EBITDA: Consolidated EBITDA is calculated by adding back depreciation to the Non-GAAP operating income. EBITDA may be useful to management, investors, and other users of our financial information because it, during a given period, is an indicator of the amount of cash generated that is available to repay debt obligations, make investments, and for certain other activities. However, EBITDA should not be considered as a measure of discretionary cash available to invest in the growth of the business. In addition, EBITDA should not be considered as a substitute for, or superior to net income, operating income, diluted earnings, or net cash provided by operating activities, or other financial measures prepared in accordance with GAAP.

Other adjustments: These items are excluded from non-GAAP financial measures because they are not related to the core operating activities and ongoing operating performance of Cypress. Excluding these items, which can vary significantly from quarter to quarter, allows management to better compare Cypress’ period-over-period performance. However, limitations of non-GAAP measures that exclude these items include that these adjustments are often subjective and may not be comparable to similarly titled non-GAAP financial measures used by other companies. Other adjustments primarily include:

• Revenue from an intellectual property license,
• Changes in value of deferred compensation plan assets and liabilities,
• Investment-related gains or losses, including equity method investments,
• Restructuring and related costs,
• Loss on extinguishment of debt,
• Amortization of debt issuance costs, discounts and imputed interest related to the equity component of convertible debt,
• Asset impairments,
• Tax effects of non-GAAP adjustments,
• Certain other expenses and benefits, and
• Diluted weighted average shares non-GAAP adjustment - for purposes of calculating non-GAAP diluted earnings per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits related to share-based compensation expense and includes the impact of the capped call transactions related to the convertible notes.

FORWARD-LOOKING STATEMENTS

Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as “may,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “future,” “continue” or other wording indicating future results or expectations to identify such forward-looking statements that include, but are not limited to: statements related to our estimated revenue, margin, operating expenses, EPS, net interest expense, tax expense, capital expenditures and depreciation for the first quarter of fiscal 2018 (on a GAAP or non-GAAP basis); the expected benefits of our acquisition of Broadcom’s wireless IoT business, including revenue growth and margin improvement; sources of revenue for the first quarter; the expected impact of our lean inventory initiative on fab utilization, inventory levels, cash flow, pricing and profitability; estimates of certain GAAP to non-GAAP reconciling items for the first quarter; the demand environment for semiconductors; the expected impact of our margin improvement plan; the impact of seasonality on revenue; cross-selling opportunities in the automotive business; our ability to meet our targeted range of inventory; expected or anticipated uses of cash flow, including to pay dividends, repurchase shares of common stock, or pay down our existing indebtedness; and plans to reduce excess inventory. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this press release. Our actual results may differ materially due to a variety of risks and uncertainties, including, but not limited to: global economic and market conditions; business conditions and growth trends in the semiconductor market; our ability to compete effectively; the volatility in supply and demand conditions for our products, including but not limited to the impact of seasonality on supply and demand; our ability to develop, introduce and sell new products and technologies; potential problems relating to our manufacturing activities; the impact of acquisitions, including but not limited to the acquisition of Broadcom’s wireless IoT business; our ability to attract and retain key personnel; the unpredictability and expense of legal proceedings; and other risks and uncertainties described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

Cypress, the Cypress logo, PSoC and WICED are registered trademarks of Cypress Semiconductor Corporation. All other trademarks are property of their owners.

CYPRESS SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		December 31, 2017			January 1, 2017
ASSETS
Cash, cash equivalents and short-term investments		$	151,596		$	120,172
Accounts receivable, net		295,991			333,037
Inventories		272,127			287,776
Property, plant and equipment, net		289,554			297,266
Goodwill and other intangible assets, net		2,154,592			2,344,033
Other assets		374,940			489,587
Total assets		$	3,538,800		$	3,871,871
LIABILITIES AND EQUITY
Accounts payable		$	214,851		$	241,424
Income tax liabilities		52,006			44,934
Revenue reserves, deferred margin and other liabilities		497,838			497,782
Revolving credit facility and long-term debt		956,513			1,194,979
Total liabilities		1,721,208			1,979,119
Total Cypress stockholders' equity		1,816,535			1,891,828
Non-controlling interest		1,056			924
Total equity		1,817,592			1,892,752
Total liabilities and equity		$	3,538,800		$	3,871,871

CYPRESS SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ON A GAAP BASIS (In thousands, except per-share data) (Unaudited)
		Three Months Ended												Twelve Months Ended
		December 31, 2017				October 1, 2017				January 1, 2017				December 31, 2017				January 1, 2017
Revenues		$	597,547			$	604,574			$	530,172			$	2,327,771			$	1,923,108
Costs and expenses:
Cost of revenues		331,143				351,969				328,220				1,373,520				1,237,974
Research and development		92,254				91,334				92,188				361,805				331,737
Selling, general and administrative		79,598				73,746				76,839				308,434				317,383
Amortization of intangible assets		49,224				48,428				52,104				195,255				174,745
Costs and settlement charges related to shareholder matter		—				—				—				14,310				—
Impairment of acquisition-related intangible assets		—				—				—				—				33,944
Impairment related to assets held for sale		—				—				1,960				—				37,219
Goodwill impairment charge		—				—				—				—				488,504
Restructuring costs		5,618				—				17,237				9,088				26,131
(Gain) related to investment in Deca Technologies Inc.		—				—				—				—				(112,774		)
Total costs and expenses		557,837				565,477				568,548				2,262,412				2,534,863
Operating income (loss)		39,710				39,097				(38,376		)		65,359				(611,755		)
Interest and other expense, net		(21,563		)		(18,619		)		(24,389		)		(75,951		)		(54,879		)
Income (loss) before income taxes and non-controlling interest		18,147				20,478				(62,765		)		(10,592		)		(666,634		)
Income tax benefit (provision)		2,773				(4,500		)		(790		)		(11,155		)		(2,616		)
Share in net loss of equity method investees		(56,930		)		(4,931		)		(8,766		)		(71,772		)		(17,644		)
Net income (loss)		(36,010		)		11,047				(72,321		)		(93,519		)		(686,894		)
Net (gain) loss attributable to non-controlling interests		12				(14		)		(46		)		(132		)		643
Net income (loss) attributable to Cypress		$	(35,998	)		$	11,033			$	(72,367	)		$	(93,651	)		$	(686,251	)
Net income (loss) per share attributable to Cypress:
Basic		$	(0.10	)		$	0.03			$	(0.22	)		$	(0.28	)		$	(2.15	)
Diluted		$	(0.10	)		$	0.03			$	(0.22	)		$	(0.28	)		$	(2.15	)
Cash dividend declared per share		$	0.11			$	0.11			$	0.11			$	0.44			$	0.44
Shares used in net income (loss) per share calculation:
Basic		343,011				332,873				322,800				333,451				319,522
Diluted		343,011				360,311				322,800				333,451				319,522

CYPRESS SEMICONDUCTOR CORPORATION RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (In thousands, except per-share data) (Unaudited)
Table A: GAAP to Non-GAAP reconciling items: Three Months Ended Q4 2017
		Cost of revenues				Research and development				SG&A and Restructuring costs				Amortization of Intangible assets				Interest and other expense, net				Income tax (provision) benefit
GAAP [i]		$	331,143			$	92,254			$	85,217			$	49,224			$	(78,493	)		$	2,773
[1] Stock based compensation		3,497				8,943				12,610				—				—				—
[2] Changes in value of deferred compensation plan		92				389				617				—				(1,210		)		—
[3] Merger, integration, related costs and adjustments related to assets held for sale		1,334				—				(135		)		—				11				—
[4] Share in net loss and impairment of equity method investees 1		—				—				—				—				56,930				—
[5] Imputed interest on convertible debt, equity component amortization on convertible debt and others		—				—				—				—				3,378				—
[6] Loss on extinguishment of Spansion convertible notes		—				—				—				—				4,250				—
[7] Amortization of debt issuance costs		—				—				—				—				1,011				—
[8] Amortization of intangible assets		—				—				—				49,224				—				—
[9] Litigation settlement		—				—				(1,000		)		—				—
[10] Restructuring charges		—				—				5,618				—				—
[11] Tax impact 2		—				—				—				—				151				(5,027		)
Non - GAAP [ii]		$	326,220			$	82,922			$	67,507			$	—			$	(13,972	)		$	(2,254	)
Impact of reconciling items [ii - i]		$	(4,923	)		$	(9,332	)		$	(17,710	)		$	(49,224	)		$	64,521			$	(5,027	)
1. Includes $51.2 million impairment charge recorded for the investment in Enovix Corporation.
2. Includes benefit of $8.6 million related to impact from recent tax reform.

Table B: GAAP to Non-GAAP reconciling items: Three Months Ended Q3 2017
		Cost of revenues				Research and development				SG&A and Restructuring costs				Amortization of Intangible assets				Interest and other expense, net				Income tax (provision) benefit
GAAP [i]		$	351,969			$	91,334			$	73,746			$	48,428			$	(23,550	)		$	(4,500	)
[1] Stock based compensation		5,156				9,604				8,235				—				—				—
[2] Changes in value of deferred compensation plan		208				1,278				1,415				—				(1,734		)		—
[3] Merger, integration, related costs and adjustments related to assets held for sale		1,336				—				(636		)		—				—				—
[4] Inventory step-up related to acquisition accounting		704				—				—				—				—				—
[5] Share in net loss from equity method investees		—				—				—				—				4,931				—
[6] Imputed interest on convertible debt, equity component amortization on convertible debt and others		—				—				—				—				3,521				—
[7] Write-off of unamortized debt issuance costs related to Term Loan A		—				—				—				—				2,996				—
[8] Amortization of debt issuance costs		—				—				—				—				856				—
[9] Amortization of intangible assets		—				—				—				48,428				—				—
[10] Tax impact		—				—				—				—				51				1,598
Non - GAAP [ii]		$	344,565			$	80,452			$	64,732			$	—			$	(12,929	)		$	(2,902	)
Impact of reconciling items [ii - i]		$	(7,404	)		$	(10,882	)		$	(9,014	)		$	(48,428	)		$	10,621			$	1,598

Table C: GAAP to Non-GAAP reconciling items (Three Months Ended Q4 2016)
		Cost of revenues				Research and development				SG&A				Amortization of Intangible assets				Impairment related to assets held for sale				Interest and other expense, net				Income tax provision
GAAP [i]		$	328,220			$	92,188			$	94,076			$	52,104			$	1,960			$	(33,155	)		$	(790	)
[1] Stock based compensation, including costs related to modification of equity awards		6,589				16,687				12,292				—				—				—				—
[2] Changes in value of deferred compensation plan		42				147				292				—				—				(641		)		—
[3] Merger, integration and related costs		2,614				476				5,136				—				—				—				—
[4] Inventory Step-up related to acquisition accounting		1,381				—				—				—				—				—				—
[5] Share in net loss from equity method investees		—				—				—				—				—				8,766				—
[6] Imputed interest on convertible debt, equity component amortization on convertible debt and others		—				—				—				—				—				3,482				—
[7] Amortization of debt issuance costs		—				—				—				—				—				976				—
[8] Amortization of intangible assets		—				—				—				52,104				—				—				—
[9] Impairment related to assets held for sale		—				—				—				—				1,960				—				—
[10] Restructuring costs, including executive severance		—				—				5,618				—				—				—				—
[11] Tax impact of Non-GAAP adjustments		—				—				—				—				—				(908		)		(2,442		)
Non - GAAP [ii]		$	317,594			$	74,878			$	59,119			$	—			$	—			$	(21,480	)		$	(3,232	)
Impact of reconciling items [ii - i]		$	(10,626	)		$	(17,310	)		$	(34,957	)		$	(52,104	)		$	(1,960	)		$	11,675			$	(2,442	)

Table D: GAAP to Non-GAAP reconciling items (Twelve Months Ended Q4 2017)
		Cost of revenues				Research and development				SG&A (including restructuring charges				Costs and settlement charges related to shareholder matter				Amortization of Intangible assets				Interest and other expense, net				Income tax (provision) benefit
GAAP [i]		$	1,373,520			$	361,805			$	317,522			$	14,310			$	195,255			$	(147,723	)		$	(11,157	)
[1] Stock based compensation, including costs related to modification of equity awards		18,816				41,593				43,907				—				—				—				—
[2] Changes in value of deferred compensation plan		602				2,826				3,936				—				—				(6,087		)		—
[3] Merger, integration, related costs and adjustments related to assets held for sale		5,357				(96		)		(1,057		)		—				—				10				—
[4] Inventory Step-up related to acquisition accounting		3,736				—				—				—				—				—				—
[5] Share in net loss and impairment of equity method investees 1		—				—				—				—				—				71,772				—
[6] Amortization of intangible assets		—				—				—				—				195,255				—				—
[7] Imputed interest on Convertible debt and others		—				—				—				—				—				20,538				—
[8] Settlement charges		—				—				(1,000		)		3,500				—				—				—
[9] Restructuring charges		—				—				9,088				—				—				—				—
[10] Loss on extinguishment of Spansion convertible notes		—				—				—				—				—				4,250				—
[11] Tax impact of Non-GAAP adjustments 2		—				—				—				—				—				844				118
Non - GAAP [ii]		$	1,345,009			$	317,482			$	262,648			$	10,810			$	—			$	(56,396	)		$	(11,039	)
Impact of reconciling items [ii - i]		$	(28,511	)		$	(44,323	)		$	(54,874	)		$	(3,500	)		$	(195,255	)		$	91,327			$	118
1. Includes $51.2 million impairment charge recorded for the investment in Enovix Corporation.
2. Includes benefit of $8.6 million related to impact from recent tax reform.

Table E: GAAP to Non-GAAP reconciling items (Twelve Months Ended Q4 2016)
		Cost of revenues				Research and development				SG&A (including restructuring charges)				Goodwill impairment charge				(Gain) related to investment in Deca Technologies				Amortization of Intangible assets				Impairment related to assets held for sale				Impairment of acquisition related intangibles				Interest and other expense, net				Income tax provision
GAAP [i]		$	1,237,974			$	331,737			$	343,514			$	488,504			$	(112,774	)		$	174,745			$	37,219			$	33,944			$	(72,523	)		$	(2,616	)
[1] Stock based compensation, including costs related to modification of equity awards		21,366				41,528				42,374				—				—				—				—				—				—				—
[2] Changes in value of deferred compensation plan		288				884				1,889				—				—				—				—				—				(2,326		)		—
[3] Merger, integration and related costs		17,927				3,106				28,819				—				—				—				—				—				—				—
[4] Inventory Step-up related to acquisition accounting		13,264				—				—				—				—				—				—				—								—
[5] Share in net loss from equity method investees		—				—				—				—				—				—				—				—				17,644				—
[6] Amortization of intangible assets		—				—				—				—				—				174,745				—				—				—				—
[7] Imputed interest on Convertible debt and others		—				—				—				—				—				—				—				—				8,306				—
[8] Amortization of debt issuance costs		—				—				—				—				—				—				—				—				1,961				—
[9] (Gain) related to investment in Deca Technologies		—				—				—				—				(112,774		)		—				—				—				—				—
[10] Impairment related to assets held for sale		—				—				—				—				—				—				37,219				—				—				—
[11] Goodwill impairment charge		—				—				—				488,504				—				—				—				—				—				—
[12] Impairment of acquisition related intangibles		—				—				—				—				—				—				—				33,944				—				—
[13] Restructuring costs, including executive severance and other charges		—				—				30,631				—				—				—				—				—				—				—
[14] Tax impact of Non-GAAP adjustments		—				—				—				—				—				—				—				—				(640		)		(10,687		)
Non - GAAP [ii]		$	1,185,129			$	286,219			$	239,801			$	—			$	—			$	—			$	—			$	—			$	(47,578	)		$	(13,303	)
Impact of reconciling items [ii - i]		$	(52,845	)		$	(45,518	)		$	(103,713	)		$	(488,504	)		$	112,774			$	(174,745	)		$	(37,219	)		$	(33,944	)		$	24,945			$	(10,687	)

Table F: Revenue		Three Months Ended												Twelve Months Ended (a)
		Q4'17				Q3'17				Q4'16				Q4'17				Q4'16
GAAP revenue		$	597,547			$	604,574			$	530,172			$	2,327,771			$	1,923,108
Add: Revenue from Intellectual Property License		—				—				—				—				18,750
Non-GAAP revenue		$	597,547			$	604,574			$	530,172			$	2,327,771			$	1,941,858

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