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 Cypress Reports Fourth-Quarter and Year-End 2014 Results
   Thursday, January 22, 2015 8:04:24 AM ET

Cypress Semiconductor Corp. (CY ) today announced its fourth-quarter 2014 and fiscal year results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included:

--  Revenue of $184.1 million and non-GAAP earnings per share of $0.13 met
    guidance
--  2014 non-GAAP operating expenses at a 15-year low
--  2014 non-GAAP earnings per share increased 33% year-over-year
--  Free cash flow increased by $19 million sequentially
--  Announced a $4 billion merger with Spansion that is expected to
    achieve $135 million in annual cost synergies over three years

Fellow shareholders:

Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year:

(In thousands, except per-share data)


                           NON-GAAP                        GAAP
                 ----------------------------  ----------------------------
                  Q4 2014   Q3 2014   Q4 2013   Q4 2014   Q3 2014   Q4 2013
                 --------  --------  --------  --------  --------  --------
Revenue          $184,097  $187,516  $167,776  $184,097  $187,516  $167,776

Gross margin         52.4%     53.5%     51.0%     50.9%     51.7%     45.6%

Pretax margin        12.6%     15.0%      9.4%      2.7%      7.4%     -7.0%

Net income
 (loss)          $ 22,056  $ 26,538  $ 14,992  $  3,503  $ 12,840  $(14,209)

Diluted EPS
 (loss)          $   0.13  $   0.16  $   0.09  $   0.02  $   0.08  $  (0.09)


Our revenue and earnings for the fiscal year are given below, compared with those of the prior year:

(In thousands, except per-share data)


                                          NON-GAAP              GAAP
                                     ------------------  ------------------
                                      FY 2014   FY 2013   FY 2014   FY 2013
                                     --------  --------  --------  --------
Revenue                              $725,497  $722,693  $725,497  $722,693

Gross margin                             52.6%     52.2%     50.1%     46.9%

Pretax margin                            12.6%      9.1%      2.1%     -7.7%

Net income (loss)                    $ 87,291  $ 63,221  $ 17,936  $(48,241)

Diluted EPS (loss)                   $   0.52  $   0.39  $   0.11  $  (0.32)


Our fourth-quarter revenue was $184.1 million and our non-GAAP earnings per share was $0.13. We continued to execute on our operating expense management initiatives, which led to a year-over-year 33% increase to $0.52 in 2014 non-GAAP earnings per share. We thus are prepared to deliver strong operating leverage as we grow in 2015.

Our planned merger with Spansion has cleared review by the government agencies in the U.S. and Germany. We remain confident that the post-merger company will position us as a leading global provider of microcontrollers, flash and SRAM memories, and automotive components required for today’s embedded systems.

BUSINESS REVIEW

+ Our non-GAAP consolidated gross margin for the fourth quarter was 52.4%, down 1.1 percentage points from the previous quarter, primarily due to product and customer mix. Excluding our Emerging Technologies Division, our core semiconductor gross margin was 54.6%.

+ Net inventory at the end of the fourth quarter was $88.2 million, down 0.6% from the third quarter.

+ Cypress announced that its Board of Directors approved a quarterly cash dividend of $0.11 per share, payable to holders of record of the company’s common stock as of the close of business on December 26, 2014. This dividend was paid on January 15, 2015.

                             NET SALES SUMMARY
                     (In thousands, except percentages)
                                (Unaudited)

                           THREE MONTHS ENDED
                    --------------------------------

                     Dec. 28,   Sept. 28,  Dec. 29,  Sequential  Year-over-
Business Unit          2014       2014       2013      Change   Year Change
                    ---------- ---------- ---------- ---------- -----------
PSD(1)              $   70,433 $   68,750 $   67,746          2%          4%
MPD(1)              $   88,803 $   92,179 $   79,890         -4%         11%
DCD(1)              $   17,709 $   19,091 $   16,482         -7%          7%
ETD (2)             $    7,152 $    7,496 $    3,658         -5%         96%
                    ---------- ---------- ---------- ---------- -----------
Total               $  184,097 $  187,516 $  167,776         -2%         10%
                    ---------- ---------- ---------- ---------- -----------

Geographic
China and ROW               60%        60%        64%         0%         -6%
Americas                    16%        17%        14%        -6%         14%
Europe                      14%        14%        12%         0%         17%
Japan                       10%         9%        10%        11%          0%
                    ---------- ---------- ---------- ---------- -----------
Total                      100%       100%       100%         0%          0%
                    ---------- ---------- ---------- ---------- -----------

Channel
Distribution                71%        68%        69%         4%          3%
Direct                      29%        32%        31%        -9%         -6%
                    ---------- ---------- ---------- ---------- -----------
Total                      100%       100%       100%         0%          0%
                    ---------- ---------- ---------- ---------- -----------

1.  PSD, Programmable Systems Division; DCD, Data Communications Division;
    MPD, Memory Products Division.
2.  ETD, Emerging Technologies Division includes businesses outside our core
    semiconductor businesses outlined in Footnote 1. Includes subsidiaries
    AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.


                                          TWELVE MONTHS ENDED
                                        ----------------------

                                         Dec. 28,     Dec. 29,   Year-over-
Business Unit                              2014        2013     Year Change
                                        ----------  ----------  -----------
PSD(1)                                  $  283,206  $  292,707           -3%
MPD(1)                                  $  347,903  $  338,986            3%
DCD(1)                                  $   70,378  $   79,410          -11%
ETD (2)                                 $   24,010  $   11,590          107%
                                        ----------  ----------  -----------
Total                                   $  725,497  $  722,693          0.4%
                                        ----------  ----------  -----------

Geographic
China and ROW                                   61%         66%          -8%
Americas                                        16%         14%          14%
Europe                                          14%         11%          27%
Japan                                            9%          9%           0%
                                        ----------  ----------  -----------
Total                                          100%        100%           0%
                                        ----------  ----------  -----------

Channel
Distribution                                    69%         73%          -5%
Direct                                          31%         27%          15%
                                        ----------  ----------  -----------
Total                                          100%        100%           0%
                                        ----------  ----------  -----------


1.  PSD, Programmable Systems Division; DCD, Data Communications Division;
    MPD, Memory Products Division.
2.  ETD, Emerging Technologies Division includes businesses outside our core
    semiconductor businesses outlined in Footnote 1. Includes subsidiaries
    AgigA Tech Inc., Deca Technologies Inc., and our foundry business unit.

FOURTH-QUARTER 2014 HIGHLIGHTS

+ Cypress and Spansion announced a definitive agreement to merge in an all-stock, tax-free transaction valued at approximately $4 billion. The merger is expected to achieve more than $135 million in cost synergies on an annualized basis over three years and to be accretive to non-GAAP earnings within the first full year after the transaction closes. The combined company will continue to pay $0.11 per share in quarterly dividends to shareholders.

+ Cypress introduced two highly integrated, single-chip Bluetooth(R) Low Energy (BLE) solutions that simplify the design of low-power, sensor-based systems for the Internet of Things (IoT) and other applications. The new PSoC(R) 4 BLE Programmable System-on-Chip delivers unprecedented ease of use and integration to applications for the IoT, home automation, healthcare equipment, sports and fitness monitors, and other wearable devices. The PRoC(TM) BLE Programmable Radio-on-Chip provides a cost-effective, turnkey solution for wireless human interface devices, remote controls and applications that require wireless connectivity.

+ Cypress announced the qualification of its BLE solutions under the Bluetooth 4.1 specification, which is designed to coexist with faster 4G cellular technologies, such as LTE, and to deliver better connections and data transfer. The qualification further simplifies customer Bluetooth Low Energy designs.

+ Cypress introduced its TrueTouch(R) Gen5 TMA568 capacitive touchscreen controller for large-screen smartphones, tablets and e-readers with advanced features: gloved-finger tracking, 1-mm passive stylus support and hover functionality that enlarges touchscreen content to improve ease of use.

+ Casio selected Cypress’s TrueTouch capacitive touchscreen controller and low-power SRAM products for its wearable EX-FR10 camera. TrueTouch provides best-in-class waterproofing, while MoBL(R) (More Battery Life(TM)) asynchronous SRAMs enable fast throughput and fluid image buffering.

+ Yota Devices announced production of its next-generation YotaPhone with Cypress’s TrueTouch Gen5 touchscreen controllers in the smartphone’s two displays. The premium Android phone uses the TMA568 controller for advanced multitouch functionality in its standard display and the TMA545 controller for its "electronic paper" display.

+ iConnectivity, a leading developer of digital audio interfaces for musicians, is using Cypress’s CapSense(R) MBR3 mechanical button replacement solution in its next-generation iConnectAUDIO4+ audio interface system. The easy-to-use MBR3 solution enables the implementation of a dynamic, reliable touch-sensing user interface for this system.

+ Cypress began sampling its EZ-USB(R) HX3(TM) hub controller in a 36-mm2 ball grid array (BGA) package. The new package makes the hub controller the industry’s smallest, saving board space in Ultrabook(TM) devices, tablets and other mobile and consumer devices.

+ Cypress and Icron Technologies successfully completed interoperability testing between Cypress’s EZ-USB FX3(TM) USB 3.0 peripheral controller and the EZ-USB CX3(TM) camera controller and Icron’s USB 3.0 Spectra(TM) 3001-15 active copper extension cable. The Icron cable extends USB 3.0 performance to 15 meters and enables the Cypress controllers to address a broader range of machine vision and industrial applications.

+ Cypress’s RadStop(TM) radiation-hardened 72-Mb QDR-II+ SRAMs and 4-Mbit fast asynchronous SRAMs have met the Qualified Manufacturers List Class V and Class Q standards -- the highest quality and reliability standards for aerospace-grade ICs in satellites and other applications.

+ United Microelectronics Corporation (UMC) licensed Cypress’s SONOS (Silicon Oxide Nitride Oxide Silicon) embedded flash memory intellectual property (IP) for its 40-nanometer process technology. UMC had licensed Cypress’s 55-nanometer SONOS IP in 2014. This ongoing collaboration strengthens the position of SONOS as the next-generation embedded-flash solution of choice for foundries.

Follow Cypress Online

--  Join the Cypress Developer Community.
--  Follow @CypressSemi on Twitter.
--  Visit us on Facebook and LinkedIn.
--  Watch Cypress videos on our Video Library or YouTube.

ABOUT CYPRESS

Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC 1, PSoC 3, PSoC 4 and PSoC 5LP programmable system-on-chip families. Cypress is the world leader in capacitive user interface solutions including CapSense touch sensing, TrueTouch touchscreens, and trackpad solutions for notebook PCs and peripherals. Cypress is a world leader in USB controllers, which enhance connectivity and performance in a wide range of consumer and industrial products. Cypress is also the world leader in SRAM and nonvolatile RAM memories. Cypress serves numerous major markets, including consumer, mobile handsets, computation, data communications, automotive, industrial and military. Cypress trades on the NASDAQ Global Select Market under the ticker symbol CY. Visit Cypress online at www.cypress.com.

FORWARD-LOOKING STATEMENTS

Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for Q1 2015 and the remainder of fiscal year 2015 and beyond are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as "believe," "expect," "future," "plan," "intend" and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to our expectations regarding the proposed merger with Spansion which include dependence on government regulators and shareholder approval; the semiconductor market; the strength and growth of our proprietary and programmable products; our expectations regarding our revenue growth and earnings leverage; our expectation that our ETD division will significantly contribute to our 2015 revenue growth; as well as our expectations regarding the demand for our products and how our products are expected to perform. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including, but not limited to, the state of and future of the global economy, business conditions and growth trends in the semiconductor market, whether our products perform as expected, whether the demand for our proprietary and programmable products is fully realized, our ability to manage our business to have strong earnings and significant revenue growth, reduce operating expenses, our ability to effectively implement third party wafer processes, the strength or softness of the markets we serve, our ability to maintain and improve our gross margins and realize our bookings, the seasonality of the markets we serve, the financial performance of our subsidiaries and Emerging Technologies Division, and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

Cypress, the Cypress logo, PSoC, TrueTouch, CapSense, EZ-USB and MoBL are registered trademarks and PRoC, More Battery Life, HX3, FX3, CX3 and RadStop are trademarks of Cypress Semiconductor Corp. All other trademarks or registered trademarks are the property of their respective owners.


                     CYPRESS SEMICONDUCTOR CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                               (In thousands)
                                (Unaudited)

                                                 ------------- -------------
                                                 December 28,  December 29,
                                                     2014          2013
                                                 ------------- -------------

ASSETS

  Cash, cash equivalents and short-term
   investments                                   $    118,812  $    104,462
  Accounts receivable, net                             75,984        81,084
  Inventories, net (a)                                 88,227       100,612
  Property, plant and equipment, net                  237,763       258,585
  Goodwill and other intangible assets, net            99,615       106,523
  Other assets                                        122,880       113,707
                                                 ------------- ------------
    Total assets                                 $    743,281  $    764,973
                                                 ============= =============

LIABILITIES AND EQUITY

  Accounts payable                               $     42,678  $     47,893
  Deferred margin on sales to distributors             95,187       122,578
  Income tax liabilities                               21,494        29,001
  Other liabilities                                   155,057       159,866
  Long-term revolving credit facility                 227,000       227,000
                                                 ------------- -------------
    Total liabilities                                 541,416       586,338
                                                 ------------- -------------
  Total Cypress stockholders’ equity                  208,320       183,109
  Noncontrolling interest                              (6,455)       (4,474)
                                                 ------------- -------------
    Total equity                                      201,865       178,635
                                                 ------------- -------------
      Total liabilities and equity               $    743,281  $    764,973
                                                 ============= =============

(a) Net inventories include $2.0 million and $3.2 million of capitalized
    inventories related to stock compensation expense, as of December 28,
    2014 and December 29, 2013, respectively.


                     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    September   December    December    December
                     28,         29,         29,         28,         29,
                    2014        2014        2013        2014        2013
                 ----------  ----------  ----------  ----------  ----------

Revenues         $  184,097  $  187,516  $  167,776  $  725,497  $  722,693
Cost of revenues     90,395      90,633      91,328     361,820     384,121
                 ----------  ----------  ----------  ----------  ----------
Gross margin         93,702      96,883      76,448     363,677  $  338,572
Operating
 expenses:
 Research and
  development        39,677      38,626      42,343     164,560     190,906
 Selling,
  general and
  administrative     37,746      41,119      43,623     163,488     182,671
 Acquisition
  costs               7,253           -           -       7,253           -
 Amortization of
  acquisition-
  related
  intangibles         1,305       1,701       1,850       6,683       7,833
 Restructuring
  charges                72        (238)       (469)     (1,180)     15,357
                 ----------  ----------  ----------  ----------  ----------
   Total
    operating
    expenses,
    net              86,053      81,208      87,347     340,804     396,767
                 ----------  ----------  ----------  ----------  ----------
Operating income
 (loss)               7,649      15,675     (10,899)     22,873     (58,195)
Interest and
 other income,
 net                 (2,759)     (1,890)     (1,437)     (7,528)        348
                 ----------  ----------  ----------  ----------  ----------
Income (loss)
 before income
 taxes                4,890      13,785     (12,336)     15,345     (57,847)
Income tax
 benefit
 (provision)         (1,814)     (1,231)     (2,210)      1,173       7,761
                 ----------  ----------  ----------  ----------  ----------
Income (loss),
 net of taxes         3,076      12,554     (14,546)     16,518     (50,086)
Adjust for net
 loss
 attributable to
 noncontrolling
 interest               426         286         337       1,418       1,845
                 ----------  ----------  ----------  ----------  ----------
Net Income
 (loss)
 attributable to
 Cypress         $    3,502  $   12,840  $  (14,209) $   17,936  $  (48,241)
                 ==========  ==========  ==========  ==========  ==========

Net Income
 (loss) per
 share
 attributable to
 Cypress:
  Basic          $     0.02  $     0.08  $    (0.09) $     0.11  $    (0.31)
  Diluted        $     0.02  $     0.08  $    (0.09) $     0.11  $    (0.31)
  Cash dividend
   per share     $     0.11  $     0.11  $     0.11  $     0.44  $     0.44
Shares used in
 net income
 (loss) per
 share
 calculation:
  Basic             161,864     159,759     151,580     159,031     148,558
  Diluted           169,148     166,481     151,580     169,122     148,558
                 ----------------------------------- -----------------------

                       CYPRESS SEMICONDUCTOR CORPORATION
   RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
                                     (a)
                     (In thousands, except per-share data)
                                  (Unaudited)

                   ---------------------------------------------------------
                                      Three Months Ended
                   ---------------------------------------------------------
                   December           September           December
                      28,      % of      28,       % of      29,      % of
                     2014    Revenue     2014    Revenue    2013    Revenue
                   --------  -------  ---------  -------  --------  -------

GAAP gross margin  $ 93,702     50.9% $  96,883     51.7% $ 76,448     45.6%
  Stock-based
   compensation
   expense            2,759      1.5%     3,766      2.0%    3,088      1.8%
  Acquisition
   costs and
   related
   amortization          22      0.0%         -      0.0%    5,562      3.3%
  Changes in value
   of deferred
   compensation
   plan                 (44)     0.0%         4      0.0%      136      0.1%
  Impairment of
   assets,
   restructuring
   and other              -      0.0%      (303)    -0.2%      269      0.2%
  Tax and tax-
   related items          -        -          -      0.0%        -        -
                   --------  -------  ---------  -------  --------  -------
Non-GAAP gross
 margin            $ 96,439     52.4% $ 100,350     53.5% $ 85,503     51.0%
                   ========  =======  =========  =======  ========  =======

GAAP research and
 development
 expenses          $ 39,677           $  38,626           $ 42,344
  Stock-based
   compensation
   expense           (2,553)             (2,089)            (7,356)
  Acquisition
   costs and
   related
   amortization           -                   -                  -
  Changes in value
   of deferred
   compensation
   plan                 128                 (13)              (282)
  Impairment of
   assets,
   restructuring
   and other           (252)               (231)             1,368
                   --------  -------  ---------  -------  --------  -------
Non-GAAP research
 and development
 expenses          $ 37,000           $  36,293           $ 36,074
                   ========  =======  =========  =======  ========  =======

GAAP selling,
 general and
 administrative
 expenses          $ 46,376           $  41,119           $ 43,623
  Stock-based
   compensation
   expense           (1,436)             (6,427)           (10,432)
  Acquisition
   costs and
   related
   amortization      (8,602)                  -               (148)
  Changes in value
   of deferred
   compensation
   plan                 229                 (24)              (607)
  Legal and other    (1,330)                  -                  -
  Impairment of
   assets,
   restructuring
   and other            (72)                 64                  -
                   --------  -------  ---------  -------  --------  -------
Non-GAAP selling,
 general and
 administrative
 expenses          $ 35,165           $  34,732           $ 32,436
                   ========  =======  =========  =======  ========  =======

GAAP operating
 income (loss)     $  7,649           $  15,675           $(10,899)
  Stock-based
   compensation
   expense            6,748              12,282             20,877
  Acquisition
   costs and
   related
   amortization       8,622               1,701              7,558
  Changes in value
   of deferred
   compensation
   plan                (402)                 41              1,026
  Impairment of
   assets,
   restructuring
   and other            328                (374)            (1,324)
  Legal and other     1,330                   -                  -
                   --------  -------  ---------  -------  --------  -------
Non-GAAP operating
 income            $ 24,275           $  29,325           $ 17,238
                   ========  =======  =========  =======  ========  =======

GAAP pretax profit    4,890      2.7% $  13,785      7.4% $(12,336)    -7.4%
  Stock-based
   compensation
   expense            6,748      3.7%    12,282      6.5%   20,877     12.4%
  Acquisition
   costs and
   related
   amortization       8,622      4.7%     1,701      0.9%    7,558      4.5%
  Changes in value
   of deferred
   compensation
   plan              (1,048)    -0.6%       288      0.2%    1,026      0.6%
  Legal and other     1,330      0.7%         -      0.0%        -      0.0%
  Impairment of
   assets,
   restructuring
   and other            327      0.2%      (374)    -0.1%   (1,324)    -0.8%
  Tax related and
   other items         (618)    -0.3%      (967)    -0.5%     (633)    -0.4%
  Investment
   related losses     1,495      0.8%         -      0.0%        -      0.0%
  Losses from
   equity method
   investment         1,403      0.7%     1,386      0.7%      632      0.4%
                   --------  -------  ---------  -------  --------  -------
Non-GAAP pretax
 profit              23,149     12.6%    28,101     15.1%   15,800      9.3%
                   ========  =======  =========  =======  ========  =======


GAAP net income
 (loss)
 attributable to
 Cypress           $  3,503           $  12,840           $(14,209)
  Stock-based
   compensation
   expense            6,748              12,282             20,877
  Acquisition
   costs and
   related
   amortization       8,622               1,701              7,558
  Changes in value
   of deferred
   compensation
   plan              (1,048)                288               (535)
  Investment
   related losses
   (gains)            1,495                   -                930
  Impairment of
   assets,
   restructuring
   and other            327                (374)            (1,324)
  Legal and other     1,330                   -                  -
  Tax related and
   other items         (324)             (1,585)             1,063
  Losses from
   equity method
   investment         1,403               1,386                632
                   --------  -------  ---------  -------  --------  -------
Non-GAAP net
 income
 attributable to
 Cypress           $ 22,056           $  26,538           $ 14,992
                   ========  =======  =========  =======  ========  =======

GAAP net income
 (loss) per share
 attributable to
 Cypress - diluted $   0.02           $    0.08           $  (0.09)
  Stock-based
   compensation
   expense             0.04                0.07               0.13
  Acquisition
   costs and
   related
   amortization        0.05                0.01               0.05
  Changes in value
   of deferred
   compensation
   plan               (0.01)                  -              (0.01)
  Impairment of
   assets,
   restructuring
   and other              -                   -              (0.01)
  Legal and other      0.01                   -                  -
  Tax related and
   other items            -               (0.01)              0.01
  Investment
   related losses
   (gains)             0.01                   -               0.01
  Non-GAAP share
   count
   adjustment             -                   -                  -
  Losses from
   equity method
   investment          0.01                0.01                  -
                   --------  -------  ---------  -------  --------  -------
Non-GAAP net
 income per share
 attributable to
 Cypress - diluted $   0.13           $    0.16           $   0.09
                   =========================================================




                   -------------------------------------------------
                                  Twelve Months Ended
                   -------------------------------------------------
                    December               December
                       29,        % of        29,            % of
                      2014      Revenue      2013          Revenue
                   ----------  ---------  ----------      ---------

GAAP gross margin  $  363,677       50.1% $  338,572           46.8%
  Stock-based
   compensation
   expense             13,209        1.8%     12,789            1.8%
  Acquisition
   costs and
   related
   amortization           (86)       0.0%     24,805            3.4%
  Changes in value
   of deferred
   compensation
   plan                   427        0.1%        854            0.2%
  Impairment of
   assets,
   restructuring
   and other            4,489        0.6%        241            0.0%
  Tax and tax-
   related items            -          -           -              -
                   ----------  ---------  ----------      ---------
Non-GAAP gross
 margin            $  381,716       52.6% $  377,261           52.2%
                   ==========  =========  ==========      =========

GAAP research and
 development
 expenses          $  164,560             $  190,906
  Stock-based
   compensation
   expense            (16,187)               (26,042)
  Acquisition
   costs and
   related
   amortization                                 (252)
  Changes in value
   of deferred
   compensation
   plan                  (793)                (1,744)
  Impairment of
   assets,
   restructuring
   and other             (482)                (1,104)
                   ----------  ---------  ----------      ---------
Non-GAAP research
 and development
 expenses          $  147,098             $  161,764
                   ==========  =========  ==========      =========

GAAP selling,
 general and
 administrative
 expenses          $  176,244             $  182,671
  Stock-based
   compensation
   expense            (20,774)               (34,187)
  Acquisition
   costs and
   related
   amortization       (14,330)                (1,168)
  Changes in value
   of deferred
   compensation
   plan                (1,855)                (3,795)
  Legal and other      (1,330)
  Impairment of
   assets,
   restructuring
   and other              (97)                     -
                   ----------  ---------  ----------      ---------
Non-GAAP selling,
 general and
 administrative
 expenses          $  137,858             $  143,521
                   ==========  =========  ==========      =========

GAAP operating
 income (loss)         22,873             $  (58,195)
  Stock-based
   compensation
   expense             50,170                 73,020
  Acquisition
   costs and
   related
   amortization        14,244                 34,056
  Changes in value
   of deferred
   compensation
   plan                 3,075                  6,393
  Impairment of
   assets,
   restructuring
   and other            5,067                 17,152
  Legal and other       1,330                      -
                   ----------  ---------  ----------      ---------
Non-GAAP operating
 income            $   96,759             $   72,426
                   ==========  =========  ==========      =========

GAAP pretax profit     15,345        2.1%    (57,847)          -8.0%
  Stock-based
   compensation
   expense             50,170        6.9%     73,020           10.1%
  Acquisition
   costs and
   related
   amortization        14,244        2.0%     34,056            4.7%
  Changes in value
   of deferred
   compensation
   plan                    61        0.0%         22            0.0%
  Legal and other       1,330        0.2%          -            0.0%
  Impairment of
   assets,
   restructuring
   and other            3,737        0.5%     17,152            2.4%
  Tax related and
   other items           (263)       0.0%     (2,267)          -0.3%
  Investment
   related losses       1,495        0.2%          -            0.0%
  Losses from
   equity method
   investment           5,068        0.7%      1,877  (b)       0.3%
                   ----------  ---------  ----------      ---------
Non-GAAP pretax
 profit                91,187       12.6%     66,013            9.2%
                   ==========  =========  ==========      =========


GAAP net income
 (loss)
 attributable to
 Cypress           $   17,936             $  (48,241) (b)
  Stock-based
   compensation
   expense             50,170                 73,020
  Acquisition
   costs and
   related
   amortization        14,244                 11,514
  Changes in value
   of deferred
   compensation
   plan                    61                     22
  Investment
   related losses
   (gains)              1,495
  Impairment of
   assets,
   restructuring
   and other            3,737                 39,694
  Legal and other       1,330
  Tax related and
   other items         (6,750)               (14,665)
  Losses from
   equity method
   investment           5,068                  1,877  (b)
                   ----------  ---------  ----------      ---------
Non-GAAP net
 income
 attributable to
 Cypress           $   87,291             $   63,221
                   ==========  =========  ==========      =========

GAAP net income
 (loss) per share
 attributable to
 Cypress - diluted $     0.11             $    (0.32)
  Stock-based
   compensation
   expense               0.30                   0.45
  Acquisition
   costs and
   related
   amortization          0.08                   0.21
  Changes in value
   of deferred
   compensation
   plan                     -                   0.01
  Impairment of
   assets,
   restructuring
   and other             0.02                   0.10
  Legal and other        0.01                      -
  Tax related and
   other items          (0.04)                 (0.08)
  Investment
   related losses
   (gains)               0.01                  (0.01)
  Non-GAAP share
   count
   adjustment               -                   0.02
  Losses from
   equity method
   investment            0.03                   0.01  (b)
                   ----------  ---------  ----------      ---------
Non-GAAP net
 income per share
 attributable to
 Cypress - diluted $     0.52             $     0.39
                   =================================================



(a) Refer to the accompanying "Notes to Non-GAAP Financial Measures" for a
    detailed discussion of management’s use of non-GAAP financial measures.
(b) Adjusted for impact of investment in equity method investee. See
    footnote disclosures related thereto in our 10Q filed on August 6, 2014.

                      CYPRESS SEMICONDUCTOR CORPORATION
                         SUPPLEMENTAL FINANCIAL DATA
                               (In thousands)
                                 (Unaudited)

                 ----------------------------------  ----------------------
                         Three Months Ended            Twelve Months Ended
                 ----------------------------------- -----------------------
                  December    September   December    December    December
                     28,         28,         29,         28,         29,
                    2014        2014        2013        2014        2013
                 ----------  ----------  ----------  ----------  ----------
Selected Cash
 Flow Data
 (Preliminary):
  Net cash
   provided by
   operating
   activities    $   25,514  $    8,322  $   20,171  $  103,336  $   66,696
  Net cash
   provided by
   (used in)
   investing
   activities    $  (13,736) $  (11,173) $      569  $  (42,156) $    1,139
  Net cash
   provided by
   (used in)
   financing
   activities    $  (13,126) $    6,501  $  (11,276) $  (43,453) $  (45,024)

Other
 Supplemental
 Data
 (Preliminary):
  Capital
   expenditures  $    3,769  $    5,800  $    8,750  $   20,947  $   36,627
  Depreciation   $   10,013  $   10,093  $    9,436  $   39,724  $   39,572
  Payment of
   dividend      $   17,728  $   17,413  $   16,578  $   69,248  $   64,819
  Dividend paid
   per share     $     0.11  $     0.11  $     0.11  $     0.11  $     0.44
  Dividend yield
   per share (a)        3.0%        4.4%        4.3%        3.0%        4.3%
                 ----------------------------------- -----------------------

(a) Dividend yield per share is calculated based on annualized dividend
 paid per share divided by the common stock share price at the end of the
 period.
                      CYPRESS SEMICONDUCTOR CORPORATION
                    CONSOLIDATED DILUTED EPS CALCULATION
                    (In thousands, except per-share data)
                                 (Unaudited)

                      ------------------------------------------------------
                                        Three Months Ended
                      ------------------------------------------------------
                         December 29,     September 28,      December 29,
                             2014              2014              2013
                      ----------------- ----------------- ------------------
                        GAAP   Non-GAAP   GAAP   Non-GAAP   GAAP    Non-GAAP
                      -------- -------- -------- -------- --------  --------

Net income (loss)
 attributable to
 Cypress              $  3,502 $ 22,056 $ 12,840 $ 26,538 $(14,209) $ 14,992
                      -------- -------- -------- -------- --------  --------

Weighted-average
 common shares
 outstanding (basic)   161,864  161,864  159,759  159,759  151,580   151,580
Effect of dilutive
 securities:
  Stock options,
   unvested
   restricted stock
   and other             7,284    8,892    6,722    8,460        -    14,224
                      -------- -------- -------- -------- --------  --------
Weighted-average
 common shares
 outstanding for
 diluted computation   169,148  170,756  166,481  168,219  151,580   165,804
                      ======== ======== ======== ======== ========  ========

Net income (loss) per
 share attributable
 to Cypress - basic   $   0.02 $   0.14 $   0.08 $   0.17 $  (0.09) $   0.10
Net income (loss) per
 share attributable
 to Cypress - diluted $   0.02 $   0.13 $   0.08 $   0.16 $  (0.09) $   0.09
                      ------------------------------------------------------


                      ------------------------------------
                               Twelve Months Ended
                      ------------------------------------
                         December 28,      December 29,
                             2014              2013
                      ----------------- ------------------
                        GAAP   Non-GAAP   GAAP    Non-GAAP
                      -------- -------- --------  --------

Net income (loss)
 attributable to
 Cypress              $ 17,936 $ 87,291 $(48,241) $ 63,221
                      -------- -------- --------  --------

Weighted-average
 common shares
 outstanding (basic)   159,031  159,031  148,558   148,558
Effect of dilutive
 securities:
  Stock options,
   unvested
   restricted stock
   and other            10,091    9,331        -    12,954
                      -------- -------- --------  --------
Weighted-average
 common shares
 outstanding for
 diluted computation   169,122  168,362  148,558   161,512
                      ======== ======== ========  ========

Net income (loss) per
 share attributable
 to Cypress - basic   $   0.11 $   0.55 $  (0.32) $   0.43
Net income (loss) per
 share attributable
 to Cypress - diluted $   0.11 $   0.52 $  (0.32) $   0.39
                      ------------------------------------



                      ---------- ---------- ---------- ---------- ----------
                       December   September  December   December   December
                          28,        28,        29,        28,        29,
                         2014       2014       2013       2014       2013
                      ---------- ---------- ---------- ---------- ----------

Average stock price
 for the period ended   $10.77     $10.54      $9.45     $10.18     $10.59
Common stock
 outstanding at
 period end (in
 thousands)             163,013    161,178    153,214    163,013    153,214

                      ---------- ---------- ---------- ---------- ----------


NOTES TO NON-GAAP FINANCIAL MEASURES

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

--  Gross margin
--  Research and development expenses
--  Selling, general and administrative expenses
--  Operating income (loss)
--  Net income (loss)
--  Diluted net income (loss) per share

The non-GAAP measures set forth above exclude charges primarily related to stock-based compensation, which represented 72% of total adjustments for the year ended December 28, 2014, as well as 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.

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Contacts:
Thad Trent
EVP Finance & Administration and CFO
(408) 943-2925

Joseph L. McCarthy
Director, Corporate Communications
(408) 943-2902


SOURCE: Cypress Semiconductor Corp.




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