,606	$ 6,143
Revolving credit facility and long-term debt	673,659	237,107
Total debt	688,265	243,250
Revolving Credit Facility
Line Of Credit Facility [Line Items]
Revolving credit facility and long-term debt	449,000	227,000
2.00% Senior Exchangeable Notes
Line Of Credit Facility [Line Items]
Revolving credit facility and long-term debt	131,845
Capital Lease Obligations
Line Of Credit Facility [Line Items]
Current portion of long-term debt	6,603	3,227
Revolving credit facility and long-term debt	586	7,105
Equipment Loan
Line Of Credit Facility [Line Items]
Current portion of long-term debt	3,003	2,916
Revolving credit facility and long-term debt		$ 3,002
Term Loan A
Line Of Credit Facility [Line Items]
Current portion of long-term debt	5,000
Revolving credit facility and long-term debt	$ 92,228

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DEBT AND EQUITY TRANSACTIONS - Narrative (Detail) $ / shares in Units, shares in Millions												1 Months Ended	2 Months Ended		3 Months Ended											12 Months Ended				51 Months Ended
	Jan. 21, 2016 USD ($)	Jan. 06, 2016 USD ($)	Dec. 22, 2015 USD ($)	Nov. 09, 2015 $ / shares	Jun. 09, 2015 note	Mar. 12, 2015 USD ($)	Jan. 15, 2015 USD ($)	Nov. 24, 2014 $ / shares	Jan. 15, 2014 USD ($)	Nov. 01, 2013 $ / shares	Jan. 01, 2012 Installment	Dec. 31, 2015 USD ($)	Jan. 03, 2016 USD ($) $ / shares shares	Jan. 03, 2016 USD ($) $ / shares	Sep. 27, 2015 $ / shares	Jun. 28, 2015 $ / shares	Mar. 29, 2015 $ / shares	Dec. 28, 2014 $ / shares	Sep. 28, 2014 $ / shares	Jun. 29, 2014 $ / shares	Mar. 30, 2014 $ / shares	Dec. 29, 2013 $ / shares	Sep. 29, 2013 $ / shares	Jun. 30, 2013 $ / shares	Mar. 31, 2013 $ / shares	Jan. 03, 2016 USD ($) $ / shares shares	Dec. 28, 2014 USD ($) $ / shares	Dec. 29, 2013 USD ($) $ / shares	Jan. 03, 2010	Jan. 03, 2016 USD ($) $ / shares	Oct. 20, 2015 USD ($)	Oct. 17, 2013 USD ($)	Dec. 30, 2012	Apr. 30, 2012 USD ($)
Debt And Equity Transactions [Line Items]
Borrowings under revolving credit facility and line of credit																										$ 537,000,000	$ 264,000,000	$ 140,000,000
Fair value of capped call assumed						$ 25,300,000
APIC adjustment for capped call																										25,300,000
Accumulated Value of Shares Repurchased																										55,018,000
Payment of dividends							$ 17,900,000		$ 16,900,000																	$ 128,000,000	$ 69,200,000	$ 64,800,000
Cash dividends declared per share | $ / shares				$ 0.11				$ 0.11		$ 0.11				$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.44	$ 0.44	$ 0.44
Dividends payable date declared																										Nov. 09, 2015	Nov. 24, 2014	Nov. 01, 2013
Dividends payable date of record																										Dec. 31, 2015	Dec. 26, 2014	Dec. 23, 2013
Cash dividend paid date																										Jan. 21, 2016	Jan. 15, 2015	Jan. 15, 2014
Program Authorized In Fiscal 2011
Debt And Equity Transactions [Line Items]
Stock repurchase program, authorized amount																															$ 450,000,000
Accumulated Value of Shares Repurchased													$ 56,500,000																	$ 327,400,000
Repurchases of common shares (in shares) | shares													5.7													24.4
Average repurchase price | $ / shares													$ 10.00													$ 13.4
2.00% Senior Exchangeable Notes
Debt And Equity Transactions [Line Items]
Adjustment for acquisition of convertible debt						$ 287,300,000
Number of instruments converted | note | note					10
2.00% Senior Exchangeable Notes | Spansion Inc
Debt And Equity Transactions [Line Items]
Interest rate						2.00%							2.00%	2.00%												2.00%				2.00%
Conversion ratio																										184.068
Conversion price | $ / shares													$ 5.43	$ 5.43												$ 5.43				$ 5.43
Make-whole adjustment, change in ownership percentage																										50.00%
Fair value of debt						$ 129,300,000
Principal amount													$ 150,000,000	$ 150,000,000												$ 150,000,000				$ 150,000,000
Yield Enhancement Program
Debt And Equity Transactions [Line Items]
Short term yield enhanced structured agreements maturity period																													90 days
Subsequent Event
Debt And Equity Transactions [Line Items]
Maximum credit line borrowing		$ 540,000,000
Borrowings under revolving credit facility and line of credit		$ 90,000,000
Payment of dividends	$ 36,500,000
Equipment Loan
Debt And Equity Transactions [Line Items]
Principal amount																																		$ 14,100,000
Number of installment payments | Installment | Installment											60
Maximum | Equipment Loan
Debt And Equity Transactions [Line Items]
Interest rate																																	3.18%
Minimum | Equipment Loan
Debt And Equity Transactions [Line Items]
Interest rate																																	3.15%
Revolving Credit Facility
Debt And Equity Transactions [Line Items]
Maximum credit line borrowing			$ 450,000,000			450,000,000																										$ 300,000,000
Additional financing allowable						$ 250,000,000
Credit facility, minimum fixed charge coverage ratio						100.00%
Carrying Value of Line of Credit													449,000,000	449,000,000												$ 449,000,000				449,000,000
Deferred costs						$ 2,300,000
Borrowings under revolving credit facility and line of credit												$ 100,000,000
Debt instrument, maturity date																										Mar. 12, 2020
Loans and letter of credit outstanding													$ 549,000,000	$ 549,000,000												$ 549,000,000				$ 549,000,000
Revolving Credit Facility | Term Loan A
Debt And Equity Transactions [Line Items]
Deferred costs			$ 2,800,000
Line of credit facility, interest rate Percentage			2.25%
Debt instrument upfront fee percentage			1.00%
Debt instrument, redemption, description																										The Company paid a 1.00% upfront fee in connection with the Term Loan A. Such Term Loan A is payable in quarterly installments equal to 1.25% per quarter for 2016, 1.875% per quarter for 2017 and 2018, and 2.50% per quarter thereafter, with the remaining outstanding principle amount due at final maturity on March 12, 2020.
Mandatory prepayments equal to excess of cash flow			50.00%
Revolving Credit Facility | Term Loan A | 2016 [Member]
Debt And Equity Transactions [Line Items]
Term loan payable per quarterly installments																										1.25%
Revolving Credit Facility | Term Loan A | 2017 [Member]
Debt And Equity Transactions [Line Items]
Term loan payable per quarterly installments																										1.875%
Revolving Credit Facility | Term Loan A | 2018 [Member]
Debt And Equity Transactions [Line Items]
Term loan payable per quarterly installments																										1.875%
Revolving Credit Facility | Term Loan A | There After
Debt And Equity Transactions [Line Items]
Term loan payable per quarterly installments																										2.50%
Revolving Credit Facility | Maximum | Term Loan A
Debt And Equity Transactions [Line Items]
Impact of excess of cash flow due to increase and decrease in total leverage ratio			25.00%
Revolving Credit Facility | Minimum | Term Loan A
Debt And Equity Transactions [Line Items]
Impact of excess of cash flow due to increase and decrease in total leverage ratio			0.00%
Revolving Credit Facility | Base Rate
Debt And Equity Transactions [Line Items]
Spread on LIBOR						1.25%
Revolving Credit Facility | (LIBOR)
Debt And Equity Transactions [Line Items]
Spread on LIBOR						2.25%
Revolving Credit Facility | (LIBOR) | Term Loan A
Debt And Equity Transactions [Line Items]
Line of credit facility, interest rate Percentage			3.25%
Debt instrument, interest rate, effective percentage			1.00%
Revolving Credit Facility | Federal Funds Effective Swap Rate | Term Loan A
Debt And Equity Transactions [Line Items]
Debt instrument, interest rate, effective percentage			0.50%
Revolving Credit Facility | Through January 1, 2017
Debt And Equity Transactions [Line Items]
Credit facility, maximum total leverage ratio						3.50%
Revolving Credit Facility | There After
Debt And Equity Transactions [Line Items]
Credit facility, maximum total leverage ratio						3.00%

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DEBT AND EQUITY TRANSACTIONS - Schedule of Spansion Note (Details) - 2.00% Senior Exchangeable Notes - Spansion Inc $ in Thousands	12 Months Ended
	Jan. 03, 2016 USD ($)
Debt Instrument [Line Items]
Principal amount	$ 150,000
Settlement due to notice from bondholder	(10)
Unamortized debt discount	(18,145)
Total	131,845
Contractual interest expense at 2% per annum	2,441
Accretion of debt discount	2,700
Total	$ 5,141

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DEBT AND EQUITY TRANSACTIONS - Schedule of Spansion Note (Parenthetical) (Details)	Jan. 03, 2016	Mar. 12, 2015
2.00% Senior Exchangeable Notes | Spansion Inc
Debt Instrument [Line Items]
Interest rate	2.00%	2.00%

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DEBT AND EQUITY TRANSACTIONS - Schedule of Principal Payments Under Equipment Loans (Detail) - Equipment Loan $ in Thousands	Jan. 03, 2016 USD ($)
Debt Instrument [Line Items]
2016	$ 3,003
Total	$ 3,003

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DEBT AND EQUITY TRANSACTIONS - Yield Enhanced Structured Agreements (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014
Debt And Equity Transactions [Line Items]
Aggregate Price Paid	$ 38,567	$ 19,415
Total Cash Proceeds Received Upon Maturity	29,353	19,733
Yield Realized	$ 387	318
Total Number of Shares Received Upon Maturity	1,000,000
Average Price Paid per Share	$ 9.6
Settled through cash proceeds
Debt And Equity Transactions [Line Items]
Aggregate Price Paid	$ 28,966	19,415
Total Cash Proceeds Received Upon Maturity	29,353	19,733
Yield Realized	387	$ 318
Settled through issuance of common stock
Debt And Equity Transactions [Line Items]
Aggregate Price Paid	$ 9,601
Total Number of Shares Received Upon Maturity	1,000,000
Average Price Paid per Share	$ 9.6

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EQUITY METHOD INVESTMENT - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Schedule Of Equity Method Investments [Line Items]
Payments to Acquire Equity Method Investments	$ 28.0	$ 15.0
Equity Method Investment, Ownership Percentage	38.70%	26.20%
Cost Method Investment, Ownership Percentage			17.60%
Aggregate investment in equity method investments	$ 41.3
Adjustment for Change to Equity Method Investment
Schedule Of Equity Method Investments [Line Items]
Revenue recognized for change in accounting principle	$ 7.1	$ 5.1	$ 1.9

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NET INCOME (LOSS) PER SHARE - Computation of Basic and Diluted Net Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Earnings Per Share [Abstract]
Net income (loss) attributable to Cypress	$ (378,867)	$ 17,936	$ (48,242)
Weighted-average common shares for basic computation	302,036	159,031	148,558
Net income (loss) per share—basic	$ (1.25)	$ 0.11	$ (0.32)
Stock options, restricted stock units, restricted stock awards and other		10,091
Weighted-average common shares for diluted computation	302,036	169,122	148,558
Net income (loss) per share—diluted	$ (1.25)	$ 0.11	$ (0.32)

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NET INCOME (LOSS) PER SHARE - Anti-Dilutive Securities Excluded from Computation of Diluted Net Income (Loss) Per Share (Detail) - shares shares in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Stock options, restricted stock units and restricted stock awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted net income (loss) per share	6,828	8,708	8,023

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EMPLOYEE BENEFIT PLANS - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Projected benefit obligations	$ 8,400	$ 9,000
Fair value of plan assets	3,300	3,400
Long-term pension liabilities	8,712	5,768
Net periodic pension cost	900
Employee deferred compensation plan	41,457	43,452
Deferred Compensation Plan
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Investments	41,200	44,100
Management | Key Employee Bonus Plan
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Total charges recorded in employee benefit plans	500	2,700	$ 7,400
Chief Executive Officer | Performance Bonus Plan
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Total charges recorded in employee benefit plans	100	100	100
Employees | Performance Profit Sharing Plan
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Total charges recorded in employee benefit plans	200	$ 1,100	$ 2,700
Other Long-term Liabilities
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Pension liability	1,700
Spansion Inc | Accrued Compensation and Employee Benefits
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Pension liability	3,900
Spansion Inc | Other Long-term Liabilities
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Long-term pension liabilities	3,700
Spansion Inc | Other Current Assets
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Restricted cash relating to pension (see Note 8)	3,700
Spansion Inc | Other Long-term Assets
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Restricted cash relating to pension (see Note 8)	$ 3,500

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EMPLOYEE BENEFIT PLANS - Schedule of Defined Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Total income (expense), net	$ (822)	$ 793	$ (22)
Other Income (Expense) Net
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Changes in fair value of assets recorded	(1,353)	3,014	6,371
Cost of revenues
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Changes in fair value of liabilities recorded	38	427	(854)
Research and development
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Changes in fair value of liabilities recorded	233	(793)	(1,744)
Selling, General and Administrative Expenses
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Changes in fair value of liabilities recorded	$ 260	$ (1,855)	$ (3,795)

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INCOME TAXES - Summary of Geographic Distribution of Income (Loss) Before Income Taxes Components of Income Tax Benefit Provision (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013	Dec. 29, 2013
Income Tax Disclosure [Abstract]
United States loss	$ (476,014)	$ (109,307)	$ (122,162)
Foreign income	111,836	124,652	64,314
Income (loss) before income taxes	(364,178)	15,345	(57,848)
Current tax benefit (expense):
Federal	219	5,551	12,026
State	55	(49)	(120)
Foreign	(17,189)	(4,732)	(4,292)
Total current tax benefit (expense)	(16,915)	770	7,614
Federal	(610)
State	(155)
Foreign	720	403	147
Total deferred tax benefit (expense)	(45)	403	147
Income tax benefit (provision)	$ (16,960)	$ 1,173	$ 7,761	$ 7,761

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INCOME TAXES - Income Tax Benefit (Provision) Differs from Statutory United States Federal Income Tax Rate (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013	Dec. 29, 2013
Income Tax Disclosure [Abstract]
Benefit (provision) at U.S. statutory rate of 35%	$ 127,462	$ (5,371)		$ 19,589
Foreign income at other than U.S. rates	(22,385)	37,477		15,425
Future benefits not recognized	(126,846)	(35,107)		(41,797)
Reversal of previously accrued taxes	10,939	8,286		13,872
Tax impact of acquisitions	(6,457)	(2,538)		1,061
Foreign withholding taxes	(243)	(1,195)		(535)
State income taxes, net of federal benefit	(138)	(49)		93
Other, net	708	(330)		53
Income tax benefit (provision)	$ (16,960)	$ 1,173	$ 7,761	$ 7,761

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INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Deferred tax assets:
Credits and net operating loss carryovers	$ 624,086	$ 265,827
Reserves and accruals	160,804	55,678
Excess of book over tax depreciation	12,463	32,892
Deferred income	20,059	6,197
Total deferred tax assets	817,412	360,594
Less valuation allowance	(525,021)	(358,424)
Deferred tax assets, net	292,391	2,170
Deferred tax liabilities:
Foreign earnings	(184,671)
Intangible assets arising from acquisitions	(108,784)
Total deferred tax liabilities	(293,455)
Net deferred tax (liability)	$ (1,064)
Net deferred tax assets		$ 2,170

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INCOME TAXES - Summary of Tax Loss and Credit Carryforwards Available to Offset Future Income Tax Liabilities (Detail) $ in Millions	12 Months Ended
	Jan. 03, 2016 USD ($)
Federal
Tax Credit Carryforward [Line Items]
Net operating loss carryforward	$ 1,708
Credit carryforward	$ 136
Federal | Minimum
Tax Credit Carryforward [Line Items]
Net operating loss carryforward, expiration date	2020
Credit carryforward, expiration date	2018
Federal | Maximum
Tax Credit Carryforward [Line Items]
Net operating loss carryforward, expiration date	2035
Credit carryforward, expiration date	2035
Foreign
Tax Credit Carryforward [Line Items]
Credit carryforward	$ 13
Foreign | Minimum
Tax Credit Carryforward [Line Items]
Credit carryforward, expiration date	2016
Foreign | Maximum
Tax Credit Carryforward [Line Items]
Credit carryforward, expiration date	2023
State
Tax Credit Carryforward [Line Items]
Net operating loss carryforward	$ 761
Credit carryforward	$ 105
Credit carryforward, expiration date	Indefinite
State | Minimum
Tax Credit Carryforward [Line Items]
Net operating loss carryforward, expiration date	2016
State | Maximum
Tax Credit Carryforward [Line Items]
Net operating loss carryforward, expiration date	2035

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INCOME TAXES - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 31, 2015	Dec. 28, 2014	Dec. 29, 2013	Dec. 30, 2012
Income Taxes [Line Items]
Total deferred tax assets	$ 817,412		$ 360,594
Valuation allowance	525,021		358,424
Tax benefit accounted for as credit to additional paid-in capital rather than reduction of income tax provision	648,300
Undistributed earnings for certain non-United States subsidiaries	$ 184,671
Income tax holiday expiration year	within the next six years
Gross unrecognized tax benefits increased		$ 103,000
Gross unrecognized tax benefits	$ 114,843		11,607	$ 18,613	$ 31,466
Recognition of previously unrecognized tax benefit	2,000
Unrecognized tax benefits, income tax penalties and interest expense	6,000
Unrecognized tax benefits, income tax penalties and interest accrued	12,000		3,000
Amount of unrecognized tax benefits that, if recognized, would affect effective tax rate	28,400		12,900
Approximate amount of unrecognized tax benefits that, if recognized, would affect effective tax rate, in the next 12 months	7,000
Accrued interest and penalties	12,000		3,000
Interest and penalties recorded, net	9,100		2,800	$ 1,900
Non-United States | Subsidiaries
Income Taxes [Line Items]
Undistributed earnings for certain non-United States subsidiaries	$ 339,100		$ 298,600

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INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Income Tax Disclosure [Abstract]
Unrecognized tax benefits, as of December 30, 2012	$ 11,607	$ 18,613	$ 31,466
Decrease related to settlements with taxing authorities	(838)	(6,361)	(9,216)
Decrease based on tax positions related to prior year	(10,272)
Increase based on tax positions related to current year	6,487	993	962
Increase based on tax positions related to prior year	108,677		163
Decrease related to lapsing of statute of limitation	(818)	(1,638)	(4,762)
Unrecognized tax benefits, as of December 29, 2013	$ 114,843	$ 11,607	$ 18,613

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INCOME TAXES - Summary of Major Tax Jurisdictions (Detail) - And Onwards	12 Months Ended
	Jan. 03, 2016
United States
Income Tax Examination [Line Items]
Open tax years	2009
Philippines
Income Tax Examination [Line Items]
Open tax years	2011
Israel
Income Tax Examination [Line Items]
Open tax years	2014
India
Income Tax Examination [Line Items]
Open tax years	2009
Thailand
Income Tax Examination [Line Items]
Open tax years	2010
Malaysia
Income Tax Examination [Line Items]
Open tax years	2007
Switzerland
Income Tax Examination [Line Items]
Open tax years	2008
California
Income Tax Examination [Line Items]
Open tax years	2010

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COMMITMENTS AND CONTINGENCIES - Narrative (Detail)		1 Months Ended						12 Months Ended
	Jul. 28, 2015 petition	Nov. 30, 2015 USD ($) bankrupt_entity payment	Jun. 30, 2015 USD ($) $ / shares	Dec. 31, 2014 USD ($)	Dec. 28, 2014 USD ($) Claim	Aug. 31, 2013 Patent	Jun. 30, 2013 USD ($) $ / shares	Jan. 03, 2016 USD ($) province	Dec. 28, 2014 USD ($)	Dec. 29, 2013 USD ($)	Dec. 30, 2012 USD ($)	Dec. 31, 2015 USD ($)	Mar. 31, 2015 USD ($)	Apr. 30, 2012 USD ($)	Jul. 19, 2011 USD ($)
Commitments And Contingencies [Line Items]
License commitment								$ 18,496,000
Total minimum lease payments								$ 7,189,000
Operating lease agreements, expiration date								2018
Operating lease, total rent expenses								$ 17,100,000	$ 6,800,000	$ 7,200,000
Payments to Acquire Equity Method Investments								$ 28,000,000	15,000,000
Litigation settlement				$ 1,300,000
Canada
Commitments And Contingencies [Line Items]
Settlement agreement with Canadian Provinces | province								3
Pending Litigation | Spansion Inc
Commitments And Contingencies [Line Items]
New claims filed | Claim					2
Long Path Capital LLC
Commitments And Contingencies [Line Items]
Litigation settlement							$ 1,500,000
Share price | $ / shares			$ 4.00				$ 3.10
Litigation Settlement, Amount Recoverable for Shares | $ / shares			0.03
Long Path Capital LLC | Judicial Ruling
Commitments And Contingencies [Line Items]
Share price | $ / shares			$ 3.07
LG Electronics, Inc. | Judicial Ruling
Commitments And Contingencies [Line Items]
Gain Contingency, Petitions Granted for Review | petition	6
LG Electronics, Inc. | Pending Litigation
Commitments And Contingencies [Line Items]
Number of patents infringed | Patent						6
Finmek S.pA.
Commitments And Contingencies [Line Items]
Litigation settlement		$ 500,000
Loss Contingency, Number of Bankrupt Entities | bankrupt_entity		4
Loss Contingency, Payments to Refund | payment		2
Manufacturing Equipment
Commitments And Contingencies [Line Items]
Maximum borrowed amount under capital lease agreements															$ 35,000,000
Manufacturing equipment, gross value								$ 20,500,000
Manufacturing equipment, book value								11,900,000
Total minimum lease payments								7,200,000
Patent License Agreement with Round Rock
Commitments And Contingencies [Line Items]
License commitment												$ 6,000,000
Cost of revenue, license fee								2,200,000
Capitalization of license fee								3,800,000
Patent License Agreement with Round Rock | Current Assets
Commitments And Contingencies [Line Items]
Capitalization of license fee								800,000
Patent License Agreement with Round Rock | Long Term Assets
Commitments And Contingencies [Line Items]
Capitalization of license fee								3,000,000
Patent License Agreement with IV Global Licensing
Commitments And Contingencies [Line Items]
License commitment														$ 14,000,000
Cost of revenue, license fee											$ 7,100,000
Capitalization of license fee													$ 18,500,000	$ 6,900,000
License Fee			$ 18,500,000
Amortization of license fee								4,400,000	800,000	$ 800,000
Patent License Agreement with IV Global Licensing | Current Assets
Commitments And Contingencies [Line Items]
Capitalization of license fee					$ 5,600,000			18,700,000	5,600,000
Patent License Agreement with IV Global Licensing | Long Term Assets
Commitments And Contingencies [Line Items]
Capitalization of license fee					$ 3,800,000			$ 13,200,000	$ 3,800,000
Product Warranty
Commitments And Contingencies [Line Items]
Product warranty period against material and workmanship defects in years								1 year

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COMMITMENTS AND CONTINGENCIES - Schedule of Warranty Reserve Activities (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Commitments And Contingencies Disclosure [Abstract]
Beginning balance	$ 2,370	$ 2,628	$ 3,360
Warranties assumed as part of the merger	1,254
Provisions	2,820	1,449	390
Settlements made	(2,348)	(1,707)	(1,122)
Ending balance	$ 4,096	$ 2,370	$ 2,628

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COMMITMENTS AND CONTINGENCIES - Future Minimum Payments Under Capitalized Lease (Detail) $ in Thousands	Jan. 03, 2016 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2016	$ 6,715
2017	599
Total minimum lease payments	7,314
Less: amount representing interest	(125)
Present value of net minimum lease payments	$ 7,189

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COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments Under Non-Cancelable Operating Leases (Detail) $ in Thousands	Jan. 03, 2016 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2016	$ 16,171
2017	13,076
2018	9,164
2019	6,541
2020	6,028
2021 and Thereafter	23,835
Total	$ 74,815

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Narrative (Detail)	12 Months Ended
	Jan. 03, 2016 Segment distributor customer	Dec. 28, 2014 distributor	Dec. 29, 2013 customer
Segment Reporting Information [Line Items]
Number of reportable business segments | Segment	4
Accounts Receivable | Customer Concentration Risk
Segment Reporting Information [Line Items]
Number of distributors | distributor	3	3
Distributor 1 | Accounts Receivable | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk	42.00%	12.00%
Distributor 1 | Sales Revenue, Net | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk	25.00%	13.00%	11.00%
Distributor 2 | Accounts Receivable | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk	11.00%	11.00%
Distributor 2 | Sales Revenue, Net | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk	10.00%	10.00%	10.00%
Distributor 3 | Accounts Receivable | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk	9.00%	9.00%
Distributor 3 | Sales Revenue, Net | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk	7.00%	10.00%
End Customer | Sales Revenue, Net | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration Risk			12.00%
Number of end customers | customer	0		1

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Revenue (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Segment Reporting Information [Line Items]
Revenue, Net	$ 1,607,853	$ 725,497	$ 722,693
Programmable Systems Division
Segment Reporting Information [Line Items]
Revenue, Net	613,884	283,206	292,707
Memory Products Division
Segment Reporting Information [Line Items]
Revenue, Net	871,640	347,887	338,986
Data Communications Division
Segment Reporting Information [Line Items]
Revenue, Net	72,791	70,378	79,410
Emerging Technologies and Other
Segment Reporting Information [Line Items]
Revenue, Net	$ 49,538	$ 24,026	$ 11,590

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Income (Loss) from Operations before Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 27, 2015	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Segment Reporting Information [Line Items]
Income (loss) from operations before income taxes		$ (357,030)	$ 20,413	$ (55,970)
Stock-based compensation expense		(93,527)	(50,170)	(73,020)
Restructuring (charges) benefit		(90,084)	1,180	(15,357)
Amortization of acquisition-related intangible assets		108,335	6,683	7,833
Gain on divestiture of TrueTouch® Mobile business	$ 66,472	66,472
Operating Segments | Programmable Systems Division
Segment Reporting Information [Line Items]
Income (loss) from operations before income taxes		(70,644)	(18,981)	(20,105)
Operating Segments | Memory Products Division
Segment Reporting Information [Line Items]
Income (loss) from operations before income taxes		105,940	134,283	111,667
Operating Segments | Data Communications Division
Segment Reporting Information [Line Items]
Income (loss) from operations before income taxes		(15,822)	(10,130)	(7,452)
Operating Segments | Emerging Technologies and Other
Segment Reporting Information [Line Items]
Income (loss) from operations before income taxes		(7,730)	(13,992)	(20,860)
Unallocated items:
Segment Reporting Information [Line Items]
Income (loss) from operations before income taxes		(357,030)	20,413	(55,970)
Stock-based compensation expense		(93,527)	(50,170)	(73,020)
Restructuring (charges) benefit		(90,084)	1,180	(15,357)
Amortization of acquisition-related intangible assets		(143,487)	(13,955)	(34,056)
Impairment of assets and other			(7,760)	(1,795)
Gain on divestiture of TrueTouch® Mobile business		66,472
Changes in value of deferred compensation plan		(820)
Impact of purchase accounting and other		$ (107,328)	$ (62)	$ 5,008

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Depreciation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Segment Reporting Information [Line Items]
Depreciation	$ 126,496	$ 39,805	$ 39,505
Operating Segments | Programmable Systems Division
Segment Reporting Information [Line Items]
Depreciation	10,484	13,613	14,642
Operating Segments | Memory Products Division
Segment Reporting Information [Line Items]
Depreciation	89,156	15,998	16,332
Operating Segments | Data Communications Division
Segment Reporting Information [Line Items]
Depreciation	1,946	3,234	3,851
Operating Segments | Emerging Technologies and Other
Segment Reporting Information [Line Items]
Depreciation	$ 24,910	$ 6,960	$ 4,680

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Total Revenues by Geographical Locations (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Segment Reporting Information [Line Items]
Revenue, Net	$ 1,607,853	$ 725,497	$ 722,693
United States
Segment Reporting Information [Line Items]
Revenue, Net	181,913	89,521	75,052
Europe
Segment Reporting Information [Line Items]
Revenue, Net	181,663	100,510	61,003
China
Segment Reporting Information [Line Items]
Revenue, Net	414,299	294,655	254,993
South Korea
Segment Reporting Information [Line Items]
Revenue, Net	68,464	82,089	96,811
Japan
Segment Reporting Information [Line Items]
Revenue, Net	467,823	64,926	81,856
Rest of the World
Segment Reporting Information [Line Items]
Revenue, Net	$ 293,691	$ 93,796	$ 152,978

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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Property, Plant and Equipment, Net, by Geographic Locations (Detail) - USD ($) $ in Thousands	Jan. 03, 2016	Dec. 28, 2014
Segment Reporting Information [Line Items]
Property, plant and equipment, net	$ 425,003	$ 237,763
United States
Segment Reporting Information [Line Items]
Property, plant and equipment, net	269,304	128,544
Philippines
Segment Reporting Information [Line Items]
Property, plant and equipment, net	90,356	90,641
Thailand
Segment Reporting Information [Line Items]
Property, plant and equipment, net	34,233
Japan
Segment Reporting Information [Line Items]
Property, plant and equipment, net	9,537	67
Other
Segment Reporting Information [Line Items]
Property, plant and equipment, net	$ 21,573	$ 18,511

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SUBSEQUENT EVENT - Narrative (Details) - USD ($)		2 Months Ended	5 Months Ended	12 Months Ended
	Jan. 06, 2016	Feb. 26, 2016	Feb. 26, 2016	Jan. 03, 2016	Dec. 28, 2014	Dec. 29, 2013
Subsequent Event [Line Items]
Borrowings under revolving credit facility and line of credit				$ 537,000,000	$ 264,000,000	$ 140,000,000
Accumulated Value of Shares Repurchased				$ 55,018,000
Subsequent Event
Subsequent Event [Line Items]
Borrowings under revolving credit facility and line of credit	$ 90,000,000
Maximum credit line borrowing	$ 540,000,000
Subsequent Event | Program Authorized In Fiscal 2015
Subsequent Event [Line Items]
Stock repurchase program, authorized amount		$ 450,000,000	$ 450,000,000
Repurchases of common shares (in shares)		23,700,000	29,300,000
Accumulated Value of Shares Repurchased		$ 181,300,000	$ 237,800,000
Stock repurchase program, remaining authorized repurchase amount		$ 212,200,000	$ 212,200,000

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2016		Dec. 28, 2014		Dec. 29, 2013
Allowance for Doubtful Accounts
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Beginning of Period	$ 738		$ 719		$ 769
Charges (Releases) to Expenses/Revenues	576		39		51
Deductions	(125)		(20)		(101)
Balance at End of Period	1,189		738		719
Deferred Tax Valuation Allowance
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Beginning of Period	358,424	[1]	334,671		307,199
Charges (Releases) to Expenses/Revenues	166,597		23,753	[1]	27,472	[1]
Balance at End of Period	$ 525,021		$ 358,424	[1]	$ 334,671

[1] Represents the change in valuation allowance primarily related to federal and state deferred tax assets that management has determined not likely to be realized due, in part, to projections of future taxable income