x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-2885898 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $.01 par value | The NASDAQ Stock Market |
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• | Focus on markets growing faster than the overall semiconductor industry. We will continue to pursue business opportunities in fast-growing market segments, particularly in the automotive, industrial and IoT markets. |
• | Improve gross margins. Cypress has appointed an executive vice president to directly manage our plan to improve gross margins, which includes reducing our excess inventory, transferring manufacturing to improve utilization at our Fab 25 in Austin, Texas, and our strategy to build up our solutions portfolio targeted at segments in the automotive, industrial and IoT markets that are growing faster than the overall semiconductor industry. |
• | 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. |
• | 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. |
• | 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, efficiency and higher performance. We will continue to drive PSoC and microcontroller adoption in our key market segments. |
• | Cross-sell products from Cypress’s expanded product portfolio in the wake of the Spansion merger and Broadcom IoT acquisition as embedded systems solutions. We will continue to take advantage of product and business synergies and grow our top-line revenue. |
• | 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. |
• | Pursue complementary strategic relationships. We will continue to assess opportunities to develop strategic relationships through acquisitions, investments, licensing and joint development projects. We will also continue to make investments in current as well as new ventures. |
• | Leverage flexible manufacturing. Our manufacturing strategy combines capacity from leading foundries with output from our internal manufacturing facility. This enables us to meet rapid swings in customer demand while reducing the burden of high fixed costs. |
Business Segments | Description | |
Microcontroller and Connectivity Division ("MCD") | MCD focuses on high-performance microcontroller (MCU), analog and wireless and wired connectivity solutions. The portfolio includes Traveo™ automotive MCUs, PSoC® programmable system-on-chip MCUs, ARM® Cortex®-M4, -M3, -M0+ MCUs and R4 CPUs, analog PMIC Power Management ICs, CapSense® capacitive-sensing controllers, TrueTouch® touchscreen and fingerprint reader products, Wi-Fi®, Bluetooth®, Bluetooth Low Energy and ZigBee® radios and WICED® development platform for the Internet of Things (“IoT”), and USB controllers, including solutions for the USB-C and USB Power Delivery (PD) standards. MCD includes wireless IoT connectivity solutions acquired from Broadcom effective July 5, 2016. This division also includes our intellectual property (IP) foundry business. The historical results of MCD include our subsidiary Deca Technologies, Inc. | |
Memory Products Division ("MPD") | MPD focuses on high-performance parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), F-RAM™ ferroelectric memory devices and other specialty memories. This division also includes our subsidiary AgigA, Tech Inc. | |
Products | Markets | Applications | ||
Traveo™ MCUs and Flexible MCUs | Automotive, industrial, IoT, consumer, computation, white goods, communication | Automotive instrument clusters, body electronics, power 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 | Automotive, industrial, IoT, white goods, consumer, handsets, medical, communications | 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, white goods and many other applications. | ||
CapSense® | Automotive, industrial, IoT, white goods, consumer, handsets, medical, computation, communication | Home appliances, handheld devices, wearables, automotive control pads/ media centers, digital cameras, toys, consumer products, notebook computers and PCs, and many other applications. | ||
TrueTouch® | Automotive, industrial | Automotive infotainment systems, and factory automation. | ||
Analog PMICs and energy harvesting solutions | Automotive, industrial, IoT, consumer | Instrument cluster systems, Advanced Driver Assistance Systems (ADAS), body control modules, factory automation, IoT beacons, wireless sensor nodes and many other applications. | ||
Wi-Fi®, Bluetooth®, Bluetooth Low Energy and ZigBee® | IoT, automotive, industrial, consumer, white goods, PC peripherals | IoT applications, wearables, smart home appliances, industrial automation equipment, connected cars, mice, appliances, keyboards, wireless headsets, consumer electronics, gamepads, remote controls, toys, presenter tools and many other 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, mobile devices, consumer electronics, IoT | PCs and peripherals smartphones, USB-C power adapters, USB-C adapter cables, monitors, docking stations and many other applications. |
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 | Point of sale terminals, set-top boxes, copiers, industrial automation, printers, single- board computers Redundant array of independent disk (RAID) servers, and gaming. | ||
F-RAMs | Automotive, medical | Smart meters, aerospace, medical systems, automotive, industrial controls, electronic point-of-sale terminals, printers and wireless (RFID) memory. | ||
Specialty Memories and Clocks | Networking, telecommunication, video, data communications, computation | Medical and instrumentation, storage, wireless infrastructure, military communications, Video, data communications, telecommunications, and network switching/routing, set-top boxes, copiers, printers, HDTV, Industrial automation, printers, single-board computers, IP phones, image processors and base stations. | ||
• | 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. |
Name | Age | Position | ||
Hassane El-Khoury | 37 | President, Chief Executive Officer and Director | ||
Thad Trent | 49 | Executive Vice President, Finance and Administration and Chief Financial Officer | ||
Dana C. Nazarian | 50 | Executive Vice President, Operations & Technology | ||
H. Raymond Bingham | 71 | Executive Chairman |
ITEM 1A. | RISK FACTORS |
• | 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 continue to integrate and streamline our operations and achieve cost savings after our 2015 merger with Spansion; |
• | The impact on our business and financial results of our July 2016 acquisition of the IoT business of Broadcom Corporation; |
• | Our ability to execute on the strategy outlined by our new CEO and our gross margin improvement plan; |
• | 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 (including recent trends toward consolidation 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; |
• | Changes in our policy regarding stock repurchases or our ability to repurchase shares of our common stock; |
• | Supply disruption or price increases from third party manufacturing partners; and |
• | Litigation, including any disputes or legal proceedings associated with activist investors. |
• | our success in developing and marketing new products, software platforms and manufacturing technologies and bringing them to market on a timely basis; |
• | 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; |
• | the number, strength and nature of our competitors, the markets they target and the rate and success of their technological advances; |
• | our ability to maintain supply of products from third party manufacturers; and |
• | responding to common actions of an activist stockholder, such as public proposals and requests for special meetings, nominations of candidates for election to our board of directors, requests that certain executive officers or directors depart the Company, requests to make changes to internal business operations, requests to pursue a strategic combination or other transaction or other special requests, could disrupt our operations, be costly and time-consuming or divert the attention of our management and employees; |
• | perceived uncertainties as to our future direction in relation to the actions of an activist stockholder, including any perceived changes at the board or management level, may result in the loss of potential business opportunities or the perception that we are unstable and need to make changes, which may be exploited by our competitors and make it more difficult to attract and retain key personnel as well as consumers and service providers; |
• | actions of an activist stockholder, especially any legal proceedings, may divert management time and attention away from execution on the Company’s business operations and cause the Company to incur significant costs, including expenses related to legal, public relations, investment banking, and/or proxy advisory services; |
• | the presence of cumulative voting for the election of Company directors may enable the election (to our board of directors) of director candidates who represent the interests of only a specific stockholder (or a small group of stockholders) and who are not supported by a majority of the Company's stockholder base; and |
• | actions of an activist stockholder may cause fluctuations in our stock price based on speculative market perceptions, unflattering media coverage, or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business. |
• | automotive applications including advanced driver assistance systems (ADAS), instrument clusters, infotainment systems, body electronics, connectivity, 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; |
• | IoT products; |
• | consumer electronics including wearable electronics, smartphones and other mobile devices, gaming consoles, gamepads, remote controls, toys, presenter tools, TVs, set-top boxes and fitness equipment; |
• | wireless telecommunications equipment; |
• | computers and computer-related peripherals; |
• | medical equipment; and |
• | networking equipment. |
• | potential violations by our international employees or third party agents of international or U.S. laws relevant to foreign operations (such as FCPA); and |
• | 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; |
• | 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; |
• | 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. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
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, Thailand | 253,000 | Manufacturing, research and development | |||
Penang, Malaysia | 175,000 | Manufacturing, research and development and administrative offices |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Low | High | |||||||
Fiscal 2016: | ||||||||
Fourth quarter | $ | 9.63 | $ | 12.22 | ||||
Third quarter | $ | 9.79 | $ | 12.48 | ||||
Second quarter | $ | 8.02 | $ | 11.22 | ||||
First quarter | $ | 6.30 | $ | 9.73 | ||||
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 |
January 1, 2012 | December 30, 2012 | December 29, 2013 | December 28, 2014 | January 3, 2016 | January 1, 2017 | |
Cypress** | 100.00 | 64.78 | 66.24 | 97.71 | 68.24 | 83.09 |
S&P 500 Index | 100.00 | 116.00 | 153.58 | 174.60 | 177.01 | 198.18 |
S&P Semiconductors Index | 100.00 | 96.58 | 131.30 | 177.08 | 178.63 | 228.56 |
Peer Group*** | 100.00 | 98.64 | 129.55 | 167.01 | 181.34 | 285.65 |
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 | 13.1 | (1) | $ | 12.2 | (3) | 21.8 | (6) | |||
Equity compensation plans not approved by shareholders | 8.6 | (2) | $ | 6.7 | (4) | 4.9 | (7) | |||
Total | 21.7 | $ | 10.70 | (5) | 26.7 |
(1) | Includes 7.3 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) granted. |
(2) | Includes 6.5 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) granted. |
(3) | Excludes the impact of 7.3 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 6.5 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 13.8 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units), which have no exercise price. |
(6) | Includes 19.3 million shares available for future issuance under Cypress’s 2013 Stock Plan and 2.6 million shares available for future issuance under Cypress’s Employee Stock Purchase Plan. |
(7) | Includes 15 thousand shares available for future issuance under the assumed Ramtron Plan and 4.9 million shares available for future issuance under the assumed Spansion Plan. |
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 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 | 859 | 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 | |||||||||
Repurchases in fiscal 2016: | |||||||||||||
January 4, 2016—April 3, 2016 | 23,822 | $ | 7.66 | 23,822 | $ | 210,968 | |||||||
April 4, 2016—July 3, 2016 | 4 | $ | 9.74 | 4 | $ | 210,931 | |||||||
July 4, 2016—October 2, 2016 | 2 | $ | 11.46 | 2 | $ | 210,913 | |||||||
October 3, 2016—January 1, 2017 | 7 | $ | 10.59 | 7 | $ | 210,844 | |||||||
Total repurchases in fiscal 2016 | 23,834 | 23,834 | $ | 210,844 | |||||||||
Total repurchases under this program | 29,492 | 29,492 |
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 |
ITEM 6. | SELECTED FINANCIAL DATA |
January 1, 2017(2) | January 3, 2016 (2) | December 28, 2014 (2) | December 29, 2013 | December 30, 2012 | |||||||||||||||
( in thousands, except per-share amounts) | |||||||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||
Revenues | $ | 1,923,108 | $ | 1,607,853 | $ | 725,497 | $ | 722,693 | $ | 769,687 | |||||||||
Cost of revenues | $ | 1,237,974 | $ | 1,207,850 | $ | 361,820 | $ | 384,121 | $ | 376,887 | |||||||||
Operating income (loss) | $ | (611,755 | ) | $ | (336,905 | ) | $ | 22,873 | $ | (58,195 | ) | $ | (18,915 | ) | |||||
Income (loss) attributable to Cypress (3) | $ | (686,251 | ) | $ | (378,867 | ) | $ | 17,936 | $ | (48,242 | ) | $ | (23,444 | ) | |||||
Noncontrolling interest, net of income taxes | $ | (643 | ) | $ | (2,271 | ) | $ | (1,418 | ) | $ | (1,845 | ) | $ | (1,614 | ) | ||||
Net income (loss) (3) | $ | (686,894 | ) | $ | (381,138 | ) | $ | 16,518 | $ | (50,087 | ) | $ | (25,058 | ) | |||||
Adjust for net loss (income) attributable to noncontrolling interest | $ | 643 | $ | 2,271 | $ | 1,418 | $ | 1,845 | $ | 1,614 | |||||||||
Net income (loss) attributable to Cypress | $ | (686,251 | ) | $ | (378,867 | ) | $ | 17,936 | $ | (48,242 | ) | $ | (23,444 | ) | |||||
Net income (loss) per share—basic: | |||||||||||||||||||
Net income (loss) per share—basic | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | $ | (0.32 | ) | $ | (0.16 | ) | |||||
Net income (loss) per share—diluted: | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | $ | (0.32 | ) | $ | (0.16 | ) | |||||
Net income (loss) per share—basic | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | $ | (0.32 | ) | $ | (0.16 | ) | |||||
Net income (loss) per share—diluted | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | $ | (0.32 | ) | $ | (0.16 | ) | |||||
Dividends per share: | |||||||||||||||||||
Declared | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.44 | |||||||||
Paid | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.42 | |||||||||
Shares used in per-share calculation: | |||||||||||||||||||
Basic | 319,522 | 302,036 | 159,031 | 148,558 | 149,266 | ||||||||||||||
Diluted | 319,522 | 302,036 | 169,122 | 148,558 | 149,266 | ||||||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | December 29, 2013 | December 30, 2012 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||
Cash, cash equivalents and short-term investments | $ | 121,144 | $ | 227,561 | $ | 118,812 | $ | 104,462 | $ | 117,210 | |||||||||
Working capital (3) | $ | 191,486 | $ | 322,376 | $ | 37,479 | $ | 13,871 | $ | 20,060 | |||||||||
Total assets (3) | $ | 3,871,871 | $ | 4,004,261 | $ | 743,281 | $ | 762,884 | $ | 830,554 | |||||||||
Debt (1) | $ | 1,225,131 | $ | 688,265 | $ | 243,250 | $ | 248,230 | $ | 264,942 | |||||||||
Stockholders’ equity (3) | $ | 1,892,752 | $ | 2,712,685 | $ | 201,865 | $ | 175,683 | $ | 175,786 |
(1) | The debt in fiscal year 2016 primarily included $332.0 million related to our Senior Secured Revolving Credit Facility, $150.0 million of 2.00% Senior Exchange notes assumed from Spansion, $95.0 million Term Loan A, net of costs, $444.4 million of Term Loan B, net of costs and $287.5 million of 4.50% Senior Exchangeable Notes. The debt in fiscal year 2015 primarily included $449.0 million related to our Senior Secured Revolving Credit Facility, $150 million of 2.00% 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 $25.0 million and net income per share, basic and diluted, by $0.08. The change increased 2016 revenue by $59.2 million and decreased net loss by $19.5 million and net income per share, basic and diluted, by $0.06. See additional disclosures on this change in revenue recognition in Note 1 of the Notes to Consolidated Financial Statements. |
(3) | Our Consolidated Financial Statements include the financial results of legacy Spansion beginning March 12, 2015 and the financial results of the IoT business acquired from Broadcom beginning July 5, 2016. The comparability of our results for the years ended January 3, 2016 and January 1, 2017 to the same prior year periods is significantly impacted by these transactions. |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
MPD | 928,626 | 876,574 | 356,497 | ||||||||
MCD | 994,482 | 731,279 | 369,000 | ||||||||
Total revenues | $ | 1,923,108 | $ | 1,607,853 | $ | 725,497 |
• | Divestiture of TrueTouch® business |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Cost of revenues | $ | 1,237,974 | $ | 1,207,850 | $ | 361,820 | |||||
As a percentage of revenue | 64.4 | % | 75.1 | % | 49.9 | % |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
R&D expenses | $ | 331,737 | $ | 281,391 | $ | 164,560 | |||||
As a percentage of revenues | 17.3 | % | 17.5 | % | 22.7 | % |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
SG&A expenses | $ | 317,383 | $ | 323,570 | $ | 170,741 | |||||
As a percentage of revenues | 16.5 | % | 20.1 | % | 23.5 | % |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Interest income | $ | 1,836 | $ | 885 | $ | 362 | |||||
Changes in fair value of investments under the deferred compensation plan | 2,326 | (1,354 | ) | 3,014 | |||||||
Unrealized gain (loss) on marketable securities | 325 | (4,655 | ) | (1,495 | ) | ||||||
Foreign currency exchange gains (losses), net | (4,251 | ) | 744 | 1,382 | |||||||
Gain (loss) on sale of investments | (265 | ) | 276 | — | |||||||
Other | 342 | 335 | 40 | ||||||||
Other income (expense), net | $ | 313 | $ | (3,769 | ) | $ | 3,303 |
As of | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Cash, cash equivalents and short-term investments | $ | 121,144 | $ | 227,561 | $ | 118,812 | |||||
Working capital, net | $ | 191,486 | $ | 322,376 | $ | 37,479 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(in thousands) | |||||||||||
Net cash provided by operating activities | $ | 217,419 | $ | 8,801 | $ | 103,336 | |||||
Net cash used in investing activities | $ | (613,439 | ) | $ | (79,087 | ) | $ | (42,156 | ) | ||
Net cash provided by (used in) financing activities | $ | 289,502 | $ | 193,240 | $ | (43,453 | ) |
• | depreciation and amortization of $265.9 million, |
• | stock based compensation expense of $105.3 million, |
• | restructuring costs and other of $27.2 million, |
• | accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt of $13.1 million, |
• | Share in net loss of equity method investees of 17.6 million, |
• | goodwill impairment charge of $488.5 million, |
• | gain related to investment in Deca Technologies Inc. of $112.8 million, |
• | impairment charge related to assets held for sale of $37.2 million, and |
• | impairment charge for acquisition-related IPR&D of $33.9 million. |
• | an increase in accounts receivable of $41.0 million due to an increase in sales during fiscal 2016. The days sales outstanding for fiscal 2016 and fiscal 2015 were 61 days; |
◦ | an increase in inventories of $34.0 million as a result of the IoT acquisition; |
• | an increase in other current and long-term assets of $12.2 million, primarily due to timing of payments for certain licenses; |
• | an increase in accounts payable, accrued and other liabilities of $76.7 million due to timing of payments; and |
• | a decrease in deferred income of $66.8 million due to the transition of additional product families to the sell-in basis of revenue recognition. The decrease in deferred income was offset by an increase in price adjustment reserve for sale to distributors of $97.3 million due to the change in revenue recognition for certain product families in fiscal 2016 on a sell-in basis, which required us to record a reserve for distributor price adjustments based on our estimate of historical experience rates. |
Total | 2017 | 2018 and 2019 | 2020 and 2021 | After 2021 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Purchase obligations (1) | $ | 458,473 | $ | 244,427 | $ | 146,007 | $ | 68,039 | $ | — | |||||||||
Operating lease commitments (2) | 77,322 | 18,935 | 22,622 | 13,945 | 21,820 | ||||||||||||||
Capital lease obligations and Equipment loans | 152 | 152 | — | — | — | ||||||||||||||
2.00% Senior Exchangeable Notes | 149,990 | — | — | 149,990 | — | ||||||||||||||
4.50% Senior Exchangeable Notes | 287,500 | — | — | — | 287,500 | ||||||||||||||
Term Loan A | 95,000 | 7,500 | 17,500 | 70,000 | — | ||||||||||||||
Term Loan B | 444,375 | 22,500 | 47,835 | 374,040 | — | ||||||||||||||
Interest payment on debt | 247,362 | 60,688 | 113,624 | 66,437 | 6,613 | ||||||||||||||
Senior Secured Revolving Credit Facility | 332,000 | — | — | 332,000 | — | ||||||||||||||
Total contractual obligations | $ | 2,092,174 | $ | 354,202 | $ | 347,588 | $ | 1,074,451 | $ | 315,933 |
(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. |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | sales of our products are denominated in U.S. dollars, Japanese yen and Euros; |
• | 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 other foreign currencies and |
• | some fixed asset purchases and sales are denominated in other foreign currencies. |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page | |
January 1, 2017 | January 3, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 120,172 | $ | 226,690 | |||
Accounts receivable, net | 333,037 | 292,736 | |||||
Inventories | 287,776 | 243,595 | |||||
Assets held for sale | 30,796 | — | |||||
Other current assets | 122,162 | 87,751 | |||||
Total current assets | 893,943 | 850,772 | |||||
Property, plant and equipment, net | 297,266 | 425,003 | |||||
Goodwill | 1,439,472 | 1,738,882 | |||||
Intangible assets, net | 904,561 | 789,195 | |||||
Equity method investments | 188,687 | 41,330 | |||||
Other long-term assets | 147,942 | 159,079 | |||||
Total assets | $ | 3,871,871 | $ | 4,004,261 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 241,424 | $ | 143,383 | |||
Accrued compensation and employee benefits | 60,552 | 54,850 | |||||
Price adjustments and other distributor related reserves | 154,525 | 55,097 | |||||
Deferred margin on sales to distributors | — | 68,964 | |||||
Dividends payable | 35,506 | 36,520 | |||||
Current portion of long-term debt | 30,152 | 14,606 | |||||
Other current liabilities | 180,298 | 154,976 | |||||
Total current liabilities | 702,457 | 528,396 | |||||
Deferred income taxes and other tax liabilities | 44,934 | 51,737 | |||||
Revolving credit facility and long-term debt | 1,194,979 | 673,659 | |||||
Other long-term liabilities | 36,749 | 37,784 | |||||
Total liabilities | 1,979,119 | 1,291,576 | |||||
Commitments and contingencies (Note 20) | — | — | |||||
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; 497,055 and 481,912 shares issued; 323,583 and 332,276 shares outstanding at January 1, 2017 and January 3, 2016, respectively | 4,737 | 4,637 | |||||
Additional paid-in-capital | 5,676,236 | 5,623,411 | |||||
Accumulated other comprehensive loss | (8,811 | ) | (227 | ) | |||
Accumulated deficit | (1,445,033 | ) | (758,780 | ) | |||
Stockholders’ equity before treasury stock | 4,227,129 | 4,869,041 | |||||
Less: shares of common stock held in treasury, at cost; 173,472 and 149,636 shares at January 1, 2017 and January 3, 2016 and, respectively | (2,335,301 | ) | (2,148,193 | ) | |||
Total Cypress stockholders’ equity | 1,891,828 | 2,720,848 | |||||
Non-controlling interest | 924 | (8,163 | ) | ||||
Total equity | 1,892,752 | 2,712,685 | |||||
Total liabilities and equity | $ | 3,871,871 | $ | 4,004,261 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands, except per-share amounts) | |||||||||||
Revenues | $ | 1,923,108 | $ | 1,607,853 | $ | 725,497 | |||||
Costs and expenses: | |||||||||||
Cost of revenues | 1,237,974 | 1,207,850 | 361,820 | ||||||||
Research and development | 331,737 | 281,391 | 164,560 | ||||||||
Selling, general and administrative | 317,383 | 323,570 | 170,741 | ||||||||
Amortization of intangible assets | 174,745 | 108,335 | 6,683 | ||||||||
Impairment of acquisition-related intangible assets | 33,944 | — | — | ||||||||
Impairment related to assets held for sale | 37,219 | — | — | ||||||||
Goodwill impairment charge | 488,504 | — | — | ||||||||
Restructuring costs (benefit) | 26,131 | 90,084 | (1,180 | ) | |||||||
(Gain) related to investment in Deca Technologies Inc. | (112,774 | ) | — | — | |||||||
(Gain) on divestiture of TrueTouch® Mobile business | — | (66,472 | ) | — | |||||||
Total costs and expenses | 2,534,863 | 1,944,758 | 702,624 | ||||||||
Operating (loss) income | (611,755 | ) | (336,905 | ) | 22,873 | ||||||
Interest expense | (55,192 | ) | (16,356 | ) | (5,763 | ) | |||||
Other income (expense), net | 313 | (3,769 | ) | 3,303 | |||||||
(Loss) Income, before income taxes and non-controlling interest | $ | (666,634 | ) | $ | (357,030 | ) | $ | 20,413 | |||
Income tax (provision) benefit | (2,616 | ) | (16,960 | ) | 1,173 | ||||||
Share in net loss of equity method investees | (17,644 | ) | (7,148 | ) | (5,068 | ) | |||||
Net (loss) income | (686,894 | ) | (381,138 | ) | 16,518 | ||||||
Net income attributable to non-controlling interest, net of taxes | 643 | 2,271 | 1,418 | ||||||||
Net income (loss) attributable to Cypress | $ | (686,251 | ) | $ | (378,867 | ) | $ | 17,936 | |||
Net income (loss) per share attributable to Cypress: | |||||||||||
Basic | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | |||
Diluted | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | |||
Cash dividends declared per share | $ | 0.44 | $ | 0.44 | $ | 0.44 | |||||
Shares used in net income (loss) per share calculation: | |||||||||||
Basic | 319,522 | 302,036 | 159,031 | ||||||||
Diluted | 319,522 | 302,036 | 169,122 |
Twelve Months Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Net (loss) income | $ | (686,894 | ) | $ | (381,138 | ) | $ | 16,518 | |||
Other comprehensive (loss) income: | |||||||||||
Net change in unrealized (losses) gains on available for sale securities | — | 28 | 131 | ||||||||
Reclassifications of net realized (gains) losses on available-for-sale securities included in net income (loss) | — | — | 171 | ||||||||
Net unrecognized gain on Defined Benefit Plan | (1,214 | ) | 26 | — | |||||||
Net unrealized gain (loss) arising during the period | (5,186 | ) | (1,651 | ) | — | ||||||
Net loss reclassified into earnings for revenue hedges (effective portion) | 13,650 | (1,678 | ) | — | |||||||
Net loss reclassified into earnings for revenue hedges (ineffective portion) | (173 | ) | — | — | |||||||
Net loss reclassified into earnings from expense hedges (ineffective portion) | — | 80 | — | ||||||||
Net loss (gain) reclassified into earnings for expense hedges (effective portion) | (15,661 | ) | 3,014 | — | |||||||
Net unrealized gain (loss) on cash flow hedges | (7,370 | ) | (235 | ) | — | ||||||
Other comprehensive gain (loss) | (8,584 | ) | (181 | ) | 302 | ||||||
Comprehensive income (loss) | (695,478 | ) | (381,319 | ) | 16,820 | ||||||
Comprehensive loss attributable to non-controlling interest | 643 | 2,271 | 1,418 | ||||||||
Comprehensive income (loss) attributable to Cypress | $ | (694,835 | ) | $ | (379,048 | ) | $ | 18,238 |
Common Stock | Additional Paid-In | Accumulated Other Comprehensive | Accumulated | Treasury Stock | Noncontrolling | Total | |||||||||||||||||||||||||||
Shares | Amount | Capital | Income (Loss) | Deficit | Shares | Amount | Interest | Equity | |||||||||||||||||||||||||
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 | — | — | — | 17936 | ||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||
January 3, 2016 | 481,912 | 4,637 | 5,623,411 | (227 | ) | (758,780 | ) | 149,636 | (2,148,193 | ) | (8,163 | ) | $ | 2,712,685 | |||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||
Net income attributable to Cypress | — | — | — | — | (686,251 | ) | — | — | — | (686,251 | ) | ||||||||||||||||||||||
Net unrealized gain on available-for-sale investments | — | — | — | (7,344 | ) | (2 | ) | — | (7,346 | ) | |||||||||||||||||||||||
Unrealized gain in defined pension benefit plan | — | — | — | (1,240 | ) | — | — | — | — | (1,240 | ) | ||||||||||||||||||||||
Changes in employee deferred compensation plan assets | — | — | — | — | — | — | (94 | ) | — | (94 | ) | ||||||||||||||||||||||
Issuance of common shares under employee stock plans | 15,143 | 100 | 48,166 | — | — | — | — | — | 48,266 | ||||||||||||||||||||||||
Withholding of common shares for tax obligations on vested restricted shares | — | — | — | — | — | 887 | (11,320 | ) | — | (11,320 | ) | ||||||||||||||||||||||
Repurchase of common shares | — | — | — | — | — | 22,949 | (175,694 | ) | — | (175,694 | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | 105,536 | — | — | — | — | — | 105,536 | ||||||||||||||||||||||||
Convertible debt | — | — | 47,686 | — | — | — | — | — | 47,686 | ||||||||||||||||||||||||
Purchase of capped calls | — | — | (8,166 | ) | — | — | — | — | — | (8,166 | ) | ||||||||||||||||||||||
Dividends | — | — | (140,397 | ) | — | — | — | — | — | (140,397 | ) | ||||||||||||||||||||||
Deconsolidation of Deca | — | — | — | — | — | — | — | 6,838 | 6,838 | ||||||||||||||||||||||||
Noncontrolling interest | — | — | — | — | — | — | — | 2,249 | 2,249 | ||||||||||||||||||||||||
January 1, 2017 | 497,055 | $ | 4,737 | $ | 5,676,236 | $ | (8,811 | ) | $ | (1,445,033 | ) | 173,472 | $ | (2,335,301 | ) | $ | 924 | $1,892,752 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) income | $ | (686,894 | ) | $ | (381,138 | ) | $ | 16,518 | |||
Adjustments to reconcile income (loss) to net cash provided by operating activities: | |||||||||||
Stock-based compensation expense | 105,268 | 93,527 | 50,170 | ||||||||
Depreciation and amortization | 265,922 | 241,584 | 46,734 | ||||||||
Impairment of acquisition-related intangible assets | 33,944 | — | — | ||||||||
Impairment related to assets held for sale | 37,219 | — | — | ||||||||
Impairment of goodwill | 488,504 | — | — | ||||||||
(Gain) related to investment in Deca Technologies | (112,774 | ) | — | — | |||||||
(Gain) loss on sale or retirement of property and equipment, net | 7,375 | 424 | (196 | ) | |||||||
Gain on divestiture of TrueTouch® Mobile business | — | (66,472 | ) | — | |||||||
Share in net loss of equity method investees | 17,644 | 7,148 | 5,068 | ||||||||
Accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt | 13,139 | 2,537 | — | ||||||||
Loss on trading securities | 598 | 3,191 | 1,667 | ||||||||
Restructuring and other costs | 27,235 | 11,623 | (908 | ) | |||||||
Changes in operating assets and liabilities, net of effects of an acquisition and divestiture: | |||||||||||
Accounts receivable | (41,022 | ) | (117,371 | ) | 5,099 | ||||||
Inventories | (33,677 | ) | 288,264 | 9,140 | |||||||
Other current and long-term assets | (12,225 | ) | (5,977 | ) | 10,560 | ||||||
Price adjustment reserve for sales to distributors | 99,428 | 32,666 | 19,605 | ||||||||
Accounts payable and other liabilities | 76,699 | (86,960 | ) | (32,731 | ) | ||||||
Deferred margin on sales to distributors | (68,964 | ) | (14,245 | ) | (27,390 | ) | |||||
Net cash provided by operating activities | $ | 217,419 | $ | 8,801 | $ | 103,336 | |||||
Cash flows from investing activities: | |||||||||||
Acquisitions, net of cash acquired | (550,000 | ) | (105,130 | ) | — | ||||||
Proceeds from maturities of available-for-sale investments | 40,000 | 800 | 16,556 | ||||||||
Proceeds from sales of available-for-sale investments | 45,904 | 16,584 | — | ||||||||
Purchases of marketable securities | (80,202 | ) | (1,530 | ) | (23,425 | ) | |||||
Contribution, net of distributions to deferred compensation plan | (1,857 | ) | 1,511 | (1,283 | ) | ||||||
Acquisition of property, plant and equipment | (57,398 | ) | (47,206 | ) | (20,947 | ) | |||||
Deconsolidation of investment in Deca | 17,627 | — | — | ||||||||
Cash paid for equity and cost method investments, and other | (27,149 | ) | (34,126 | ) | (18,400 | ) | |||||
Proceeds from divestiture | — | 88,635 | 3,240 | ||||||||
Other | (364 | ) | 1,375 | 2,103 | |||||||
Net cash used in investing activities | $ | (613,439 | ) | $ | (79,087 | ) | $ | (42,156 | ) |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Cash flows from financing activities: | |||||||||||
Repurchase of common stock | (175,694 | ) | (55,018 | ) | — | ||||||
Proceeds from employee equity awards | 43,850 | 52,857 | 31,755 | ||||||||
Yield enhancement structured agreements settled in cash, net | — | 387 | 318 | ||||||||
Yield enhancement structured agreements settled in stock, net | — | (9,601 | ) | — | |||||||
Payments of dividends | (141,410 | ) | (127,995 | ) | (69,248 | ) | |||||
Purchase of capped calls | (8,165 | ) | — | — | |||||||
Proceeds from settlement of capped calls | — | 25,293 | — | ||||||||
Repayment of equipment leases, loans and others | (11,061 | ) | (9,420 | ) | (6,278 | ) | |||||
Borrowings under revolving credit facility and line of credit | 195,000 | 537,000 | 264,000 | ||||||||
Borrowings under Term Loan | 450,000 | 97,228 | — | ||||||||
Repayments of revolving credit facility and line of credit loan | (312,000 | ) | (315,000 | ) | (264,000 | ) | |||||
Repayment of Term Loan A | (10,625 | ) | — | — | |||||||
Financing costs | (27,893 | ) | (2,491 | ) | — | ||||||
Proceeds from issuance of 4.50% Senior Exchangeable Notes | 287,500 | — | — | ||||||||
Net cash provided by (used in) financing activities | $ | 289,502 | $ | 193,240 | $ | (43,453 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (106,518 | ) | 122,954 | 17,727 | |||||||
Cash and cash equivalents, beginning of year | 226,690 | 103,736 | 86,009 | ||||||||
Cash and cash equivalents, end of year | $ | 120,172 | $ | 226,690 | $ | 103,736 | |||||
Supplemental disclosures: | |||||||||||
Dividends payable | $ | 35,506 | $ | 36,549 | $ | 17,931 | |||||
Cash paid for income taxes | $ | 8,288 | $ | 8,736 | $ | 4,598 | |||||
Cash paid for interest | $ | 32,625 | $ | 9,670 | $ | 5,774 | |||||
Unpaid purchases of property, plant and equipment | $ | 3,960 | $ | 6,663 | $ | 1,688 |
Equipment | 3 to 10 years |
Buildings and leasehold improvements | 5 to 20 years |
Furniture and fixtures | 3 to 7 years |
Fair Values as of July 5, 2016 | Changes through January 1, 2017 | Final allocation as of January 1, 2017 | |||||||||
(In thousands) | |||||||||||
Intangible assets | $ | 295,400 | $ | 28,600 | (a) | $ | 324,000 | ||||
Property, plant and equipment | 16,256 | 14 | 16,270 | ||||||||
Inventories | 11,655 | — | 11,655 | ||||||||
Other current assets | 6,532 | 18 | 6,550 | ||||||||
Other long-term assets | 4,203 | — | 4,203 | ||||||||
Goodwill | 217,726 | (28,632 | ) | 189,094 | |||||||
Total assets acquired | $ | 551,772 | $ | — | $ | 551,772 | |||||
Other current liabilities | (1,199 | ) | — | (1,199 | ) | ||||||
Other long-term liabilities | (573 | ) | — | (573 | ) | ||||||
Total liabilities assumed | (1,772 | ) | — | (1,772 | ) | ||||||
Fair value of net assets acquired | $ | 550,000 | $ | — | $ | 550,000 |
As of January 1, 2017 | ||||||||||||||
Gross | Accumulated Amortization | Net | Estimated life | |||||||||||
(in thousands) | (in years) | |||||||||||||
Existing Technology | $ | 189,300 | $ | (23,662 | ) | $ | 165,638 | 4 | ||||||
In-Process Research and Development Technology | 88,900 | — | 88,900 | N/A | ||||||||||
Backlog | 13,500 | (13,500 | ) | — | <1 | |||||||||
Customer Relationships | 20,000 | (1,000 | ) | 19,000 | 10 | |||||||||
License Agreements | 3,700 | (1,850 | ) | 1,850 | 1 | |||||||||
Trademarks | 8,600 | (1,075 | ) | 7,525 | 4 | |||||||||
Total intangible assets | $ | 324,000 | $ | (41,087 | ) | $ | 282,913 |
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 |
Final allocation of January 3, 2016 | |||||
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 (1) | (391,184 | ) | |||
Total liabilities assumed | $ | (790,380 | ) | ||
Fair value of net assets acquired | $ | 2,816,865 |
As of March 12, 2015 | ||||||||
Gross | Estimated range of lives (in years) | |||||||
(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 |
Years Ended | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands, except per-share amounts) | |||||||
Revenues | $ | 2,018,124 | $ | 1,982,824 | |||
Net loss | $ | (725,359 | ) | $ | (505,544 | ) | |
Net loss per share attributable to Cypress | |||||||
Basic | $ | (2.27 | ) | $ | (1.67 | ) | |
Diluted | $ | (2.27 | ) | $ | (1.67 | ) |
MPD | PSD | DCD | MCD | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Goodwill as of December 28, 2014 (1) | $ | 33,860 | $ | 31,836 | $ | — | $ | — | $ | 65,696 | ||||||||||
Goodwill from merger with Spansion | 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 | ||||||||||
Goodwill impairment | (488,504 | ) | (488,504 | ) | ||||||||||||||||
Goodwill from acquisition of IoT Business | — | — | 217,726 | — | 217,726 | |||||||||||||||
Measurement period adjustments | — | — | (28,632 | ) | — | (28,632 | ) | |||||||||||||
Reallocation of goodwill | (113,447 | ) | (480,332 | ) | (189,094 | ) | 782,873 | — | ||||||||||||
Goodwill as of January 1, 2017 | $ | 656,599 | $ | — | $ | — | $ | 782,873 | $ | 1,439,472 |
As of January 1, 2017 | As of January 3, 2016 | ||||||||||||||||||||||
Gross | Accumulated Amortization | Net (a) | Gross | Accumulated Amortization | Net (a) | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Developed technology and other intangible assets | |||||||||||||||||||||||
Acquisition-related intangible assets | $ | 1,021,244 | $ | (295,023 | ) | $ | 726,221 | $ | 836,256 | $ | (226,417 | ) | $ | 609,839 | |||||||||
Non-acquisition related intangible assets | 12,000 | (8,863 | ) | 3,137 | 13,368 | (10,228 | ) | 3,140 | |||||||||||||||
Total developed technology and other intangible assets | $ | 1,033,244 | $ | (303,886 | ) | 729,358 | $ | 849,624 | $ | (236,645 | ) | $ | 612,979 | ||||||||||
In-process research and development | 175,203 | — | 175,203 | 176,216 | — | 176,216 | |||||||||||||||||
Total intangible assets | $ | 1,208,447 | $ | (303,886 | ) | $ | 904,561 | $ | 1,025,840 | $ | (236,645 | ) | $ | 789,195 |
(a) | Included in the intangible assets are in-process research and development (“IPR&D”) projects acquired as part of the Spansion Merger and the acquisition of the IoT business, that had not attained technological feasibility and commercial production. IPR&D assets are accounted for initially as indefinite-lived intangible assets until the completion the associated research and development efforts. Upon completion, the carrying value of every related intangible asset will be amortized over the remaining estimated life of the asset beginning in the period in which the project is completed. |
(in thousands) | |||
As of January 3, 2016 | $ | 176,216 | |
Intangibles acquired as part of IoT business (Note 2) | 88,900 | ||
Technological feasibility achieved | (55,969 | ) | |
Projects impaired | (33,944 | ) | |
As of January 1, 2017 | $ | 175,203 |
Fiscal Year | (In thousands) | |||
2017 | $ | 188,211 | ||
2018 | 182,462 | |||
2019 | 175,234 | |||
2020 | 115,058 | |||
2021 and future | 68,393 | |||
Total future amortization expense | $ | 729,358 |
January 1, 2017 | Ownership | January 3, 2016 | Ownership | |||||||
Deca Technologies Inc. | $ | 134,327 | 52.2 | % | N/A | N/A | ||||
Enovix Corporation | 54,360 | 46.6 | % | 41,330 | 38.7 | % | ||||
Equity method investments | $ | 188,687 | $ | 41,330 |
(in thousands) | |||
Consideration received | |||
Cash proceeds received for sale of shares in Deca | 20,627 | ||
Add: | |||
Fair value of retained equity method investment | 142,508 | ||
Carrying amount of non-controlling interest | (6,838 | ) | |
156,297 | |||
Less: | |||
Carrying amount of net assets of Deca at July 29, 2016 | (43,523 | ) | |
Gain related to investment in Deca | 112,774 |
As of January 1, 2017 | As of January 3, 2016 | ||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Reported as cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | 287 | $ | — | $ | 287 | $ | 119 | $ | — | $ | 119 | |||||||||||
Total cash equivalents | 287 | — | 287 | 119 | — | 119 | |||||||||||||||||
Reported as short-term investments: | |||||||||||||||||||||||
Certificates of deposit | — | 972 | 972 | — | 871 | 871 | |||||||||||||||||
Total short-term investments | — | 972 | 972 | — | 871 | 871 | |||||||||||||||||
Reported as long-term investments: | |||||||||||||||||||||||
Marketable equity securities | — | — | — | 6,516 | — | 6,516 | |||||||||||||||||
Total long-term investments | — | — | — | 6,516 | — | 6,516 | |||||||||||||||||
Employee deferred compensation plan assets: | |||||||||||||||||||||||
Cash equivalents | 3,809 | — | 3,809 | 3,333 | — | 3,333 | |||||||||||||||||
Mutual funds | 22,658 | — | 22,658 | 22,023 | — | 22,023 | |||||||||||||||||
Equity securities | 11,974 | — | 11,974 | 8,624 | — | 8,624 | |||||||||||||||||
Fixed income | 4,088 | — | 4,088 | 3,227 | — | 3,227 | |||||||||||||||||
Stable Value Funds | — | 3,045 | 3,045 | — | 4,042 | 4,042 | |||||||||||||||||
Total employee deferred compensation plan assets | 42,529 | 3,045 | 45,574 | 37,207 | 4,042 | 41,249 | |||||||||||||||||
Foreign Exchange Forward Contracts | — | 6,605 | 6,605 | — | 983 | 983 | |||||||||||||||||
Total financial assets | $ | 42,816 | $ | 10,622 | $ | 53,438 | $ | 43,842 | $ | 5,896 | $ | 49,738 | |||||||||||
Financial Liabilities | |||||||||||||||||||||||
Foreign Exchange Forward Contracts | — | 15,582 | 15,582 | — | 1,382 | 1,382 | |||||||||||||||||
Employee deferred compensation plan liability | — | 46,359 | 46,359 | — | 41,457 | 41,457 | |||||||||||||||||
Total financial liabilities | $ | — | $ | 61,941 | $ | 61,941 | $ | — | $ | 42,839 | $ | 42,839 |
• | 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 1, 2017 and January 3, 2016, the Company did not own any financial assets utilizing Level 3 inputs. |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Accounts receivable, gross | $ | 338,061 | $ | 295,803 | |||
Allowances for doubtful accounts receivable and sales returns | (5,024 | ) | (3,067 | ) | |||
Accounts receivable, net | $ | 333,037 | $ | 292,736 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Raw materials | $ | 15,525 | $ | 13,516 | |||
Work-in-process | 208,525 | 192,245 | |||||
Finished goods | 63,726 | 37,834 | |||||
Total inventories | $ | 287,776 | $ | 243,595 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Prepaid tooling | $ | 11,768 | $ | 19,379 | |||
Restricted cash relating to pension plan, current (see Note 18) | 4,206 | 3,730 | |||||
Advance to suppliers | 16,549 | 10,683 | |||||
Prepaid royalty and licenses | 17,769 | 14,281 | |||||
Derivative asset | 6,605 | 966 | |||||
Value added tax receivable | 11,625 | 12,493 | |||||
Receivable from sale of TrueTouch®Mobile business | 10,000 | — | |||||
Other current assets | 43,640 | 26,219 | |||||
Total other current assets | $ | 122,162 | $ | 87,751 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Land | $ | 29,844 | $ | 37,819 | |||
Equipment | 493,498 | 1,191,469 | |||||
Buildings, building and leasehold improvements | 175,589 | 314,017 | |||||
Construction in progress | 36,066 | 28,050 | |||||
Furniture and fixtures | 6,728 | 12,946 | |||||
Total property, plant and equipment, gross | 741,725 | 1,584,301 | |||||
Less: accumulated depreciation and amortization | (444,459 | ) | (1,159,298 | ) | |||
Total property, plant and equipment, net | $ | 297,266 | $ | 425,003 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Employee deferred compensation plan | $ | 45,574 | $ | 41,249 | |||
Investments in cost method equity securities | 13,331 | 9,184 | |||||
Deferred tax assets | 4,463 | 4,080 | |||||
Long-term license | 14,498 | 24,079 | |||||
Restricted cash relating to pension plan, non-current (see Note 18) | — | 3,462 | |||||
Long-term receivable from sale of TrueTouch ® Mobile business | — | 10,000 | |||||
Advances to suppliers | 25,207 | 26,237 | |||||
Other assets | 44,869 | 40,788 | |||||
Total other long-term assets | $ | 147,942 | $ | 159,079 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Employee deferred compensation plan | $ | 46,359 | $ | 41,457 | |||
Restructuring accrual - current portion (see Note 10) | 24,029 | 7,270 | |||||
Deferred Revenue on sale of TrueTouch® mobile business | — | 15,295 | |||||
Rebate reserve | 2,320 | 7,944 | |||||
Derivative liability | 15,582 | 1,283 | |||||
Other current liabilities | 92,008 | 81,727 | |||||
Total other current liabilities | $ | 180,298 | $ | 154,976 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Long-term pension liabilities | $ | 6,378 | $ | 8,712 | |||
Restructuring accrual - non-current portion (see Note 10) | 11,294 | 14,217 | |||||
Asset retirement obligation | 5,067 | 2,783 | |||||
Other long-term liabilities | 14,010 | 12,072 | |||||
Total other long-term liabilities | $ | 36,749 | $ | 37,784 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Cost of revenues | $ | 21,366 | $ | 16,459 | $ | 13,209 | |||||
Research and development | 41,528 | 25,719 | 16,187 | ||||||||
Selling, general and administrative | 42,374 | 51,349 | 20,774 | ||||||||
Total stock-based compensation expense | $ | 105,268 | $ | 93,527 | $ | 50,170 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Stock options | $ | 700 | $ | 1,920 | $ | 4,717 | |||||
Restricted stock units and restricted stock awards | 81,905 | 74,897 | 37,837 | ||||||||
ESPP | 22,663 | 16,710 | 7,616 | ||||||||
Total stock-based compensation expense | $ | 105,268 | $ | 93,527 | $ | 50,170 |
(In thousands) | Weighted-Average Amortization Period | ||||
(In years) | |||||
Stock options | $ | 781 | 0.83 | ||
Restricted stock units and restricted stock awards | 76,001 | 1.21 | |||
ESPP | 5,671 | 0.46 | |||
Total unrecognized stock-based compensation balance, net of estimated forfeitures | $ | 82,453 | 1.15 |
Year Ended | |||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||
Stock Option Plans: | |||||
Expected life | — | — | 4.4-5.7 years | ||
Volatility | — | — | 39.7%-41.1% | ||
Risk-free interest rate | — | — | 0.26%-1.75% | ||
Dividend yield | — | — | 4.2%-4.4% | ||
ESPP: | |||||
Expected life | 0.5-1.5 years | 0.5-1.5 years | 0.5-1.5 years | ||
Volatility | 36.9%-38.5% | 35.9%-46.6% | 31.0%-36.1% | ||
Risk-free interest rate | 0.37%-0.61% | 0.09%-0.86% | 0.03%-0.35% | ||
Dividend yield | 4.1% | 4.5%-5.2% | 4.2%-4.4% |
Year Ended | ||||||||||||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | ||||||||||||||||||
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 | 16,840 | $ | 7.99 | 14,463 | $ | 9.24 | 19,060 | $ | 8.33 | |||||||||||
Options assumed as a part of the Merger | — | $ | — | 8,976 | $ | 12.86 | — | $ | — | |||||||||||
Granted | — | $ | — | — | $ | — | 522 | $ | 10.24 | |||||||||||
Exercised | (8,255 | ) | $ | 5.03 | (5,391 | ) | $ | 5.71 | (4,027 | ) | $ | 4.47 | ||||||||
Forfeited or expired | (638 | ) | $ | 12.54 | (1,208 | ) | $ | 12.75 | (1,092 | ) | $ | 11.59 | ||||||||
Options outstanding, end of year | 7,947 | $ | 10.70 | 16,840 | $ | 7.99 | 14,463 | $ | 9.24 | |||||||||||
Options exercisable, end of year | 6,736 | $ | 10.62 | 14,366 | $ | 7.40 | 9,787 | $ | 8.05 |
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- $6.17 | 1,336,223 | 1.69 | $ | 5.42 | 1,324,572 | $ | 5.42 | ||||||||
$6.22-$8.79 | 798,714 | 1.14 | $ | 7.07 | 784,191 | $ | 7.04 | ||||||||
$8.85-$10.76 | 818,312 | 3.67 | $ | 10.11 | 587,081 | $ | 10.12 | ||||||||
$10.79-$10.92 | 69,331 | 4.48 | $ | 10.85 | 48,054 | $ | 10.84 | ||||||||
$11.27-$11.27 | 1,569,893 | 3.93 | $ | 11.27 | 1,254,685 | $ | 11.27 | ||||||||
$11.32-$11.40 | 144,953 | 2.09 | $ | 11.33 | 137,317 | $ | 11.33 | ||||||||
$11.55-$11.55 | 1,832,550 | 4.29 | $ | 11.55 | 1,297,262 | $ | 11.55 | ||||||||
$11.58-$17.77 | 949,361 | 2.38 | $ | 15.04 | 875,539 | $ | 15.24 | ||||||||
$18.86-$22.88 | 418,175 | 2.64 | $ | 19.42 | 417,587 | $ | 19.42 | ||||||||
$23.23-$23.23 | 9,460 | 2.52 | $ | 23.23 | 9,460 | $ | 23.23 | ||||||||
7,946,972 | 3.05 | $ | 10.70 | 6,735,748 | $ | 10.62 |
Year Ended | ||||||||||||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | ||||||||||||||||||
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 | 11,053 | $ | 13.43 | 7,838 | $ | 10.98 | 8,652 | $ | 11.97 | |||||||||||
Granted and assumed | 11,318 | $ | 11.19 | 10,172 | $ | 14.78 | 6,344 | $ | 10.16 | |||||||||||
Released | (5,890 | ) | $ | 13.36 | (3,594 | ) | $ | 5.60 | (4,363 | ) | $ | 11.58 | ||||||||
Forfeited | (2,701 | ) | $ | 12.36 | (3,363 | ) | $ | 11.66 | (2,795 | ) | $ | 11.21 | ||||||||
Non-vested, end of year | 13,780 | $ | 11.83 | 11,053 | $ | 13.43 | 7,838 | $ | 10.98 |
Year Ended | |||||||||||
(In thousands) | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
Personnel Costs | $ | 26,131 | 58,972 | $ | (357 | ) | |||||
Lease termination costs and other related charges | — | 18,016 | — | ||||||||
Impairment of property, plant and equipment | — | 12,531 | (579 | ) | |||||||
Other | — | 565 | (244 | ) | |||||||
Total restructuring and other charges | $ | 26,131 | $ | 90,084 | $ | (1,180 | ) |
Year Ended | |||||||||||||||
January 1, 2017 | |||||||||||||||
(In thousands) | |||||||||||||||
Spansion-Integration plan | 2016 Plan | 2012/ 2013 Plan | Total | ||||||||||||
Accrued restructuring balance as of December 28, 2014 | — | — | 1,177 | $ | 1,177 | ||||||||||
Provision | 81,041 | — | — | $ | 81,041 | ||||||||||
Cash payments and other adjustments | (59,554 | ) | — | (1,177 | ) | $ | (60,731 | ) | |||||||
Accrued restructuring balance as of January 3, 2016 | 21,487 | — | — | 21,487 | |||||||||||
Provision | (130 | ) | 26,261 | — | 26,131 | ||||||||||
Cash payments and other adjustments | (7,138 | ) | (5,157 | ) | — | (12,295 | ) | ||||||||
Accrued restructuring balance as of January 1, 2017 | $ | 14,219 | $ | 21,104 | $ | — | $ | 35,323 | |||||||
Current portion of the restructuring accrual | $ | 2,925 | $ | 21,104 | $ | — | $ | 24,029 | |||||||
Non-current portion of the restructuring accrual | $ | 11,294 | $ | — | $ | — | $ | 11,294 |
Buy / Sell | January 1, 2017 | January 3, 2016 | |||
(in millions) | |||||
US dollar / Japanese Yen | — | $19.4 / ¥2,333 | |||
US dollar / EUR | $25.0 / €23.6 | $7.3 / €6.8 | |||
Japanese Yen / US dollar | ¥10,129 / $87.9 | — |
January 1, 2017 | January 3, 2016 | |||||||||||||||
Balance Sheet location | Derivatives designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives designated as hedging instruments | Derivatives not designated as hedging instruments | ||||||||||||
(in thousands) | ||||||||||||||||
Other Current Assets | ||||||||||||||||
Derivative Asset | $ | 6,468 | $ | 137 | $ | 966 | $ | 17 | ||||||||
Other Current Liabilities | ||||||||||||||||
Derivative Liability | $ | 14,391 | $ | 1,191 | $ | 1,283 | $ | 99 |
Accumulated net unrealized losses 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 28, 2014 | $ | (52 | ) | $ | 6 | $ | — | $ | (46 | ) | |||||
Other comprehensive income (loss) before reclassification | (1,623 | ) | — | — | (1,623 | ) | |||||||||
Amounts reclassified to other income (expense), net | $ | 1,416 | $ | — | $ | — | $ | 1,416 | |||||||
Net unrecognized gain on the Defined Benefit Plan | — | — | 26 | 26 | |||||||||||
Balance as of January 3, 2016 | (259 | ) | 6 | 26 | (227 | ) | |||||||||
Other comprehensive income (loss) before reclassification | (5,186 | ) | — | — | (5,186 | ) | |||||||||
Amounts reclassified to other income (expense), net | (2,184 | ) | — | — | (2,184 | ) | |||||||||
Net unrecognized gain (loss) on the Defined Benefit Plan | — | — | (1,214 | ) | (1,214 | ) | |||||||||
Balance as of January 1, 2017 | $ | (7,629 | ) | $ | 6 | $ | (1,188 | ) | $ | (8,811 | ) |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Interest income | $ | 1,836 | $ | 885 | $ | 362 | |||||
Changes in fair value of investments under the deferred compensation plan | 2,326 | (1,354 | ) | 3,014 | |||||||
Unrealized gain (loss) on marketable securities | 325 | (4,655 | ) | (1,495 | ) | ||||||
Foreign currency exchange gains (losses), net | (4,251 | ) | 744 | 1,382 | |||||||
Gain (loss) on sale of investments | (265 | ) | 276 | — | |||||||
Other | 342 | 335 | 40 | ||||||||
Other income (expense), net | $ | 313 | $ | (3,769 | ) | $ | 3,303 |
January 1, 2017 | January 3, 2016 | |||||||
(in thousands) | ||||||||
Current portion of debt | ||||||||
Capital lease obligations | $ | 40 | $ | 6,603 | ||||
Equipment loans | 112 | 3,003 | ||||||
Term Loan A | 7,500 | 5,000 | ||||||
Term Loan B | 22,500 | — | ||||||
Current portion of long-term debt | 30,152 | 14,606 | ||||||
Revolving credit facility and long-term portion of debt | ||||||||
Senior Secured Credit facility | 332,000 | 449,000 | ||||||
Term Loan A | 84,838 | 92,228 | ||||||
Term Loan B | 406,214 | — | ||||||
2.00% Senior Exchangeable Notes | 135,401 | 131,845 | ||||||
4.50% Senior Exchangeable Notes | 236,526 | — | ||||||
Capital lease obligations | — | 586 | ||||||
Revolving credit facility and long-term debt | 1,194,979 | 673,659 | ||||||
Total debt | $ | 1,225,131 | $ | 688,265 |
June 23, 2016 | |||
Liability component | |||
Principal | $ | 238,338 | |
Less: Issuance cost | (7,158 | ) | |
Net carrying amount | $ | 231,180 | |
Equity component | |||
Allocated amount | $ | 49,163 | |
Less: Issuance cost | (1,477 | ) | |
Net carrying amount | $ | 47,686 | |
Convertible Notes, net of issuance costs | $ | 278,866 |
Year ended January 1, 2017 | ||||
Contractual interest expense | $ | 6,900 | ||
Amortization of debt issuance costs | 700 | |||
Accretion of debt discount | 4,646 | |||
Total | $ | 12,246 |
January 1, 2017 | ||||
Net carrying amount at issuance date | $ | 231,180 | ||
Amortization of debt issuance costs during the year | 700 | |||
Accretion of debt discount during the year | 4,646 | |||
$ | 236,526 |
Year Ended | ||||||
January 1, 2017 | January 3, 2016 | |||||
( in thousands) | ||||||
Contractual interest expense at 2% per annum | $ | 2,989 | $ | 2,441 | ||
Accretion of debt discount | 3,556 | 2,700 | ||||
Total | $ | 6,545 | $ | 5,141 |
(in thousands) | |||
Principal amount | $ | 149,990 | |
Unamortized debt discount | (14,589 | ) | |
Net carrying value | $ | 135,401 |
Fiscal Year | Term Loan A | Term Loan B | Senior Secured Credit Facility | 2.00% Senior Exchangeable Notes | 4.50% Senior Exchangeable Notes | Capital lease obligations and Equipment loans | Total | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
2017 | $ | 13,131 | $ | 50,470 | $ | 10,026 | $ | 3,000 | $ | 13,908 | $ | 152 | $ | 90,687 | ||||||||||||||
2018 | 12,673 | 49,008 | 10,026 | 3,000 | 13,117 | — | 87,824 | |||||||||||||||||||||
2019 | 14,657 | 50,335 | 10,026 | 3,000 | 13,117 | — | 91,135 | |||||||||||||||||||||
2020 | 71,069 | 56,783 | 334,507 | 152,990 | 13,153 | — | 628,502 | |||||||||||||||||||||
2021 and beyond | — | 350,849 | — | — | 307,230 | — | 658,079 | |||||||||||||||||||||
Total | $ | 111,530 | $ | 557,445 | $ | 364,585 | $ | 161,990 | $ | 360,525 | $ | 152 | $ | 1,556,227 |
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 | — | $ | — | |||||||||
Total for fiscal 2014 | $ | 19,415 | $ | 19,733 | $ | 318 | — | $ | — |
Year ended | ||||||||
January 1, 2017 | January 3, 2016 | |||||||
(in thousands) | ||||||||
Total revenues | $ | 2,965 | $ | 1,684 | ||||
Total purchases | $ | 6,694 | $ | 3,963 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands, except per-share amounts) | |||||||||||
Net Income (Loss) per Share—Basic: | |||||||||||
Net income (loss) attributable to Cypress for basic computation | $ | (686,251 | ) | $ | (378,867 | ) | $ | 17,936 | |||
Weighted-average common shares for basic computation | 319,522 | 302,036 | 159,031 | ||||||||
Net income (loss) per share—basic | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 | |||
Net Income (Loss) per Share—Diluted: | |||||||||||
Net income (loss) attributable to Cypress for diluted computation | $ | (686,251 | ) | $ | (378,867 | ) | $ | 17,936 | |||
Weighted-average common shares for basic computation | 319,522 | 302,036 | 159,031 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options, restricted stock units, restricted stock awards and other | — | — | 10,091 | ||||||||
Weighted-average common shares for diluted computation | 319,522 | 302,036 | 169,122 | ||||||||
Net income (loss) per share—diluted | $ | (2.15 | ) | $ | (1.25 | ) | $ | 0.11 |
Year Ended | ||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | ||||||
(in thousands) | ||||||||
Stock options, restricted stock units and restricted stock awards | 7,519 | 6,828 | 8,708 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(in thousands) | |||||||||||
Changes in fair value of assets recorded in: | |||||||||||
Other income (expense), net | $ | 2,326 | $ | (1,353 | ) | $ | 3,014 | ||||
Changes in fair value of liabilities recorded in: | |||||||||||
Cost of revenues | (288 | ) | 38 | 427 | |||||||
Research and development expenses | (884 | ) | 233 | (793 | ) | ||||||
Selling, general and administrative expenses | (1,889 | ) | 260 | (1,855 | ) | ||||||
Total income (expense), net | $ | (735 | ) | $ | (822 | ) | $ | 793 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
United States loss | $ | (789,627 | ) | $ | (476,014 | ) | $ | (109,307 | ) | ||
Foreign income | 105,992 | 111,836 | 124,652 | ||||||||
Income (loss) before income taxes | (683,635 | ) | (364,178 | ) | 15,345 | ||||||
Income tax benefit (provision): | |||||||||||
Current tax benefit (expense): | |||||||||||
Federal | (1,144 | ) | 219 | 5,551 | |||||||
State | 204 | 55 | (49 | ) | |||||||
Foreign | (926 | ) | (17,189 | ) | (4,732 | ) | |||||
Total current tax benefit (expense) | (1,866 | ) | (16,915 | ) | 770 | ||||||
Deferred tax benefit (expense): | |||||||||||
Federal | (556 | ) | (610 | ) | — | ||||||
State | (31 | ) | (155 | ) | — | ||||||
Foreign | (163 | ) | 720 | 403 | |||||||
Total deferred tax benefit (expense) | (750 | ) | (45 | ) | 403 | ||||||
Income tax benefit (provision) | $ | (2,616 | ) | $ | (16,960 | ) | $ | 1,173 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Benefit (provision) at U.S. statutory rate of 35% | $ | 239,272 | $ | 127,462 | $ | (5,371 | ) | ||||
Foreign income at other than U.S. rates | (36,552 | ) | (22,385 | ) | 37,477 | ||||||
Future benefits not recognized | (30,263 | ) | (126,846 | ) | (35,107 | ) | |||||
Goodwill impairment | (181,987 | ) | — | — | |||||||
Reversal of previously accrued taxes | 13,371 | 10,939 | 8,286 | ||||||||
Tax impact of acquisitions | — | (6,457 | ) | (2,538 | ) | ||||||
Foreign withholding taxes | (2,018 | ) | (243 | ) | (1,195 | ) | |||||
State income taxes, net of federal benefit | (87 | ) | (138 | ) | (49 | ) | |||||
Other, net | (4,352 | ) | 708 | (330 | ) | ||||||
Income tax benefit (provision) | $ | (2,616 | ) | $ | (16,960 | ) | $ | 1,173 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
Deferred tax assets: | |||||||
Credits and net operating loss carryovers | $ | 493,879 | $ | 624,086 | |||
Reserves and accruals | 133,614 | 160,804 | |||||
Excess of book over tax depreciation | 35,886 | 12,463 | |||||
Deferred income | 26,457 | 20,059 | |||||
Total deferred tax assets | 689,836 | 817,412 | |||||
Less valuation allowance | (458,674 | ) | (525,021 | ) | |||
Deferred tax assets, net | 231,162 | 292,391 | |||||
Deferred tax liabilities: | |||||||
Foreign earnings | (160,862 | ) | (184,671 | ) | |||
Intangible assets arising from acquisitions | (71,960 | ) | (108,784 | ) | |||
Total deferred tax liabilities | (232,822 | ) | (293,455 | ) | |||
Net deferred tax assets | $ | (1,660 | ) | $ | (1,064 | ) |
Carryforward | Amount | Expiration Date | ||||
(In thousands) | ||||||
Federal net operating loss carryforward | $ | 1,533,094 | 2020-2036 | |||
Federal research credit carryforward | $ | 142,229 | 2018-2036 | |||
International foreign tax credit carryforward | $ | 13,297 | 2017-2023 | |||
State research credit carryforward | $ | 93,571 | indefinite | |||
State net operating loss carryforward | $ | 789,407 | 2017-2036 |
(In thousands) | |||
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 | |
Decrease related to lapsing of statute of limitation | (7,190 | ) | |
Decrease based on tax positions related to prior year | — | ||
Increase based on tax positions related to current year | 5,639 | ||
Increases in balances related to tax positions taken during prior periods | 33,032 | ||
Unrecognized tax benefits, as of January 1, 2017 | $ | 146,324 |
• | completion of examinations by the U.S. or foreign taxing authorities; and |
• | expiration of statute of limitations on the Company’s tax returns. |
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 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Beginning balance | $ | 4,096 | $ | 2,370 | $ | 2,628 | |||||
Warranties assumed as part of the Spansion merger | — | 1,254 | — | ||||||||
Provisions & prior warranty estimates | 5,261 | 2,820 | 1,449 | ||||||||
Settlements made | (5,361 | ) | (2,348 | ) | (1,707 | ) | |||||
Ending balance | $ | 3,996 | $ | 4,096 | $ | 2,370 |
Fiscal Year | (In thousands) | |||
2017 | $ | 18,935 | ||
2018 | 13,445 | |||
2019 | 9,177 | |||
2020 | 7,915 | |||
2021 | 6,030 | |||
2022 and Thereafter | 21,820 | |||
Total | $ | 77,322 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Memory Products Division | $ | 928,626 | $ | 876,574 | $ | 356,497 | |||||
Microcontroller and Connectivity Division | 994,482 | 731,279 | 369,000 | ||||||||
Total revenues | $ | 1,923,108 | $ | 1,607,853 | $ | 725,497 |
Year Ended | |||||||||||
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
Memory Products Division | $ | 192,983 | $ | 82,137 | $ | 128,213 | |||||
Microcontroller and Connectivity Division | (9,853 | ) | (70,393 | ) | (37,033 | ) | |||||
Unallocated items: | |||||||||||
Stock-based compensation expense | (105,268 | ) | (93,527 | ) | (50,170 | ) | |||||
Restructuring (charges) benefit, including executive severance | (30,631 | ) | (90,084 | ) | 1,180 | ||||||
Amortization of intangibles and other acquisition-related costs | (210,513 | ) | (143,487 | ) | (13,955 | ) | |||||
Impairment of assets and other | (33,944 | ) | — | (7,760 | ) | ||||||
Impairment related to assets held for sale | (37,219 | ) | — | — | |||||||
Gain on divestiture of TrueTouch® Mobile business | — | 66,472 | — | ||||||||
Changes in value of deferred compensation plan | (735 | ) | (820 | ) | — | ||||||
Gain related to investment in Deca Technologies Inc. | 112,774 | — | — | ||||||||
Goodwill impairment charge | (488,504 | ) | — | — | |||||||
Impact of purchase accounting and other | (55,724 | ) | (107,328 | ) | (62 | ) | |||||
Income (loss) from operations before income taxes | $ | (666,634 | ) | $ | (357,030 | ) | $ | 20,413 |
January 1, 2017 | January 3, 2016 | December 28, 2014 | |||||||||
(In thousands) | |||||||||||
United States | $ | 199,294 | $ | 199,527 | $ | 96,082 | |||||
Europe | 255,604 | 208,525 | 94,481 | ||||||||
Greater China 2 | 819,200 | 525,274 | 292,338 | ||||||||
Japan | 420,869 | 464,673 | 64,635 | ||||||||
Rest of the World | 228,141 | 209,854 | 177,961 | ||||||||
Total revenue | $ | 1,923,108 | $ | 1,607,853 | $ | 725,497 |
As of | |||||||
January 1, 2017 | January 3, 2016 | ||||||
(In thousands) | |||||||
United States | $ | 189,912 | $ | 269,304 | |||
Philippines | 37,790 | 90,356 | |||||
Thailand | 32,547 | 34,233 | |||||
Japan | 14,898 | 9,537 | |||||
Other | 22,119 | 21,573 | |||||
Total property, plant and equipment, net | $ | 297,266 | $ | 425,003 |
Three Months Ended | ||||||||||||||||
January 1, 2017 (4) (5) (10) | October 2, 2016 (5) (6) (10) | July 3, 2016 (7) (8) (10) | April 3, 2016 (9) (10) | |||||||||||||
(In thousands, except per-share amounts) | ||||||||||||||||
Revenues | $ | 530,172 | $ | 523,845 | $ | 450,127 | $ | 418,964 | ||||||||
Gross margin | $ | 201,952 | $ | 198,620 | $ | 158,778 | $ | 125,785 | ||||||||
Net income (loss) | $ | (72,413 | ) | $ | 9,235 | $ | (519,655 | ) | $ | (104,154 | ) | |||||
Adjust for net loss attributable to non-controlling interest | $ | (46 | ) | $ | 176 | $ | 381 | $ | 132 | |||||||
Net income (loss) attributable to Cypress | $ | (72,367 | ) | $ | 9,411 | $ | (519,274 | ) | $ | (104,022 | ) | |||||
Net income (loss) per share–basic | $ | (0.22 | ) | $ | 0.03 | $ | (1.65 | ) | $ | (0.32 | ) | |||||
Net income (loss) per share–diluted | $ | (0.22 | ) | $ | 0.03 | $ | (1.65 | ) | $ | (0.32 | ) |
Three Months Ended | ||||||||||||||||
January 3, 2016 | September 27, 2015 (2)(3) | June 28, 2015 | March 29, 2015 (1) | |||||||||||||
(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 (loss) per share–basic | $ | (0.22 | ) | $ | 0.09 | $ | (0.27 | ) | $ | (1.26 | ) | |||||
Net income (loss) per share–diluted | $ | (0.22 | ) | $ | 0.08 | $ | (0.27 | ) | $ | (1.26 | ) |
(1) | 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 an increase in revenue of $33.5 million and an increase in net income of $17.5 million, or $0.09 per basic and diluted share. |
(2) | 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 an increase in revenue of $17.3 million, increase in net income of $9.4 million, or $0.03 per basic and diluted share. |
(3) | 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. |
(4) | During the fourth quarter of fiscal 2016, the impact from the change in methodology for recognizing revenue for sales to certain distributors at the time of shipment was an increase in revenue of $12.6 million and a reduction in net loss of $2.2 million, or $0.01 per basic and diluted share. |
(5) | In the third quarter of fiscal 2016, the Company has changed the method of accounting for its investment in Deca Technologies Inc. ("Deca") from consolidation to the equity method of accounting. The change in the method of accounting resulted in a gain of $112.8 million. See Note 6 of the notes to the consolidated financial statements. In the third and fourth quarter of fiscal 2016, the Company recorded $1.5 million and $6.7 million, respectively, in share in net loss of equity method investee relating to Deca. |
(6) | In the third quarter of fiscal 2016, the Company recorded out-of-period correcting adjustments primarily related to cut-off errors for foundry manufacturing costs, errors related to stock rotation balances, prior accounting for the non-controlling interest in Deca, and the over accrual of certain employee bonuses. These out-of-period corrections resulted in a $6.6 million increase in the cost of revenues, a $3.7 million decrease in research and development expenses, and a $2.1 million reduction in the recognized gain on the investment in Deca, for an aggregate reduction in net income of $5.0 million. |
(7) | In the second quarter of fiscal 2016, the Company recorded a non-cash goodwill impairment charge of $488.5 million related to the Company's MCD reporting unit. See Note 3 of the notes to the consolidated financial statements. |
(8) | During the second quarter of fiscal 2016, 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 $24.2 million, reduction in net loss of $6.8 million or $0.02 per basic and diluted share. |
(9) | During the first quarter of fiscal 2016, 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 $9.4 million, reduction in net loss of $3.1 million or $0.01 per basic and diluted share. |
(10) | During the first, second, third and fourth quarters of fiscal 2016, the Company recorded $0.3 million, $0.7 million, $8.0 million and $17.2 million, respectively, of restructuring charges. See Note 10 of the notes to the consolidated financial statements. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
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 |
3. | Exhibits: |
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 1, 2017 | $ | 1,189 | $ | 490 | $ | (651 | ) | $ | 1,028 | ||||||
Year ended January 3, 2016 | $ | 738 | $ | 576 | $ | (125 | ) | $ | 1,189 | ||||||
Year ended December 28, 2014 | $ | 719 | $ | 39 | $ | (20 | ) | $ | 738 | ||||||
Deferred tax valuation allowance | |||||||||||||||
Year ended January 1, 2017 | $ | 525,021 | $ | (66,347 | ) | (1) | $ | — | $ | 458,674 | |||||
Year ended January 3, 2016 | $ | 358,424 | $ | 166,597 | (1) | $ | — | $ | 525,021 | ||||||
Year ended December 28, 2014 | $ | 334,671 | $ | 23,753 | (1) | $ | — | $ | 358,424 |
(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 |
CYPRESS SEMICONDUCTOR CORPORATION | ||
Date: March 1, 2017 | By: | / S / Thad Trent |
Thad Trent Executive Vice President, Finance and Administration and Chief Financial Officer |
Signature | Title | Date | ||
/S/ HASSANE EL-KHOURY | President, Chief Executive Officer and Director (Principal Executive Officer) | March 1, 2017 | ||
Hassane El-Khoury | ||||
/S/ THAD TRENT | Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer) | March 1, 2017 | ||
Thad Trent | ||||
/S/ W. STEVE ALBRECHT | Director | March 1, 2017 | ||
W. Steve Albrecht | ||||
/S/ ERIC A. BENHAMOU | Director | March 1, 2017 | ||
Eric A. Benhamou | ||||
/S/ H. RAYMOND BINGHAM | Executive Chairman and Chairman of the Board of Directors | March 1, 2017 | ||
H. Raymond Bingham | ||||
/S/ OH CHUL KWON | Director | March 1, 2017 | ||
Oh Chul Kwon | ||||
/S/ WILBERT G.M. VAN DEN HOEK | Director | March 1, 2017 | ||
Wilbert G.M. Van Den Hoek | ||||
/S/ MICHAEL S. WISHART | Director | March 1, 2017 | ||
Michael S. Wishart |
EXHIBIT INDEX | ||||||||
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. | 10-Q | 7/3/2016 | |||||
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 | |||||
4.2 | Indenture, dated June 23, 2016, by and between Cypress Semiconductor Corporation and U.S. Bank National Association. | 8-K | 6/23/2016 | |||||
4.3 | Form of 4.50% Senior Convertible Note due 2022 (included in Exhibit 4.1 of the Form 8-K, referenced herein). | 8-K | 6/23/2016 | |||||
4.4 | Form of Capped Call Transaction. | 10-Q | 7/3/2016 | |||||
10.1+ | Form of Indemnification Agreement. | S-1 | 3/4/1987 | |||||
10.2+ | Form of Change of Control Severance Agreement. | 10-Q | 7/3/2016 | |||||
10.3+ | Severance Policy dated May 26, 2016. | 10-Q | 7/3/2016 | |||||
10.4 + | Cypress Semiconductor Corporation Non-Qualified Deferred Compensation Plan I. | 10-K | 1/3/2016 | |||||
10.5 + | Cypress Semiconductor Corporation Non-Qualified Deferred Compensation Plan II. | 10-K | 1/3/2016 | |||||
10.6+ | Cypress Semiconductor Corporation 2006 Key Employee Bonus Plan (KEBP) Summary. | 10-Q | 7/3/2016 | |||||
10.7 + | Cypress Semiconductor Corporation Performance Profit Sharing Plan (PPSP) Summary. | 10-K | 1/1/2006 | |||||
10.8 | Memorandum of Agreement between GNPower Ltd. Co. and Cypress Manufacturing Ltd. | 10-Q | 10/1/2006 | |||||
10.9 | Guaranty dated December 12, 2006 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-K | 12/31/2006 | |||||
10.10 | Lease Agreement dated as of June 27, 2003 between Wachovia Development Corporation and Cypress Semiconductor Corporation. | 10-Q | 6/29/2003 | |||||
10.11 | Memorandum of Agreement between GNPower Ltd. Co. and Cypress Manufacturing Ltd. | 10-Q | 10/1/2006 | |||||
10.12 | Guaranty dated December 12, 2006 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-K | 12/31/2006 | |||||
10.13 | Guaranty dated February 1, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-K | 12/31/2006 | |||||
10.14 | Guaranty dated March 19, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-Q | 4/1/2007 | |||||
10.15 | Guaranty dated May 15, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-Q | 7/1/2007 | |||||
10.16 | Guaranty dated June 15, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-Q | 7/1/2007 | |||||
10.17 | Guaranty dated December 15, 2007 by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-K | 12/30/2007 | |||||
10.18 | Guaranty, dated March 24, 2008, by and between Grace Semiconductor USA, Inc., CIT Technologies Corporation and Cypress Semiconductor Corporation. | 10-Q | 3/30/2008 | |||||
10.19 | Asset Purchase Agreement by and between Broadcom Corporation as Seller and Cypress Semiconductor Corporation as Buyer dated as of April 28, 2016. | 10-Q | 4/3/2016 | |||||
10.20 | Project Le Cose Commitment Letter dated as of April 28, 2016 | 10-Q | 4/3/2016 | |||||
10.21 | Purchase Agreement by and among Merrill Lynch, Pierce, Fenner & Smith Incorporated and Cypress Semiconductor Corporation dated as of June 20, 2016. | 10-Q | 7/3/2016 | |||||
10.22 | Joinder and Amendment Agreement, dated as of July 5, 2016, by and among Cypress Semiconductor Corporation, the guarantors party thereto, the incremental term loan lenders party thereto, and Morgan Stanley Senior Funding, Inc., as administrative agent and as collateral agent. | 8-K | 7/5/2016 | |||||
10.23+ | Form of Restricted Stock Unit Agreement under the Cypress Semiconductor Corporation 2013 Stock Plan. | 10-Q | 9/27/2015 | |||||
10.24+ | Amended Form of Restricted Stock Unit and Performance Stock Unit Grant Agreement under the 2015 PARS Grant program. | 10-Q | 6/28/2015 | |||||
10.25+ | 2012 Incentive Award Plan, as amended and restated. | S-8 | 12/12/2012 | |||||
10.26+ | Spansion Inc. 2010 Equity Incentive Award Plan | S-8(1) | 5/10/2010 | |||||
10.27+ | Amendment to Spansion Inc. 2010 Equity Incentive Award Plan | 8-K(1) | 5/14/2010 | |||||
10.28+ | 1999 Non-Statutory Stock Option Plan, as amended and restated. | S-8 | 10/24/2008 | |||||
10.29+ | Amended and Restated Cypress Semiconductor Corporation 2013 Stock Plan. | 10-Q | 9/27/2015 | |||||
10.30+ | Employee Qualified Stock Purchase Plan, as amended and restated. | 10-K | 3/2/2016 | |||||
10.31+ | 2016 Cypress Incentive Plan. | 8-K | 2/25/2016 | |||||
10.32 | Form of Cypress Support Agreement. | 8-K | 12/1/2014 | |||||
10.33 | Form of Spansion Support Agreement. | 8-K | 12/1/2014 | |||||
10.34+ | Thad Trent Employment Agreement. | 10-K | 2/17/2015 | |||||
10.35+ | J. Daniel McCranie Employment Agreement. | 10-K | 2/17/2015 | |||||
10.36+ | Separation Agreement with J. Daniel McCranie. | 10-Q | 3/29/2015 | |||||
10.37+ | Employment Agreement and Release between Cypress Semiconductor Corporation and T.J. Rodgers dated June 3, 2016. | 10-Q | 7/3/2016 | |||||
10.38+ | Employment Offer Letter, by and between Cypress Semiconductor Corporation and H. Raymond Bingham, dated August 10, 2016. | 8-K | 8/12/2016 | |||||
10.39+ | Employment Offer Letter, by and between Cypress Semiconductor Corporation and Hassane El-Khoury, dated August 10, 2016. | 8-K | 8/12/2016 | |||||
10.40+ | Employment Agreement, by and between Cypress Semiconductor Corporation and H. Raymond Bingham, dated November 7, 2016. | X | ||||||
10.41+ | Employment Agreement, by and between Cypress Semiconductor Corporation and Hassane El-Khoury, dated November 30, 2016. | X | ||||||
10.42+ | 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 | |||||
10.43+ | 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 | |||||
10.44 | Joinder Agreement dated as of December 22, 2015. | 8-K | 1/11/2016 | |||||
10.45 | Incremental Revolving Joinder Agreement dated as of January 6, 2016. | 8-K | 1/11/2016 | |||||
10.46 | Amendment No. 2 to Amended and Restated Credit and Guaranty Agreement dated March 23, 2016. | 10-Q | 4/3/2016 | |||||
10.47 | Amendment No. 3 to Amended and Restated Credit and Guaranty Agreement dated April 27, 2016. | 10-Q | 4/3/2016 | |||||
10.48 | Lease Agreement dated as of June 27, 2003 between Wachovia Development Corporation and Cypress Semiconductor Corporation. | 10-Q | 6/29/2003 | |||||
10.49 | Lease Agreement between Spansion Inc. and Hines VAP No. Cal. Properties, LP, effective May 20, 2014. | 10-Q(1) | 5/20/2014 | |||||
10.50++ | 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 | ||||||
24.1 | Power of Attorney (incorporated by reference 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. | X | ||||||
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. | X | ||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase 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. |
Name | Jurisdiction of Incorporation or Formation | |
Spansion International IP, Inc. | Cayman Islands | |
Spansion LLC | Delaware |
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, 2017 | By: | /s/ HASSANE EL-KHOURY | |
HASSANE EL-KHOURY | |||
President and Chief Executive Officer |
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, 2017 | By: | / S / THAD TRENT | |
Thad Trent | |||
Executive Vice President, Finance and Administration and Chief Financial Officer |
Dated: | March 1, 2017 | By: | /s/ HASSANE EL-KHOURY |
HASSANE EL-KHOURY | |||
President and Chief Executive Officer |
Date: March 1, 2017 | By: | / S / THAD TRENT | |
Thad Trent | |||
Executive Vice President, Finance and Administration and Chief Financial Officer |
Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Feb. 23, 2017 |
Jul. 03, 2016 |
|
Document Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Jan. 01, 2017 | ||
Document Fiscal Year Focus | 2016 | ||
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 | --01-01 | ||
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 | 327,893,924 | ||
Entity Public Float | $ 3.4 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 650,000,000 | 650,000,000 |
Common stock, shares issued | 497,055,000 | 481,912,000 |
Common stock, shares outstanding | 323,583,000 | 332,276,000 |
Common stock held in treasury, shares | 173,472,000 | 149,636,000 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) |
12 Months Ended |
---|---|
Jan. 03, 2016 | |
Spansion Inc | |
Senior exchangeable notes, Interest rate (percent) | 2.00% |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
---|---|---|---|
4.50% Senior Convertible Notes | |||
Interest rate (percent) | 4.50% | 4.50% | 4.50% |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 01, 2017 | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Abstract] | |||||||||||
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Cypress manufactures advanced embedded system solutions for automotive, industrial, home automation and appliances, consumer electronics and medical products. Cypress' programmable systems-on-chip, general-purpose microcontrollers, analog ICs, wireless and USB-C based connectivity solutions and memories help engineers design differentiated products. Cypress is committed to providing customers with support and engineering resources enabling innovators and out-of-the-box thinkers to disrupt markets and create new product categories in record time. The Company’s operations outside of the United States include its assembly and test plants in Thailand 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 (“Spansion 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. Consequently, the financial condition and results of operations includes the financial results of legacy Spansion beginning March 12, 2015. The comparability of our results for the year ended January 1, 2017 to the same periods in fiscal 2015 is impacted by the Spansion Merger. On July 5, 2016, the Company completed its acquisition of certain assets primarily related to the Internet of Things business of Broadcom Corporation (“IoT business”) pursuant to an Asset Purchase Agreement with Broadcom ("Broadcom"), dated April 28, 2016, for a total consideration of approximately $550 million. Effective as of July 29, 2016, the Company has changed the method of accounting for its investment in Deca Technologies Inc. (“Deca”) from consolidation to the equity method of accounting as a result of the investment by certain third party investors in Deca. The comparability of results for fiscal 2016 compared to prior year periods presented is impacted by this change. See Note 6 of the Notes to the Consolidated Financial Statements. Pursuant to reorganization and internal reporting structure effective fourth quarter, the Company operates under two reportable business segments: Memory Products Division ("MPD") and MCD. Prior to the fourth quarter of fiscal 2016, the Company reported under four reportable business segments: MPD, Programmable Systems Division ("PSD"), Data Communications Division ("DCD") and Emerging Technologies Division ("ETD"). The prior reportable segments of PSD and DCD have been combined and are referred to as MCD. Deca, previously included in ETD, and now accounted for as an equity method investment, has been reflected in MCD for historical results. The MPD segment comprises of substantial portion of the previous MPD segment, as well as certain portions of the previous PSD. Agiga, previously included in ETD has been combined with MPD. The prior periods herein reflect this change in segment information. 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 2016 ended on January 1, 2017, Fiscal 2015 ended on January 3, 2016 and Fiscal 2014 ended on December 28, 2014. Fiscal years 2016 and 2014 each contained 52 weeks. Fiscal 2015 contained 53 weeks. 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 inter-company transactions and balances have been eliminated in consolidation. Certain balances included on the Consolidated Balance Sheet and in the Consolidated Statement of Cash Flows for prior periods have been reclassified to conform to the current period presentation. 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 7 of the Notes to the Consolidated Financial Statements 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)” on 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. The Company’s equity method investments are included in “Equity Method Investments” on 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. 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:
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 analysis. Net income (loss) per Share Basic net income (loss) per share is calculated by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt, using the treasury stock method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. Convertible debt In accounting for each series of Senior Exchangeable Notes at issuance, the Company separated the Convertible Notes into debt and equity components according to accounting standards codification ("ASC") 470-20 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 non-convertible 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 effective interest method. In accounting for the transaction costs incurred relating to issuance of the Notes, the Company allocated the costs of the offering in proportion to the fair value of the debt and equity recognized in accordance with the accounting standards. The transaction costs allocated to the debt are being amortized as interest expense over the term of the Notes. In accounting for the cost of the capped call transaction entered in connection with the issuance of the Senior Exchangeable Notes, the Company included the cost as a net reduction to additional paid-in capital in the stockholders’ equity section of the consolidated balance sheet, in accordance with the guidance in ASC 815-40 Derivatives and Hedging-Contracts in Entity’s Own Equity. See Note 14 of the Notes to the Consolidated Financial Statements for more information. Assets Held for Sale The Company considers properties to be assets held for sale when management approves and commits to a plan to actively market a property or group of properties for sale. Assets held for sale are recorded initially at the lower of its carrying value or its estimated fair value, less estimated costs to sell. Upon designation as an asset held for sale, the Company stops recording depreciation expense on such asset. Costs to sell a disposal group include incremental direct costs to transact the sale and represent the costs that result directly from and are essential to a sale transaction that would not have been incurred by the entity had the decision to sell not been made. The properties that are held for sale prior to the sale date are classified as held for sale and would be presented separately in the appropriate asset and liability sections of the balance sheet. See Note 5 of the Notes to the Consolidated Financial Statements for more information. 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 2011-8, Testing Goodwill for Impairment, qualitative factors may 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. See Note 3 of the Notes to the Consolidated Financial Statements for more information. 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 of the Notes to the Consolidated Financial Statements for more information. Acquisition related In-process Research and Development Acquisition-related in-process research and development represents the fair value of incomplete research and development projects that have not reached technological feasibility as of the date of acquisition. Initially, these assets are not subject to amortization. The incomplete projects are reviewed each quarter for impairment related to cancellation, change in business plans as well as completion. Assets related to projects that have been completed are transferred to developed technology, which are subject to amortization. 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 had 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 processes around its distribution channel to improve the quality of the information it receives from its distributors. Given these ongoing investments, and based on the financial framework we use for estimating potential price adjustments, in the fourth quarter of 2014 the Company began recognizing revenue on certain product families and with certain distributors (less its estimate of future price adjustments and returns) upon shipment to the distributors (also referred to as the sell-in basis of revenue recognition). As a result of this change, the Company recognized 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 $0.08 per basic and diluted shares. During fiscal 2016, the Company recognized $59.2 million of incremental revenue from this change in revenue recognition, which resulted in a reduction of the Company’s net loss of $19.5 million for fiscal 2016, or $0.06 per basic and diluted share. As at the end of fiscal 2016, 100% of the distribution revenue has been converted to sell-in basis of revenue recognition. The Company records as a reduction to revenues reserves for sales returns, price protection, stock rotation, 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. Employee Benefit Plans 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 18 of Notes to the Consolidated Financial Statements 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 of Notes to the Consolidated Financial Statements 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 $3.1 million, $5.0 million and $3.7 million for fiscal years 2016, 2015 and 2014, 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 2016, 2015 and 2014 were $(4.3) million, $0.7 million and $1.4 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 of the Notes to the Consolidated Financial Statements. 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 one of the Company’s distributors, accounted for 24%, of the consolidated accounts receivable as of January 1, 2017. Outstanding accounts receivable from two of the Company's distributors, accounted for 42% and 11% of the Company's consolidated accounts receivable as of January 3, 2016. Revenue generated through two of the Company’s distributors accounted for 25% and 10%, of the consolidated revenues for fiscal 2015 . Revenue generated through three of the Company’s distributors, accounted for 13%, 10% and 10% respectively, of the consolidated revenues for fiscal 2014. 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 The following are the accounting pronouncements issued but not adopted that may materially affect the Company’s consolidated financial statements: 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 standard permits the use of either the retrospective or cumulative effect transition method. 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, compensation, information technology systems and other financial reporting and operational elements. The Company does not plan to early adopt this guidance and has not presently selected a transition method. While we are continuing to assess all potential impacts, we believe the most significant impact of this new guidance on the Company will relate to timing of recognition of revenue from intellectual property and non-recurring engineering arrangements. Because at the end of fiscal 2016, the Company has transitioned all revenue from distributors from sell-through to the sell-in basis of accounting, it does not expect the new guidance to materially impact the timing of recognition of future revenue from distributors. While we are continuing to assess all potential impacts, given our distributor revenues are now recognized at the time of shipment, we believe the most material impact of this new guidance on the Company will relate to timing of recognition of revenue from intellectual property and non-recurring engineering arrangements. 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 it's consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies several aspects of the accounting for share-based payments transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements In October 2016, the FASB issued ASU 2016-16, “Intra- Entity Transfers of Assets Other Than Inventory”. For public entities, ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, “Consolidation: Interest held through Related Parties that Are under Common Control". For public entities ASU 2016-17 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017- 04, "Intangibles, Goodwill & Other- Simplifying the test for goodwill impairment". The guidance simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. The Company is currently assessing the impact of this new guidance. Recently Adopted Accounting Pronouncements In August 2014, the Financial Accounting Standards Board issued ASU 2014-15, Presentation of Financial Statements, Going Concern. The ASU provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for fiscal years ending after December 15, 2016 and for interim periods there after. The Company adopted ASU 2015-16 standard for the fiscal year ended January 1, 2017. |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MERGERS AND ACQUISITIONS | MERGERS AND ACQUISITIONS Acquisition of IoT Business from Broadcom On July 5, 2016, the Company completed its acquisition of certain assets primarily related to the IoT business of Broadcom Corporation (“Broadcom”) pursuant to an Asset Purchase Agreement, dated April 28, 2016. In connection with the closing of the transaction, the Company paid Broadcom $550 million in cash. The results of business acquired as part of this acquisition is reported in the Company’s Microcontroller and Connectivity Division. The acquisition was accounted for using the purchase method of accounting. During the year ended January 1, 2017 approximately $8.9 million in expense were incurred as acquisition expenses related to the IoT business and were recorded in Selling, general and administrative line item in the Consolidated Statements of Operations. The table below represents the allocation of the purchase price to the net assets acquired based on their estimated fair values:
(a) The Company obtained new information regarding the valuation of intangibles assets as of the acquisition date which led to a net increase in the fair value of total assets of $28.6 million and a corresponding decrease in goodwill. The purchase price has been allocated based on the estimated net tangible and intangible assets of the IoT business that existed on the date of the acquisition. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the acquisition. Identifiable intangible assets The table below shows the valuation of the intangible assets acquired from Broadcom along with their estimated useful lives:
In-process research and development ("IPR&D") consists of 6 projects. These projects are expected to be completed during fiscal 2017. The estimated remaining costs to complete the IPR&D projects were approximately $8.9 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 which are expected to be approximately 4 years. Goodwill The excess of the fair value of the purchase 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. Goodwill was initially allocated to the Company’s previous data communications division and was reallocated to the new Microcontroller and Connectivity Division during the fourth quarter of 2016. The goodwill resulting from the acquisition is expected to be deductible for tax purposes. Spansion Merger 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. The total purchase consideration of approximately $2.8 billion consists of the following:
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 was $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:
(1) Includes the fair value of the debt and equity components of Spansion's Exchangeable 2.00% Senior Notes assumed by the Company. The table below shows the valuation of the intangible assets acquired from Spansion, along with their estimated useful lives:.
The purchase price was 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. 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. 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. In-process research and development ("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. IPR&D consisted of 21 projects, primarily relating to the development of process technologies to manufacture NOR, NAND, Analog, and MCU products. 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 1, 2017, 15 out of 21 projects originally identified, representing $92.1 million of the total capitalized IPR&D of $212.3 million, had reached technological feasibility and were transferred to developed technology. Remaining IPR&D projects are expected to be completed in fiscal 2017. During fiscal 2016, the Company recognized a $33.9 million impairment charge related to two IPR&D projects that were cancelled due to changes in the Company’s product portfolio strategy. The impairment charges are included in the “Impairment of acquisition-related intangible assets” line in the Consolidated Statements of Operations. 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 financial data for the years ended January 3, 2016 and January 1, 2017 assume that the acquisitions of the IoT business and Spansion Merger had occurred at the beginning of fiscal year 2015. 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, amortization of the step up to fair value of acquired inventory, acquisition related expenses and tax 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 acquisition actually occurred at the beginning of fiscal year 2015 or of the results of future operations of the combined businesses. Consequently, actual results will differ from the unaudited pro forma information presented below.
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GOODWILL |
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GOODWILL | GOODWILL Changes in carrying value of goodwill During fiscal years 2014, 2015 and through the first three quarters of fiscal 2016, the Company had four reporting units - Memory Products Division (“MPD”), Programmable Solutions Divison (“PSD”), Data Communications Division (“DCD”) and Emerging Technologies Division (“ETD”), of which MPD, PSD and DCD carried goodwill. During the second quarter of fiscal 2016, the Company concluded that a combination of factors, including (a) decreases in its forecasted operating results when compared with the expectations of the PSD reporting unit at the time of the Spansion Merger, primarily in consumer markets as the Company has subsequently increased its focus on the automotive and industrial end markets, (b) evaluation of business priorities due to recent changes in management, and (c) certain market conditions necessitated a quantitative impairment analysis for the carrying value of the Goodwill related to PSD which resulted in an impairment charge of $488.5 million. As a result of the IoT business acquisition during the third quarter of fiscal 2016, the DCD reporting unit recorded $189.1 million in goodwill. As a result of a reorganization in the operations of the Company, effective in the beginning of the fourth quarter of fiscal 2016, the Company has two reporting units MPD and Microcontroller & Connectivity Division (“MCD”). Upon the change of the reporting units, the carrying value of goodwill was reallocated to the new MPD and MCD reporting units based on relative fair values of the respective reporting units. Immediately prior to and following the reallocation, an analysis to assess the recoverability of the carrying value of goodwill was carried out which did not indicate any impairment. The changes in the carrying amount of goodwill by reportable segment for the year ended January 1, 2017 were as follows:
(1) The Company had previously recorded an impairment charge of $351.3 million in the fourth quarter of fiscal 2008. Impairment related to the legacy PSD recorded in second quarter of fiscal 2016 As the first step of the quantitative test (“Step 1”) in the goodwill impairment test related to the legacy PSD reporting unit, the Company estimated the fair value of the net assets, including goodwill related to legacy PSD through a combination of a market approach and an income approach. This combination was deemed to be the best indication of the reporting unit’s estimated fair value in an orderly transaction between market participants and is consistent with the methodology of the Company used for the goodwill impairment tests in prior years. The Company applied a weighting of 75% to the income approach and 25% to the market approach. Under the market approach, the Company utilized publicly-traded comparable company information to determine revenue and earnings multiples that are used to value the reporting units. Under the income approach, the Company determined fair value based on estimated future cash flows of the reporting unit discounted by an estimated weighted-average cost of capital, reflecting the overall level of inherent risk of the reporting unit and the rate of return an outside investor would expect to earn. The Company based cash flow projections for legacy PSD on a forecast of cash flows and a terminal value based on perpetuity growth model for the industry. The forecast and related assumptions were derived from a five-year outlook which included adjustments arising from the changes in strategic decisions as previously discussed. Based on the Step 1 analysis, the Company concluded that the carrying value of legacy PSD’s net assets exceeded their estimated fair value as of June 1, 2016, the date of the analysis. Prior to completing the goodwill impairment test, the Company tested the recoverability of the long lived assets related to the legacy PSD, other than goodwill, and no impairment was noted based on this assessment. Given the difference between the carrying and estimated fair value of the net assets as noted in Step 1, the Company performed the second step of the quantitative test (“Step 2”) by comparing the carrying value of the goodwill related to legacy PSD to its implied fair value. The implied fair value of goodwill was calculated by allocating all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculated the implied fair value of goodwill in the same manner as if the legacy PSD reporting unit was being acquired in a business combination. An impairment charge of $488.5 million was recognized for the excess of the carrying value of goodwill over its implied fair value. Annual impairment assessment Goodwill is subject to an annual impairment test during the Company’s fourth quarter of each fiscal year, or earlier if indicators of potential impairment exist, using either a qualitative or a quantitative assessment. Our impairment review process compares the fair value of the reporting unit in which the goodwill resides to its carrying value. During the fourth quarter of fiscal 2016, immediately prior to and immediately after the reallocation of goodwill to the new reporting units, the Company performed a quantitative assessment to test goodwill for impairment. 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 this goodwill impairment tests, the Company estimated that the fair value of equity of all reporting units exceeded their carrying value immediately prior to and immediately after the reorganization. As such, no impairment of in the carrying value of goodwill was identified during the fourth quarter of fiscal 2016. In fiscal 2015, the Company had elected to perform a quantitative goodwill impairment test for each of its reporting units based on which no goodwill impairment was identified in fiscal 2015. In fiscal 2014, the Company had elected to perform a qualitative analysis for impairment on goodwill based on which no goodwill impairment was identified in fiscal 2014. The next annual evaluation of the goodwill by reporting unit will be performed during the fourth quarter of fiscal year 2017, 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. |
INTANGIBLE ASSETS |
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INTANGIBLE ASSETS | INTANGIBLE ASSETS The following tables present details of the Company’s total intangible assets:
The below table presents details of the IPR&D assets as of January 1, 2017:
During fiscal 2016, the Company recognized a $33.9 million impairment charge related to two IPR&D projects that were cancelled due to changes in the Company’s product portfolio strategy. The impairment charges are included in the “Impairment of acquisition-related intangible assets” line in the Consolidated Statements of Operations. As of January 1, 2017, the estimated future amortization expense of intangible assets including IPR&D was as follows:
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ASSETS HELD FOR SALE |
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Discontinued Operations and Disposal Groups [Abstract] | |
ASSETS HELD FOR SALE | ASSETS HELD FOR SALE In the third quarter of fiscal 2016, the Company committed to a plan to sell its wafer manufacturing facility located in Bloomington, Minnesota, as well as a building in Austin, Texas. The carrying value of these assets held for sale as of January 1, 2017 reflects the lower of carrying value or fair value, net of estimated costs to sell the assets. The Company performed an analysis and estimated the fair value of the assets, less estimated selling costs, and determined the fair value was lower than the carrying value of the assets. As a result, based on this analysis the Company recorded an impairment charge of $37.2 million during fiscal 2016 to write these assets down to their estimated fair value, less selling costs. On March 1, 2017, the Company completed the sale of its wafer fabrication facility in Minnesota. See Note 22 of the Notes to the Consolidated Financial Statements. The sale of building in Austin, Texas, is expected to be completed in fiscal 2017. |
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INVESTMENTS IN EQUITY METHOD INVESTMENTS | INVESTMENT IN EQUITY METHOD INVESTMENTS 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 such companies. The Company’s total investments in equity securities accounted for under the equity method of accounting are $188.7 million and $41.3 million as of January 1, 2017 and January 3, 2016, 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. Deca Technologies Inc. On July 29, 2016, Deca Technologies Inc. ("Deca"), a majority owned subsidiary of the Company entered into a share purchase agreement (the "Purchase Agreement"), whereby certain third-party investors purchased 41.1% of the shares outstanding at the said date for an aggregate consideration of approximately $111.4 million. Concurrently, Deca repurchased certain of its preferred shares from Cypress. After giving effect to the above transactions, the Company's ownership in Deca was reduced to 52.2% as of July 29, 2016. As a consequence of the substantive rights afforded to third party new investors in the Purchase Agreement, including, among other things, participation on the Board of Directors of Deca, the approval of operating plans, approval of indebtedness, the Company determined that it no longer has the power to direct the activities of Deca that most significantly impact Deca's economic performance. However, since the Company continues to have significant influence over Deca's financial and operating policies, effective July 29, 2016, the investment in Deca is being accounted for as an equity method investment and is no longer a consolidated subsidiary. The carrying value of this equity method investment as of July 29, 2016 was determined based on the fair value of the equity in Deca, which was estimated to be $142.5 million. This represents the Company's remaining investment in Deca immediately following the investments by the third-party investors. As a result of the change in the method of accounting for the Company's investment in Deca from consolidation to the equity method of accounting, the net carrying value of the assets and liabilities related to Deca, and the adjustments related to the recognition of the initial fair value of the equity method investment resulted in a gain of $112.8 million which has been reflected as "Gain related to investment in Deca Technologies Inc." in the Consolidated Statements of Operations and was calculated as follows:
The Company held 52.5% of Deca's outstanding voting shares as of January 1, 2017 and the carrying value of the investments was $134.3 million on the Company's Consolidated Balance Sheet as of January 1, 2017. The Company recorded $8.2 million in share in net loss of equity method investee relating to Deca for the period from July 29, 2016 to January 1, 2017. Enovix Corporation During fiscal 2016, the Company invested an additional $23.0 million in Enovix Corporation (“Enovix”), which increased the Company’s cumulative total investment to $79.5 million as of January 1, 2017. The carrying value of the investment in Enovix was $54.4 million and $41.3 million as of January 1, 2017 and January 3, 2016 respectively. The Company recorded $9.4 million and $7.1 million in share of net loss of equity method relating to Enovix for the year ended January 1, 2017 and January 3, 2016 respectively. The Company held 46.6% and 38.7% of this investee’s voting shares as of January 1, 2017 and January 3, 2016 respectively. |
FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS | 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 1, 2017 and January 3, 2016:
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:
The Company determines the basis of the cost of a security sold or the amount reclassified out of accumulated other comprehensive income (loss) 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 2016 and 2015. There were no unrealized gains or losses on available-for-sale securities as of 2016 or 2015. Realized gains and realized losses from sales of available-for-sale in fiscal 2016, 2015 and 2014 were not material. As of January 1, 2017, the contractual maturities of the Company’s available-for-sale investments and certificates of deposit were less than a year. 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 1, 2017, the carrying value of the Company’s senior secured revolving line of credit was $332.0 million (See Note 14). The carrying value of the Company's Credit Facility approximates its fair value since it bears an interest rate that is comparable to rates on similar credit facilities and is determined using Level 2 inputs. The Company's 2.00% 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 1, 2017 is $135.4 million and $326.0 million respectively. See Note 14 of the Notes to the Consolidated Financial Statements for further details. The Company’s 4.50% Senior Convertible Notes are traded in the secondary market and its fair value is determined using Level 2 inputs. The carrying value and the estimated fair value of the debt portion of the said Notes as of January 1, 2017, were $236.5 million and $324.0 million, respectively. See Note 14 of the Notes to the Consolidated Financial Statements for further details. |
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BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Accounts Receivable, net
Inventories
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Property, Plant and Equipment, Net
Other Long-term Assets
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Other Long-Term Liabilities
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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION | EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION The 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 1.5 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 Nonstatutory Stock 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 1, 2017, 19.3 million options or 10.2 million RSUs and RSAs were available for grant 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 1, 2017, 4.9 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 1, 2017, 14.6 thousand shares of stock options or 9.6 thousand 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 Company’s Employee Stock Purchase Plan (“ESPP Plan”) to May 10, 2023. The Company’s amended and restated ESPP allows eligible employees to purchase shares of our common stock through payroll deductions. The ESPP contains consecutive 18 months offering periods composed of three six months 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 1, 2017 2.6 million shares were available for future issuance under the ESPP. Stock-Based Compensation The following table summarizes stock-based compensation expense by line item in the Consolidated Statement of Operations:
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. Aggregate cash proceeds from the issuance of shares under the employee stock plans were $43.9 million, $52.9 million and $32.0 million for fiscal 2016, fiscal 2015 and 2014, respectively. No income tax benefit was realized from stock option exercises for fiscal 2016, 2015 and 2014. As of January 1, 2017 and January 3, 2016 stock-based compensation capitalized in inventories totaled $4.6 million and $4.3 million, respectively. The following table summarizes stock-based compensation expense by type of awards:
The following table summarizes the unrecognized stock-based compensation balance, net of estimated forfeitures, by type of awards as of January 1, 2017:
During the second quarter of fiscal 2016, the Company, as part of the severance agreement executed with Dr. T.J. Rodgers, accelerated the vesting of the PSU’s previously granted and modified the vesting conditions such that 100% of such awards effective date of his termination which was April 28, 2016. During the third quarter of fiscal 2016, as part of the severance agreements executed with two other executives, the Company accelerated vesting of options, RSU's and PSU's previously granted and modified the vesting conditions. Included in the stock-based compensation expense for the year ended January 1, 2017 is an amount of $4.3 million related to the impact of the said modifications. 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:
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 on its common stock 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 1, 2017, 24.1 million stock options, or 15.1 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:
The weighted-average grant-date fair value was $2.22 per share for options granted in fiscal 2014. The Company did not grant any new stock options during fiscal 2015 and fiscal 2016. The aggregate intrinsic value of the options outstanding and options exercisable as of January 1, 2017 was $12.9 and $12.5 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 1, 2017 and does not include substantial tax payments. The aggregate intrinsic value of the options outstanding and options exercisable as of January 3, 2016 was $48.1 million 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 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 $46.0 million in fiscal 2016, $41.8 million in fiscal 2015 and $26.4 million in fiscal 2014. The aggregate grant date fair value of the options which vested in fiscal 2016, 2015, and 2014 was $3.5 million, $5.6 million and $6.9 million, respectively. The following table summarizes information about options outstanding and exercisable as of January 1, 2017:
The total number of exercisable in-the-money options was 4.1 million shares as of January 1, 2017. 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:
Of the total awards granted in 2016, 1.2 million awards were performance-based units granted for the performance-based restricted stock program (PARS) for 2016, 0.9 million awards were service-based units granted under the 2016 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 0.1 million awards were granted to individuals subject to the achievement of specific milestones. Of the total awards granted and assumed in 2015, 3.3 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 0.2 million awards were granted to individuals subject to the achievement of specific milestones. Of the total awards released in 2016, 0.2 million and 72 thousand shares awards were released for the performance-based units and service-based units, respectively granted under the 2016 PARS program, 1.9 million and 0.6 million awards were released for the performance-based units and service-based units, respectively granted under the 2015 PARS program, 0.1 million awards were released for the service-based units granted under the 2014 PARS program and 0.3 million shares were released to individuals who achieved the specific milestones set upon grant. 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 2015 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. A portion of the non-vested balance as of January 1, 2017 included 3.7 million units for the PARS programs. These PARS were issued to certain senior-level employees 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. On April 1, 2016, the Compensation Committee of the Company approved the issuance of 0.9 million awards of performance-based restricted stock units to certain of the Company’s executive officers. Approximately 57% of the 2016 grants are in the form of PSUs which vest based on achievement of two performance milestones: product development and production milestones and Gross Margin goals—over the next two years. Such PSU grants will be capped at target levels if Cypress’s total shareholder return (TSR) is negative, even if the Product Development/Production or Gross Margin performance milestones are achieved at above-target or maximum levels. The remaining 43% of the 2016 grants are in the form of RSUs which cliff vest based on continued service over two years. The milestones for the 2016 PARS Program, as approved by the Compensation Committee included service condition and performance conditions linked to the Company's total shareholder return (TSR) relative to its peers, achievement of Spansion merger synergies, achievement of non-GAAP earnings per share and margin and certain product development milestones. 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: The milestones for the 2015 PARS Program, as approved by the Compensation Committee included service condition and performance conditions related to the Company's TSR relative to its peers, achievement of Spansion merger synergies and achievement of non-GAAP earnings per share. The three milestones for the 2014 PARS Program, as approved by the Compensation Committee, included service condition, performance condition related to the achievement of a specific revenue amount, and achievement of annual goals or CSFs of our Chief Executive Officer. ESPP: During fiscal 2016, 2015 and 2014, the Company issued 1.2 million, 2.6 million and 1.5 million shares under its ESPP with weighted-average price of $8.34, $8.69 and $8.93 per share, respectively. |
RESTRUCTURING |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING | RESTRUCTURING 2016 Restructuring Plan In September 2016, the Company began implementation of a reduction in workforce ("2016 Plan") which is expected to result in elimination of approximately 430 positions worldwide across various functions. The personnel costs related to the 2016 plan during fiscal 2016 were $26.3 million. The Company expects that the cash costs incurred under the 2016 plan will be paid out through fiscal 2017. 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 planned 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. During fiscal 2016, a release of previously estimated personnel related liability of $0.1 million was recorded. The following table summarizes the restructuring charges recorded in Consolidated Statements of Operations:
Roll-forward of the restructuring reserves Restructuring activity under the Company's various restructuring plan was as follows:
The provision for restructuring expense at the end of January 3, 2016 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 second quarter of fiscal 2017 for employee terminations and over the remaining lease term through 2026 for the excess lease obligation related to the buildings Spansion had leased prior to the Merger, which the Company decided not to occupy in the post-Merger period. |
FOREIGN CURRENCY DERIVATIVES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FOREIGN CURRENCY DERIVATIVES | 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 1, 2017, the Company had outstanding forward contracts to buy ¥7,108.0 million for $69.3 million. Non-designated hedges Total notional amounts of outstanding contracts were as summarized below. The duration or each contract is approximately thirty days:
The gross fair values of derivative instruments on the Consolidated Balance Sheets as of January 1, 2017 and January 3, 2016 were as follows:
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of Accumulated other comprehensive loss were as follows:
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OTHER INCOME (EXPENSE), NET |
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OTHER INCOME (EXPENSE), NET | OTHER INCOME (EXPENSE), NET The following table summarizes the components of “other income (expense), net,” recorded in the Consolidated Statements of Operations:
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DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Debt is comprised of the following:
4.50% Senior Exchangeable Notes On June 23, 2016, the Company, issued at face value, $287.5 million of Senior Exchangeable Notes due in 2022 (the “Notes”) in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. The Notes are governed by an Indenture (“Indenture”), dated June 23, 2016, between the Company and U.S. Bank National Association, as Trustee. The Notes will mature on January 15, 2022, unless earlier repurchased or converted, and bear interest of 4.50% per year payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2017. The Notes may be due and payable immediately in certain events of default. The Notes are exchangeable for an initial exchange rate of 74.1372 shares of common stock per $1,000 principal amount of the Notes (equivalent to an initial exchange price of approximately $13.49 per share) subject to adjustments for 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. Prior to October 15, 2021, the Notes will be exchangeable under certain specified circumstances as described in the Indenture. On or after October 15, 2021, until the close of business on the second scheduled trading day immediately preceding the maturity date, the Notes will be convertible in multiples of $1,000 principal amount regardless of the foregoing circumstances. Upon conversion, the Company may pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. If the Company satisfies its conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of its common stock, the amount of cash and shares of common stock, if any, due upon conversion will be based on a pre-defined conversion value. It is the Company’s intent that upon conversion, the Company would pay the holders of the Notes cash for an amount up to the aggregate principal the Notes. If the conversion value exceeds the principal amount, the Company intends to deliver shares of its common stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (“conversion spread”). Accordingly, for the purposes of calculating diluted earnings per share, there would be no adjustment to the numerator in the net income per common share computation for the cash settled portion of the Notes, as that portion of the debt liability is expected to be settled in cash. The conversion spread will be included in the denominator for the computation of diluted net income per common share, using the treasury stock method. In accordance with ASC 470-20, Debt with Conversion and Other Options, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated convertible feature. Such amount was based on the contractual cash flows discounted at an appropriate market rate for non-convertible debt at the date of issuance, which was determined to be 82.9% of the par value of the Notes or $238.3 million. The carrying amount of the equity component of $49.2 million representing the conversion option was determined by deducting the fair value of the liability component from the face value of the Convertible Notes as a whole. The excess of the principal amount of the liability component over its carrying amount ("debt discount") is accreted to interest expense over the term of the Notes using the effective interest method. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The Company incurred transaction costs of approximately $8.6 million relating to the issuance of the Notes. The transaction costs of $8.6 million include $7.9 million of financing fees paid to the initial purchasers of the Notes, and other estimated offering expenses payable by the Company. In accounting for these costs, the Company allocated the costs of the offering in proportion to the fair value of the debt and equity recognized in accordance with the accounting standards. The transaction costs allocated to the debt component of approximately $7.2 million and are being amortized as interest expense over the term of the Notes using the effective yield method. The transaction costs allocated to the equity component of approximately $1.5 million were recorded as a reduction of additional paid-in capital. At the debt issuance date, the Convertible Notes, net of issuance costs, consisted of the following (in thousands):
The following table includes total interest expense related to the Notes recognized during the year ended January 1, 2017 (in thousands):
The net liability component of the Notes as of January 1, 2017 is comprised of the following (in thousands):
Capped Calls, 4.50% Senior Exchangeable Notes In connection with the issuance of the Notes, the Company entered into capped call transactions with certain bank counterparties to reduce the risk of potential dilution of the Company’s common stock upon the exchange of the Notes. The capped call transactions have a strike price of approximately $13.49 and a cap price of approximately $15.27, and are exercisable when and if the Notes are converted. If upon conversion of the Notes, the price of the Company’s common stock is above the strike price of the capped calls, the counterparties will deliver shares of the Company’s common stock and/or cash with an aggregate value approximately equal to the difference between the price of the Company’s common stock at the conversion date (as defined, with a maximum price for purposes of this calculation equal to the cap price) and the strike price, multiplied by the number of shares of the Company’s common stock related to the capped call transactions being exercised. The capped calls expire in January 2022. The Company paid $8.2 million for these capped calls which was recorded as a reduction of additional paid-in capital. Senior Secured Revolving Credit Facility, Term Loan A, Term Loan B On April 27, 2016, the Company amended and restated its existing senior secured revolving credit facility ("Credit Facility") of $540 million. The borrowings under the Credit Facility 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 guaranteed by certain present and future wholly-owned material domestic subsidiaries of the Company (the “Guarantors”) and are secured by a security interest in substantially all assets of the Company and the Guarantors. The financial covenants include the following conditions: 1) maximum total leverage ratio of 4.50x through October 2016, 4.25x until January 1, 2017, 4.00 x until April 2, 2017 and 3.75x thereafter, and 2) minimum fixed charge coverage ratio of 1.00x. The Company incurred financing costs of $2.6 million related to 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 and recorded in “Interest Expense” in the Consolidated Statement of Operations. 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. On July 5, 2016 the Company entered into a Joinder and Amendment Agreement with the guarantors party thereto, the initial incremental term loan lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent . The Joinder Agreement supplements the Company’s existing Amended and Restated Credit and Guaranty Agreement, dated as of March 12, 2015, by and among the Company, the guarantors, the lenders, the Agent, and Morgan Stanley Bank, N.A., as issuing bank and others. The Joinder and Amendment Agreement provides for the incurrence by the Company of an incremental term loan in an aggregate principal amount of $450.0 million (“Term Loan B”). The incurrence of Term Loan B is permitted as an incremental loan under the Credit Agreement and is subject to the terms of the Credit Agreement and to additional terms set forth in the Joinder and Amendment Agreement. Term Loan B will initially bear interest at (i) an adjusted LIBOR rate loan plus an applicable margin of 5.50% or (ii) an adjusted base rate loan plus an applicable margin of 4.50%. Following the delivery of the Compliance Certificate and the financial statements for the period ending the last day of the third Fiscal Quarter of 2016, Term Loan B shall bear interest, at the Company’s option, at (i) an adjusted LIBOR rate plus an applicable margin of either 5.25% or 5.50%, or (ii) an adjusted base plus an applicable margin of either 4.25% or 4.50%, with the applicable margin in each case determined based on the Company’s total net leverage ratio for the trailing twelve month period ended as of the last day of the Company’s most recently ended fiscal quarter. The Company paid an upfront fee to the initial incremental lenders in an amount equal to 1.5% of the aggregate principal amount of the Incremental Term Loan funded. The Company is required to pay a prepayment premium of 1% of the principal amount prepaid if it prepays the Incremental Term Loan in certain circumstances prior to the date that is twelve months after the Closing Date. Term Loan B was fully funded on the Closing Date and matures on July 5, 2021.The Company incurred financing costs of $11.5 million to the lenders of Term Loan B which has been capitalized and recognized as a deduction of the Term Loan B 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 B and recorded in “Interest Expense” in the Consolidated Statement of Operations. As January 1, 2017, $872.0 million aggregate principal amount of loans, including Term Loan A, Term Loan B and letters of credit are outstanding under the Credit Facility. As of January 1, 2017, 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 ("Spansion Notes") on March 12, 2015. The Spansion 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 Spansion 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 Spsansion Notes may be due and payable immediately in certain events of default. As of January 1, 2017, the Spansion Notes are exchangeable for 192.12 shares of common stock per $1,000 principal amount of the Spansion Notes (equivalent to an exchange price of $5.21) 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 Spansion Notes will be exchangeable under certain specified circumstances as described in the Indenture. Upon conversion, the Company may pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of its common stock, at its election. If the Company satisfies its conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of our common stock, the amount of cash and shares of common stock, if any, due upon conversion will be based on a pre-defined conversion value. It is Company’s intent that upon conversion, the Company would pay the holders of the Spansion Notes cash for an amount up to the aggregate principal the Spansion Notes. If the conversion value exceeds the principal amount, the Company intends to deliver shares of its common stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (“conversion spread”). Accordingly, for the purposes of calculation of diluted earnings per share, there would be no adjustment to the numerator in the net income per common share computation for the cash settled portion of the Notes, as that portion of the debt liability is expected to be settled in cash. The conversion spread, will be included in the denominator for the computation of diluted net income per common share, using the treasury stock method. The following table presents the interest expense recognized on the Spansion Notes during the fiscal year ended January 1, 2017 and January 3, 2016:
The net carrying amount of liability component of the Spansion Notes as of January 1, 2017 consists of the following:
Capped Calls, 2.00% Senior Exchangeable Notes In connection with the Spansion 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 Spansion 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. Capital Leases and Equipment Loans In 2011, the Company entered into capital lease agreements which allow it to borrow up to $35.0 million to finance the acquisition of certain manufacturing equipment. Assets purchased under all capital leases are included in “Property, plant and equipment, net” on the Company's Consolidated Balance Sheet. As of January 3, 2016, the gross value and net book value of manufacturing equipment purchased under these capital leases were $20.5 million and $11.9 million, respectively. As of January 1, 2017, the gross value and net book value of manufacturing equipment purchased under these capital leases were $1.8 million and $0.9 million, respectively. During the year ended January 1, 2017, the Company purchased previously leased manufacturing equipment having gross value and net book value of $18.8 million and $9.4 million, respectively. 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 1, 2017 was recorded as part of “Other current liabilities”. At January 1, 2017 and January 3, 2016, 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 balance of $0.1 million outstanding against these loans as of January 1, 2017 is payable within the first three months of fiscal 2017. Future Debt Payments For each of the next five years and beyond, the scheduled maturities of the Company's debt including interest as of January 1, 2017, are as follows:
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EQUITY TRANSACTIONS |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY TRANSACTIONS | EQUITY TRANSACTIONS $450 million Stock Buyback Program: On October 20, 2015, the Company’s Board authorized a $450 million stock buyback program. In connection with the approval of the 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 2016, the Company used $239.2 million to repurchase 29.5 million share at an average price of $8.11. 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 2016. The following table summarizes the activity of the Company’s settled yield enhanced structured agreements during fiscal 2014 and 2015:
. Dividends During fiscal 2016, the Company paid total cash dividends of $141.4 million, consisting of dividends of $0.11 per share of common stock paid in all four quarters of the fiscal year. On November 7, 2016 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 29, 2016. This cash dividend was paid on January 19, 2017 and totaled $35.5 million. 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. |
RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS During the year ended January 1, 2017, the Company purchased from, or sold to, several entities, where one or more executive officers of the Company or members of the Company’s Board of Directors also serves as an executive officer or a board member, including Flextronics, Inc., and Oracle. The following table provides the transactions with these parties for the indicated periods:
As of January 1, 2017 and January 3, 2016, total receivable balances with these parties totaled $2.9 million and $5.0 million, respectively, and total payable balances with these parties totaled $0.2 million and $0.8 million, respectively. The Company's related party includes Deca. The net receivable balance with Deca was immaterial as of January 1, 2017. |
NET INCOME (LOSS) PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed using the weighted-average common shares outstanding during the period. 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:
Anti-Dilutive Securities: The following securities calculated on a weighted average basis were excluded from the computation of diluted Net income (loss) per share as their impact was anti-dilutive:
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EMPLOYEE BENEFIT PLANS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | 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 1, 2017 and January 3, 2016, projected benefit obligations totaled $9.7 million and $8.4 million, respectively, and the fair value of plan assets was $3.2 million and $3.3 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 1, 2017 , the Company has a pension liability of $4.7 million recorded as a part of the accrued compensation and employee benefits on the Consolidated Balance Sheet and restricted cash of $4.2 million on the Consolidated Balance Sheet. 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 and 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 1, 2017. This status is not indicative of the Company’s ability to pay ongoing pension benefits. The Company recorded a net periodic cost of $1.1 million and $0.9 million for the year ended January 1, 2017 and January 3, 2016, respectively. The Company has accrued a liability of $1.9 million and $1.7 million as of January 1, 2017 and January 3, 2016, respectively, 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. Cypress Incentive Plan The Company has an employee incentive plan, which provides for incentive payments to certain employees including all named executive officers. Payments under the plan are determined based up on certain performance measures, including the company’s Non GAAP actual revenue and EPS as well as the achievement of strategic, operational and financial goals established for the company and for each employee. The Company recorded total charges of $4.0 million under the plan in fiscal 2016. Deferred Compensation Plans The Company has deferred compensation plans, 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 plans 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 plans 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 1, 2017 and January 3, 2016, the fair value of the assets was $45.6 million and $41.2 million, respectively, and the fair value of the liabilities was $46.4 million and $41.5 million, respectively. All non-cash expense and income recorded under the deferred compensation plans were included in the following line items in the Consolidated Statements of Operations:
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. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The geographic distribution of income (loss) before income taxes and the components of income tax benefit (provision) are summarized below:
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:
The components of deferred tax assets and liabilities were as follows:
The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:
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. Net operating loss carryovers have been adjusted to reflect finalization of transfer pricing studies. Foreign tax credits may only be used to offset tax attributable to foreign source income. As of January 1, 2017 of the total deferred tax assets of $689.8 million, a valuation allowance of $458.7 million has been recorded for the portion that is not more likely than not to be realized. 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. 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 $657.3 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. United States income taxes and foreign withholding taxes have not been provided on a cumulative total of $282.7 million and $339.1 million of undistributed earnings for certain non-United States subsidiaries as of January 1, 2017 and January 3, 2016, 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 lower than the U.S. The Company is subject to tax holidays in Malaysia and Thailand where it manufactures and designs certain products. These tax holidays are scheduled to expire at varying times within the next five years. The Company’s tax benefit of these tax holidays for the year ended January 1, 2017 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:
Gross unrecognized tax benefits increased by $31.5 million during fiscal year 2016, resulting in gross unrecognized tax benefits of $146.3 million as of January 1, 2017. During fiscal year 2016, the Company recognized $7.2 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 $3.4 million of benefit related to interest and penalties in fiscal year 2016. Accrued interest and penalties are included within other long-term liabilities in the consolidated balance sheets. As of January 1, 2017 and January 3, 2016, the combined amount of cumulative accrued interest and penalties was approximately $8.5 million and $12.0 million, respectively. As of January 1, 2017 and January 3, 2016, the amounts of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate totaled $24.3 million and $28.4 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:
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 $0.5 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 The Company's 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 1, 2017 and January 3, 2016, the amount of accrued interest and penalties totaled $8.5 million and $12.0 million, respectively. The Company recorded a charge or (benefit) from interest and penalties of $(3.4) million, $9.1 million and $(2.8) million during fiscal 2016, 2015 and 2014, 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 1, 2017:
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. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | 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:
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. Consequently, the Company has recorded $2.2 million charge to cost of revenues in fiscal 2015. During fiscal 2016, the Company has recorded $0.8 million as part of cost of revenues related to this arrangement. 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 $14.0 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 also paid $5.8 million in 2016 remaining from the original agreement. The Company is amortizing such costs over the remaining life of the patent portfolio. Amortization expense was $5.9 million, $4.4 million and $0.8 million in fiscal years January 1, 2017, January 3, 2016 and December 28, 2014, respectively. The remaining capitalized balance of the PLA is $18.6 million and $18.7 million and $6.4 million and 5.6 million is in Current assets, and $12.2 million and $13.2 million in Long-term assets on the Consolidated Balance Sheet as of January 1, 2017 and January 3, 2016, respectively. Operating Lease Commitments We lease certain facilities and equipment under non-cancelable operating lease agreements that expire at various dates through fiscal 2020. Some leases include renewal options, which would permit extensions of the expiration dates at rates approximating fair market rental values. As of January 1, 2017 future minimum lease payments under non-cancelable operating leases were as follows:
Rental expenses totaled $15.0 million, $17.1 million and $6.8 million in fiscal 2016, 2015 and 2014, respectively. Restructuring accrual balances related to operating facility leases were $14.2 million and $17.4 million as of January 1, 2017 and January 3, 2016, respectively. Equity Investment Commitments The Company has committed to purchase additional preferred stock from Enovix. In fiscal 2016 we invested $23.0 million in this Company. The Company has committed to make additional investments of an amount of approximately $5 million in preferred stock in Enovix subject to the attainment of certain milestones. Litigation and Asserted Claims In a matter associated with Ramtron International Corporation (“Ramtron”), a wholly owned subsidiary of the Company, bankruptcy proceedings are ongoing in Italy where the trustee for four bankrupt entities of Finmek S.pA. is seeking refunds of approximately $2.8 million in 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 of approximately $0.5 million, including interest and fees. The Company believes this ruling was made in error and has filed an appeal (Court of Appeal of Venice, Docket no. 2706/2015). The Company has prevailed in all other related proceedings, which the trustee may appeal (Court of Appeal of Venice, Docket Nos. 1387/2014 and 2487/2015; Tribunal of Padua Docket No. 5378/2009). Due to the current stage of the proceedings and the appellate process, the Company cannot reasonably estimate the loss or the range of possible losses, if any. In 2013, a former employee filed a grievance against the Company with the U.S. Department of Labor (“DOL”) seeking back pay and reinstatement or forward pay. The 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 approximately $1.3 million, which includes his attorneys’ fees and costs. On March 30, 2016, the ruling was affirmed by the DOL Administrative Review Board. The Company believes both rulings were erroneous and filed an appeal in the United States Court of Appeals for the Tenth Circuit on April 29, 2016 (Case No. 16-9523). Oral argument was heard by a three-judge panel in January 2017, and a ruling is expected by the second or third quarter of 2017. The respective positions of the parties and the appellate process prevent a reasonable determination of the outcome at this time. This former employee also filed a complaint for wrongful termination in state court in El Paso County, Colorado on March 4, 2015 (Case No. 2015-cv-30632). The state court litigation is stayed pending resolution of the DOL matter. The Company believes the state court action is meritless and will defend against the allegations. Due to the current stage of the proceedings and the appellate process, the Company cannot reasonably estimate the loss or the range of possible loss, if any. After the announcement of the proposed Merger between Cypress and Spansion Inc. 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., et. al. (No. 114CV274924)) were filed in Santa Clara County Superior Court, alleging claims of breach of fiduciary duty against 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 attorneys’ fees to the class counsel. In January 2017, the court approved the settlement agreement, which included payment of $0.3 million in attorneys’ fees to plaintiffs’ counsel. Since August 2014, the Company has been involved in various trademark opposition proceedings with Kingston Technology Corporation (“Kingston”) concerning Kingston’s “HYPERX” trademark and the Company’s “HYPERRAM” trademark, including Trademark Trial and Appeal Board Proceeding Nos. 91218100, 91222728, and 92061796. The Company believes its defenses and counterclaims have merit and will continue to defend its intellectual property. Due to the current stage of the proceedings, the Company cannot reasonably estimate the loss or the range of possible loss, if any. On May 17, 2016, a patent infringement case was filed by North Star Innovations, Inc. (“North Star”) against the Company and UMC Group USA (“UMC”) in the U.S. District Court for the District of Delaware (Case No. 16-cv-368). North Star alleges that the Company infringes three patents. On September 26, 2016, North Star filed a second case against the Company and UMC in the U.S. District Court for the Central District of California (Case No. 16-cv-01721), asserting two additional patents against the Company, as well as one of the patents asserted in the Delaware lawsuit. In December 2016, the Company settled with North Star, pursuant to which the Company obtained a license to the North Star patent portfolio for $2.5 million to be paid in equal installments over three years. In January 2017, the Delaware lawsuit was dismissed and in February 2017, the California lawsuit was dismissed. On August 15, 2016, a patent infringement lawsuit was filed by the California Institute of Technology (“Caltech”) against the Company in the U.S. District Court for the Central District of California (Case No. 16-cv-03714). The other co-defendants are Apple Inc., Avago Technologies Limited, Broadcom Corporation, and Broadcom Limited. Caltech alleges that defendants infringe four patents. The matter is still in the very early stages and the Company will defend against the allegations accordingly. Due to the current stage of the proceedings, the Company cannot reasonably estimate the loss or the range of possible losses, if any. In September 2016, the Company was named in a lawsuit filed by Standard Communications Pty Ltd. in Sydney, Australia (Supreme Court of New South Wales; Case No. 2016/263578-002), for approximately $1.1 million in costs associated with a product recall. The matter is still in the very early stages and the Company will defend against the allegations accordingly. Due to the current stage of the proceedings, the Company cannot reasonably estimate the loss or the range of possible losses, if any. On January 30, 2017, T.J. Rodgers, the former Chief Executive Officer and director of the Company, filed a complaint in the Delaware Court of Chancery captioned Rodgers v. Cypress Semiconductor Corp., C.A. No. 2017-0070-AGB (Del. Ch.), seeking to inspect certain Company books and records pursuant to Section 220 of the Delaware General Corporation Law. On February 20, 2017, the Company filed its answer and response to Mr. Rodgers’ complaint. The complaint does not seek an award of money damages other than reasonable attorneys and expert fees, costs and expenses. Given the stage and nature of the litigation, the Company cannot reasonably estimate the loss or the range of possible losses, if any. 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 condition, cash flows or results of operations. However, because of the nature and inherent uncertainties of 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 matters such 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 1, 2017, we had no reason to believe a loss exceeding amounts already recognized had been incurred. |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION | SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION Segment Information The Company designs, develops, manufactures and markets a broad range of high-performance solutions for embedded systems, from automotive, industrial and networking platforms to highly interactive consumer devices Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker ("CODM") is considered to be the chief executive officer. The prior periods herein reflect the change in segments as outlined in Note 1 of the Notes to Consolidated Financial Statements. The following tables set forth certain information relating to the reportable business segments: Revenues:
Income (Loss) from Operations before Income Taxes:
The Company does not allocate goodwill and intangible assets impairment charges, impact of purchase accounting, IPR&D, severance and retention costs, acquisition-related costs, stock-based compensation, interest income and other, and interest expense to its segments. In addition, the Company does not allocate assets to its segments. The Company excludes these items consistent with the manner in which it internally evaluates its results of operations. Geographical Information The following table presents revenues by geographical locations 1
1 Prior period numbers have been recast to conform to the current period presentation. During the second quarter of fiscal 2016, the Company started presenting this information based on location of customers to whom the sale of products was made. 2 Greater China includes China, Taiwan and Hong Kong. Property, plant and equipment, net, by geographic locations were as follows:
The Company tracks its assets by physical location. Although management reviews asset information on a corporate level and allocates depreciation expense by segment, the Company's chief operating decision maker does not review asset information on a segment basis. Customer Information Outstanding accounts receivable from one the Company's distributors, accounted for 24% of Company's consolidated accounts receivable as of January 1, 2017. Outstanding accounts receivable from two of the Company's distributors, accounted for 42% and 11% of the Company's consolidated accounts receivable as of January 3, 2016. Revenue generated through one of Company's distributors, accounted for 23% of Company's consolidated revenues for fiscal 2016. No end customer accounted for 10% or more of the Company’s revenues for fiscal 2016. Revenue generated through two of Company's distributors, accounted for 25% and 10% respectively, of the Company's consolidated revenues for fiscal 2015. No end customer accounted for 10% or more of the Company’s revenues for fiscal 2015. Revenue generated through three of our distributors accounted for 13%, 10% and 10%, respectively, of the Company's consolidated revenues for fiscal 2014. |
SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENT Amendment to Credit and Guarantee Agreement On February 17, 2017, we amended our Senior Secured Credit Facility. The amendment reduced the applicable margins on our Term Loan A from 5.11% to 3.75% and from 5.50% to 3.75% Term Loan B effective February 17, 2017. Additionally, the amended financial covenants include the following conditions: 1) maximum senior secured leverage ratio of 4.25 to 1.00 through December 31, 2017, 2) maximum senior secured leverage ratio of 4.00 to 1.00 through July 1, 2018 and 3.75 to 1.00 thereafter. Divestiture On March 1, 2017, the Company completed the sale of its wafer fabrication facility in Minnesota to an independent third party for net consideration of $30.0 million, subject to working capital adjustments. |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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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 2016 ended on January 1, 2017, Fiscal 2015 ended on January 3, 2016 and Fiscal 2014 ended on December 28, 2014. Fiscal years 2016 and 2014 each contained 52 weeks. Fiscal 2015 contained 53 weeks. 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 inter-company transactions and balances have been eliminated in consolidation. Certain balances included on the Consolidated Balance Sheet and in the Consolidated Statement of Cash Flows for prior periods have been reclassified to conform to the current period presentation. |
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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 7 of the Notes to the Consolidated Financial Statements for a detailed discussion of fair value measurements. |
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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. |
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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)” on 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. The Company’s equity method investments are included in “Equity Method Investments” on 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. |
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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. |
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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:
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 analysis. |
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Net income (loss) per Share | Net income (loss) per Share Basic net income (loss) per share is calculated by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt, using the treasury stock method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. |
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Convertible debt | Convertible debt In accounting for each series of Senior Exchangeable Notes at issuance, the Company separated the Convertible Notes into debt and equity components according to accounting standards codification ("ASC") 470-20 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 non-convertible 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 effective interest method. In accounting for the transaction costs incurred relating to issuance of the Notes, the Company allocated the costs of the offering in proportion to the fair value of the debt and equity recognized in accordance with the accounting standards. The transaction costs allocated to the debt are being amortized as interest expense over the term of the Notes. In accounting for the cost of the capped call transaction entered in connection with the issuance of the Senior Exchangeable Notes, the Company included the cost as a net reduction to additional paid-in capital in the stockholders’ equity section of the consolidated balance sheet, in accordance with the guidance in ASC 815-40 Derivatives and Hedging-Contracts in Entity’s Own Equity. |
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Assets Held for Sale | Assets Held for Sale The Company considers properties to be assets held for sale when management approves and commits to a plan to actively market a property or group of properties for sale. Assets held for sale are recorded initially at the lower of its carrying value or its estimated fair value, less estimated costs to sell. Upon designation as an asset held for sale, the Company stops recording depreciation expense on such asset. Costs to sell a disposal group include incremental direct costs to transact the sale and represent the costs that result directly from and are essential to a sale transaction that would not have been incurred by the entity had the decision to sell not been made. The properties that are held for sale prior to the sale date are classified as held for sale and would be presented separately in the appropriate asset and liability sections of the balance sheet. |
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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 2011-8, Testing Goodwill for Impairment, qualitative factors may 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. See Note 3 of the Notes to the Consolidated Financial Statements for more information. 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. |
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Acquisition related In-Process Research and Development | Acquisition related In-process Research and Development Acquisition-related in-process research and development represents the fair value of incomplete research and development projects that have not reached technological feasibility as of the date of acquisition. Initially, these assets are not subject to amortization. The incomplete projects are reviewed each quarter for impairment related to cancellation, change in business plans as well as completion. Assets related to projects that have been completed are transferred to developed technology, which are subject to amortization. |
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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 had 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 processes around its distribution channel to improve the quality of the information it receives from its distributors. Given these ongoing investments, and based on the financial framework we use for estimating potential price adjustments, in the fourth quarter of 2014 the Company began recognizing revenue on certain product families and with certain distributors (less its estimate of future price adjustments and returns) upon shipment to the distributors (also referred to as the sell-in basis of revenue recognition). |
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Employee Benefit Plans | Employee Benefit Plans 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 18 of Notes to the Consolidated Financial Statements for further details of the pension plans. |
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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 of Notes to the Consolidated Financial Statements for further details of the contracts. |
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Shipping and Handling Costs | Shipping and Handling Costs The Company records costs related to shipping and handling in cost of revenues. |
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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. |
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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. |
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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. |
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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. |
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Impact of Recently Issued Accounting Pronouncements And Recently Adopted Accounting Pronouncements | Impact of Recently Issued Accounting Pronouncements The following are the accounting pronouncements issued but not adopted that may materially affect the Company’s consolidated financial statements: 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 standard permits the use of either the retrospective or cumulative effect transition method. 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, compensation, information technology systems and other financial reporting and operational elements. The Company does not plan to early adopt this guidance and has not presently selected a transition method. While we are continuing to assess all potential impacts, we believe the most significant impact of this new guidance on the Company will relate to timing of recognition of revenue from intellectual property and non-recurring engineering arrangements. Because at the end of fiscal 2016, the Company has transitioned all revenue from distributors from sell-through to the sell-in basis of accounting, it does not expect the new guidance to materially impact the timing of recognition of future revenue from distributors. While we are continuing to assess all potential impacts, given our distributor revenues are now recognized at the time of shipment, we believe the most material impact of this new guidance on the Company will relate to timing of recognition of revenue from intellectual property and non-recurring engineering arrangements. 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 it's consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies several aspects of the accounting for share-based payments transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements In October 2016, the FASB issued ASU 2016-16, “Intra- Entity Transfers of Assets Other Than Inventory”. For public entities, ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, “Consolidation: Interest held through Related Parties that Are under Common Control". For public entities ASU 2016-17 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017- 04, "Intangibles, Goodwill & Other- Simplifying the test for goodwill impairment". The guidance simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. The Company is currently assessing the impact of this new guidance. Recently Adopted Accounting Pronouncements In August 2014, the Financial Accounting Standards Board issued ASU 2014-15, Presentation of Financial Statements, Going Concern. The ASU provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for fiscal years ending after December 15, 2016 and for interim periods there after. The Company adopted ASU 2015-16 standard for the fiscal year ended January 1, 2017. |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Description Of Business And Summary Of Significant Accounting Policies [Abstract] | |||||||||||
Property And Equipment Useful Life | Estimated useful lives are as follows:
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MERGERS AND ACQUISITIONS (Tables) |
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Broadcom | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The table below represents the allocation of the purchase price to the net assets acquired based on their estimated fair values:
(a) The Company obtained new information regarding the valuation of intangibles assets as of the acquisition date which led to a net increase in the fair value of total assets of $28.6 million and a corresponding decrease in goodwill. |
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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 Broadcom along with their estimated useful lives:
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
(1) Includes the fair value of the debt and equity components of Spansion's Exchangeable 2.00% Senior Notes assumed by the Company. The total purchase consideration of approximately $2.8 billion consists of the following:
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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, along with their estimated useful lives:.
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Pro Forma Information | 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 acquisition actually occurred at the beginning of fiscal year 2015 or of the results of future operations of the combined businesses. Consequently, actual results will differ from the unaudited pro forma information presented below.
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GOODWILL (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill by reportable segment for the year ended January 1, 2017 were as follows:
(1) The Company had previously recorded an impairment charge of $351.3 million in the fourth quarter of fiscal 2008. |
INTANGIBLE ASSETS (Tables) |
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Total Intangible Assets | The following tables present details of the Company’s total intangible assets:
The below table presents details of the IPR&D assets as of January 1, 2017:
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Estimated Future Amortization Expense of Intangible Assets | As of January 1, 2017, the estimated future amortization expense of intangible assets including IPR&D was as follows:
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INVESTMENTS IN EQUITY METHOD INVESTMENTS (Tables) |
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Equity Method Investments and Gain Related to Investment | As a result of the change in the method of accounting for the Company's investment in Deca from consolidation to the equity method of accounting, the net carrying value of the assets and liabilities related to Deca, and the adjustments related to the recognition of the initial fair value of the equity method investment resulted in a gain of $112.8 million which has been reflected as "Gain related to investment in Deca Technologies Inc." in the Consolidated Statements of Operations and was calculated as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 1, 2017 and January 3, 2016:
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BALANCE SHEET COMPONENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Component [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | Accounts Receivable, net
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Inventories | Inventories
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Other Current Assets | Other Current Assets
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Property, Plant and Equipment, Net | Property, Plant and Equipment, Net
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Other Long-term Assets | Other Long-term Assets
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Other Current Liabilities | Other Current Liabilities
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Other Long-Term Liabilities | Other Long-Term Liabilities
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EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expenses | The following table summarizes stock-based compensation expense by line item in the Consolidated Statement of Operations:
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Schedule of Stock-Based Compensation Expense Award Type | The following table summarizes stock-based compensation expense by type of awards:
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Schedule of Unrecognized Stock-Based Compensation Balance, Net by Award Type | The following table summarizes the unrecognized stock-based compensation balance, net of estimated forfeitures, by type of awards as of January 1, 2017:
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Schedule of 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:
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Schedule of Stock Option Activities | The following table summarizes the Company’s stock option activities:
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Summary of Information about Options Outstanding and Exercisable | The following table summarizes information about options outstanding and exercisable as of January 1, 2017:
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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:
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RESTRUCTURING (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type |
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Schedule of Restructuring Costs | Restructuring activity under the Company's various restructuring plan was as follows:
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FOREIGN CURRENCY DERIVATIVES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Gross Fair Values of Derivative Instruments on Condensed Consolidated Balance Sheets | The gross fair values of derivative instruments on the Consolidated Balance Sheets as of January 1, 2017 and January 3, 2016 were as follows:
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Loss | The components of Accumulated other comprehensive loss were as follows:
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OTHER INCOME (EXPENSE), NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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DEBT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt is comprised of the following:
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Schedule of Long-term Debt Instruments | The following table presents the interest expense recognized on the Spansion Notes during the fiscal year ended January 1, 2017 and January 3, 2016:
The net carrying amount of liability component of the Spansion Notes as of January 1, 2017 consists of the following:
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Schedule of Principal Payments Under Equipment Loans | Future Debt Payments For each of the next five years and beyond, the scheduled maturities of the Company's debt including interest as of January 1, 2017, are as follows:
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4.50% Senior Exchangeable Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | At the debt issuance date, the Convertible Notes, net of issuance costs, consisted of the following (in thousands):
The following table includes total interest expense related to the Notes recognized during the year ended January 1, 2017 (in thousands):
The net liability component of the Notes as of January 1, 2017 is comprised of the following (in thousands):
|
EQUITY TRANSACTIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Yield Enhancement Structured Agreements | The following table summarizes the activity of the Company’s settled yield enhanced structured agreements during fiscal 2014 and 2015:
|
RELATED PARTY TRANSACTIONS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The following table provides the transactions with these parties for the indicated periods:
|
NET INCOME (LOSS) PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Income (Loss) Per Share | The following table sets forth the computation of basic and diluted net income (loss) per share:
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Anti-Dilutive Securities Excluded from Computation of Diluted Net Income (Loss) Per Share | The following securities calculated on a weighted average basis were excluded from the computation of diluted Net income (loss) per share as their impact was anti-dilutive:
|
EMPLOYEE BENEFIT PLANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures | All non-cash expense and income recorded under the deferred compensation plans were included in the following line items in the Consolidated Statements of Operations:
|
INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Geographic Distribution Of Income Loss Before Income Taxes Components Of Income Tax Benefit Provision | The geographic distribution of income (loss) before income taxes and the components of income tax benefit (provision) are summarized below:
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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:
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Components of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities were as follows:
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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:
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Reconciliation of Unrecognized Tax Benefits | The following table is a reconciliation of unrecognized tax benefits:
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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 1, 2017:
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warranty Reserve Activities | The following table presents warranty reserve activities:
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Future Minimum Lease Payments Under Non-Cancelable Operating Leases | As of January 1, 2017 future minimum lease payments under non-cancelable operating leases were as follows:
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SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenues:
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Income (Loss) from Operations before Income Taxes | Income (Loss) from Operations before Income Taxes:
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Total Revenues by Geographical Locations | The following table presents revenues by geographical locations 1
1 Prior period numbers have been recast to conform to the current period presentation. During the second quarter of fiscal 2016, the Company started presenting this information based on location of customers to whom the sale of products was made. 2 Greater China includes China, Taiwan and Hong Kong. |
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Property Plant and Equipment, Net, by Geographic Locations | Property, plant and equipment, net, by geographic locations were as follows:
|
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Useful Lives (Detail) |
12 Months Ended |
---|---|
Jan. 01, 2017 | |
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 |
MERGERS AND ACQUISITIONS - Total Purchase Price Consideration (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 |
MERGERS AND ACQUISITIONS - Pro Forma (Details) - Spansion Inc - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Business Acquisition [Line Items] | ||
Revenues | $ 2,018,124 | $ 1,982,824 |
Net loss | $ (725,359) | $ (505,544) |
Basic (in usd per share) | $ (2.27) | $ (1.67) |
Diluted (in usd per share) | $ (2.27) | $ (1.67) |
GOODWILL - Narrative (Detail) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jan. 01, 2017
Segment
|
Oct. 02, 2016
USD ($)
|
Jul. 03, 2016
USD ($)
|
Dec. 28, 2008
USD ($)
|
Oct. 02, 2016
Segment
|
Jan. 01, 2017
USD ($)
|
Jan. 03, 2016
USD ($)
|
Dec. 28, 2014
USD ($)
|
|
Goodwill [Line Items] | ||||||||
Number of reporting units | Segment | 2 | 4 | ||||||
Goodwill impairment charge | $ 351,300 | $ 488,504 | $ 0 | $ 0 | ||||
Goodwill from acquisition of IoT Business | 217,726 | 1,676,036 | ||||||
MPD | ||||||||
Goodwill [Line Items] | ||||||||
Goodwill from acquisition of IoT Business | 0 | 739,036 | ||||||
PSD | ||||||||
Goodwill [Line Items] | ||||||||
Goodwill impairment charge | $ 488,500 | 488,504 | ||||||
Goodwill from acquisition of IoT Business | 0 | 937,000 | ||||||
Weighting of income approach (percent) | 75.00% | |||||||
Weighting of market approach (percent) | 25.00% | |||||||
DCD | ||||||||
Goodwill [Line Items] | ||||||||
Goodwill from acquisition of IoT Business | $ 189,100 | $ 217,726 | $ 0 |
INTANGIBLE ASSETS - Narrative (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 03, 2016
USD ($)
project
|
Jan. 01, 2017
USD ($)
project
|
Jan. 03, 2016
USD ($)
|
Dec. 28, 2014
USD ($)
|
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Projects impaired | $ 33,944 | $ 0 | $ 0 | |
In-Process Research and Development Technology | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Projects impaired | $ 33,900 | $ 33,944 | ||
Number of projects cancelled | project | 2 | 2 |
INTANGIBLE ASSETS - Total Intangible Assets (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 1,208,447 | $ 1,025,840 |
Accumulated Amortization | (303,886) | (236,645) |
Net | 904,561 | 789,195 |
Acquisition-related intangible assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 1,021,244 | 836,256 |
Accumulated Amortization | (295,023) | (226,417) |
Net | 726,221 | 609,839 |
Non-acquisition related intangible assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 12,000 | 13,368 |
Accumulated Amortization | (8,863) | (10,228) |
Net | 3,137 | 3,140 |
Total developed technology and other intangible assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 1,033,244 | 849,624 |
Accumulated Amortization | (303,886) | (236,645) |
Net | 729,358 | 612,979 |
In-process research and development | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross | 175,203 | 176,216 |
Accumulated Amortization | 0 | 0 |
Net | $ 175,203 | $ 176,216 |
INTANGIBLE ASSETS - Intangible Assets Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 03, 2016 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Finite-lived Intangible Assets [Roll Forward] | ||||
Intangible assets, beginning balance | $ 789,195 | $ 789,195 | ||
Projects impaired | (33,944) | $ 0 | $ 0 | |
Intangible assets, ending balance | 904,561 | 789,195 | ||
In-Process Research and Development Technology | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Intangible assets, beginning balance | 176,216 | 176,216 | ||
Intangibles acquired as part of IoT business (Note 2) | 88,900 | |||
Technological feasibility achieved | (55,969) | |||
Projects impaired | $ (33,900) | (33,944) | ||
Intangible assets, ending balance | $ 175,203 | $ 176,216 |
INTANGIBLE ASSETS - Estimated Future Amortization Expense of Intangible Assets (Detail) - Total developed technology and other intangible assets $ in Thousands |
Jan. 01, 2017
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
2017 | $ 188,211 |
2018 | 182,462 |
2019 | 175,234 |
2020 | 115,058 |
2021 and future | 68,393 |
Net | $ 729,358 |
ASSETS HELD FOR SALE - Narrative (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Long Lived Assets Held For Sale [Line Items] | |||
Impairment related to assets held for sale | $ 37,219 | $ 0 | $ 0 |
Impairment related to assets held for sale | 37,219 | $ 0 | $ 0 |
Held-for-sale | |||
Long Lived Assets Held For Sale [Line Items] | |||
Impairment related to assets held for sale | $ 37,200 |
INVESTMENTS IN EQUITY METHOD INVESTMENTS - Gain Related to Investment (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Jul. 29, 2016 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Gain related to investment in Deca | $ 112,774 | $ 0 | $ 0 | |
Deca | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Cash proceeds received for sale of shares in Deca | $ 20,627 | |||
Fair value of retained equity method investment | 142,508 | |||
Carrying amount of non-controlling interest | (6,838) | |||
Total | 156,297 | |||
Carrying amount of net assets of Deca at July 29, 2016 | (43,523) | |||
Gain related to investment in Deca | $ 112,774 |
INVESTMENTS IN EQUITY METHOD INVESTMENTS - Equity Method Investments (Details) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 188,687 | $ 41,330 |
Deca Technologies Inc. | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 134,327 | |
Ownership percentage | 52.20% | |
Enviox Corporation | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 54,360 | $ 41,330 |
Ownership percentage | 46.60% | 38.70% |
BALANCE SHEET COMPONENTS - Accounts Receivable, Net (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Balance Sheet Component [Abstract] | ||
Accounts receivable, gross | $ 338,061 | $ 295,803 |
Allowances for doubtful accounts receivable and sales returns | (5,024) | (3,067) |
Accounts receivable, net | $ 333,037 | $ 292,736 |
BALANCE SHEET COMPONENTS - Inventories (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Balance Sheet Component [Abstract] | ||
Raw materials | $ 15,525 | $ 13,516 |
Work-in-process | 208,525 | 192,245 |
Finished goods | 63,726 | 37,834 |
Total inventories | $ 287,776 | $ 243,595 |
BALANCE SHEET COMPONENTS - Other Current Assets (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Balance Sheet Component [Abstract] | ||
Prepaid tooling | $ 11,768 | $ 19,379 |
Restricted cash relating to pension plan, current (see Note 18) | 4,206 | 3,730 |
Advance to suppliers | 16,549 | 10,683 |
Prepaid royalty and licenses | 17,769 | 14,281 |
Derivative asset | 6,605 | 966 |
Value added tax receivable | 11,625 | 12,493 |
Receivable from sale of TrueTouch®Mobile business | 10,000 | 0 |
Other current assets | 43,640 | 26,219 |
Total other current assets | $ 122,162 | $ 87,751 |
BALANCE SHEET COMPONENTS - Property, Plant and Equipment, Net (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 741,725 | $ 1,584,301 |
Less: accumulated depreciation and amortization | (444,459) | (1,159,298) |
Total property, plant and equipment, net | 297,266 | 425,003 |
Land | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 29,844 | 37,819 |
Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 493,498 | 1,191,469 |
Buildings, building and leasehold improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 175,589 | 314,017 |
Construction in progress | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 36,066 | 28,050 |
Furniture and fixtures | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 6,728 | $ 12,946 |
BALANCE SHEET COMPONENTS - Other Long-Term Assets (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Balance Sheet Component [Abstract] | ||
Employee deferred compensation plan | $ 45,574 | $ 41,249 |
Investments in cost method equity securities | 13,331 | 9,184 |
Deferred tax assets | 4,463 | 4,080 |
Long-term license | 14,498 | 24,079 |
Restricted cash relating to pension plan, non-current (see Note 18) | 0 | 3,462 |
Long-term receivable from sale of TrueTouch ® Mobile business | 0 | 10,000 |
Advances to suppliers | 25,207 | 26,237 |
Other assets | 44,869 | 40,788 |
Total other long-term assets | $ 147,942 | $ 159,079 |
BALANCE SHEET COMPONENTS - Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Balance Sheet Component [Abstract] | ||
Employee deferred compensation plan | $ 46,359 | $ 41,457 |
Restructuring accrual - current portion (see Note 10) | 24,029 | 7,270 |
Deferred Revenue on sale of TrueTouch® mobile business | 0 | 15,295 |
Rebate reserve | 2,320 | 7,944 |
Derivative liability | 15,582 | 1,283 |
Other current liabilities | 92,008 | 81,727 |
Total other current liabilities | $ 180,298 | $ 154,976 |
BALANCE SHEET COMPONENTS - Other Long-Term Liabilities (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Balance Sheet Component [Abstract] | ||
Long-term pension liabilities | $ 6,378 | $ 8,712 |
Restructuring accrual - non-current portion (see Note 10) | 11,294 | 14,217 |
Asset retirement obligation | 5,067 | 2,783 |
Other long-term liabilities | 14,010 | 12,072 |
Total other long-term liabilities | $ 36,749 | $ 37,784 |
EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Expenses (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | $ 105,268 | $ 93,527 | $ 50,170 |
Cost of revenues | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | 21,366 | 16,459 | 13,209 |
Research and development | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | 41,528 | 25,719 | 16,187 |
Selling, general and administrative | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | $ 42,374 | $ 51,349 | $ 20,774 |
EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Expense Award Type (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 105,268 | $ 93,527 | $ 50,170 |
Stock options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation expense | 700 | 1,920 | 4,717 |
Restricted stock units and restricted stock awards | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation expense | 81,905 | 74,897 | 37,837 |
ESPP | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 22,663 | $ 16,710 | $ 7,616 |
RESTRUCTURING - Schedule of Restructuring Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs (benefit) | $ 26,131 | $ 90,084 | $ (1,180) |
Spansion Integration plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs (benefit) | 26,131 | 90,084 | (1,180) |
Spansion Integration plan | Personnel costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs (benefit) | 26,131 | 58,972 | (357) |
Spansion Integration plan | Lease termination costs and other related charges | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs (benefit) | 0 | 18,016 | 0 |
Spansion Integration plan | Impairment of property, plant and equipment | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs (benefit) | 0 | 12,531 | (579) |
Spansion Integration plan | Other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs (benefit) | $ 0 | $ 565 | $ (244) |
FOREIGN CURRENCY DERIVATIVES - Narrative (Details) - 12 months ended Jan. 01, 2017 ¥ 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 | $ 69.3 | ¥ 7,108.0 |
Cash Flow Hedging | Minimum | ||
Derivative [Line Items] | ||
Term of derivative contract | 3 months | |
Cash Flow Hedging | Maximum | ||
Derivative [Line Items] | ||
Term of derivative contract | 9 months | |
Derivatives not designated as hedging instruments | ||
Derivative [Line Items] | ||
Term of derivative contract | 30 days |
FOREIGN CURRENCY DERIVATIVES - Schedule of Notational Amounts of Outstanding Contracts (Details) - Derivatives not designated as hedging instruments |
Jan. 01, 2017
USD ($)
|
Jan. 01, 2017
EUR (€)
|
Jan. 01, 2017
JPY (¥)
|
Jan. 03, 2016
USD ($)
|
Jan. 03, 2016
EUR (€)
|
Jan. 03, 2016
JPY (¥)
|
---|---|---|---|---|---|---|
Japanese Yen USD Future | Long | ||||||
Derivative [Line Items] | ||||||
Notional derivative contract | ¥ 10,129,000,000 | $ 19,400,000 | ||||
Japanese Yen USD Future | Short | ||||||
Derivative [Line Items] | ||||||
Notional derivative contract | ¥ | ¥ 2,333,000,000 | |||||
Eurodollar Future | Long | ||||||
Derivative [Line Items] | ||||||
Notional derivative contract | $ | $ 25,000,000 | $ 7.3 | ||||
Eurodollar Future | Short | ||||||
Derivative [Line Items] | ||||||
Notional derivative contract | $ 87,900,000 | € 23,600,000 | € 6,800,000.0 |
FOREIGN CURRENCY DERIVATIVES - Gross Fair Values of Derivative Instruments on Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | $ 6,605 | $ 983 |
Derivative Liability | 15,582 | 1,382 |
Forward Contracts | Derivatives designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 6,468 | 966 |
Forward Contracts | Derivatives designated as hedging instruments | Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | 14,391 | 1,283 |
Forward Contracts | Derivatives not designated as hedging instruments | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | 137 | 17 |
Forward Contracts | Derivatives not designated as hedging instruments | Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability | $ 1,191 | $ 99 |
OTHER INCOME (EXPENSE), NET - Components of Other Income (Expense), Net (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Other Income and Expenses [Abstract] | |||
Interest income | $ 1,836 | $ 885 | $ 362 |
Changes in fair value of investments under the deferred compensation plan | 2,326 | (1,354) | 3,014 |
Unrealized gain (loss) on marketable securities | 325 | (4,655) | (1,495) |
Foreign currency exchange gains (losses), net | (4,251) | 744 | 1,382 |
Gain (loss) on sale of investments | (265) | 276 | 0 |
Other | 342 | 335 | 40 |
Other income (expense), net | $ 313 | $ (3,769) | $ 3,303 |
DEBT - Schedule of Convertible Notes, Net of Issuance Costs (Details) - 4.50% Senior Exchangeable Notes |
Jun. 23, 2016
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Principal | $ 287,500,000.0 |
Convertible Notes, net of issuance costs | 278,866,000 |
Liability component | |
Debt Instrument [Line Items] | |
Principal | 238,338,000 |
Less: Issuance cost | (7,158,000) |
Convertible Notes, net of issuance costs | 231,180,000 |
Equity component | |
Debt Instrument [Line Items] | |
Principal | 49,163,000 |
Less: Issuance cost | (1,477,000) |
Convertible Notes, net of issuance costs | $ 47,686,000 |
DEBT - Schedule of Total Interest Expense Related to Notes (Details) - Convertible Senior Notes - 4.50% Senior Exchangeable Notes $ in Thousands |
12 Months Ended |
---|---|
Jan. 01, 2017
USD ($)
| |
Debt Instrument [Line Items] | |
Contractual interest expense | $ 6,900 |
Amortization of debt issuance costs | 700 |
Accretion of debt discount | 4,646 |
Total | $ 12,246 |
DEBT - Schedule of Net Liability Component (Details) $ in Thousands |
12 Months Ended |
---|---|
Jan. 01, 2017
USD ($)
| |
Debt Instrument [Line Items] | |
Net carrying amount | $ 1,556,227 |
Liability component | 4.50% Senior Exchangeable Notes | |
Debt Instrument [Line Items] | |
Net carrying amount at issuance date | 231,180 |
Amortization of debt issuance costs | 700 |
Accretion of debt discount | 4,646 |
Net carrying amount | $ 236,526 |
DEBT - Schedule of Senior Exchangeable Notes (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Mar. 12, 2015 |
|
Debt Instrument [Line Items] | |||
Total | $ 1,556,227,000 | ||
2.00% Senior Exchangeable Notes | Spansion Inc | |||
Debt Instrument [Line Items] | |||
Contractual interest expense | 2,989,000 | $ 2,441,000 | |
Accretion of debt discount | 3,556,000 | 2,700,000 | |
Total | 6,545,000 | $ 5,141,000 | |
Principal | 149,990,000 | ||
Unamortized debt discount | (14,589,000) | ||
Total | $ 135,401,000 | ||
Interest rate (percent) | 2.00% | 2.00% |
EQUITY TRANSACTIONS - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions |
2 Months Ended | 3 Months Ended | 12 Months Ended | 62 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 19, 2017 |
Jan. 21, 2016 |
Jan. 15, 2015 |
Dec. 31, 2016 |
Jan. 01, 2017 |
Oct. 02, 2016 |
Jul. 03, 2016 |
Apr. 03, 2016 |
Jan. 03, 2016 |
Sep. 27, 2015 |
Jun. 28, 2015 |
Mar. 29, 2015 |
Dec. 28, 2014 |
Sep. 28, 2014 |
Jun. 29, 2014 |
Mar. 30, 2014 |
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
Oct. 19, 2016 |
Oct. 20, 2015 |
|
Class of Stock [Line Items] | |||||||||||||||||||||
Repurchases of common shares | $ 175,694,000 | $ 55,018,000 | |||||||||||||||||||
Payment of dividends | $ 36,500,000 | $ 17,900,000 | $ 141,400,000 | $ 128,000,000 | $ 69,200,000 | ||||||||||||||||
Cash dividends declared per share (in usd per share) | $ 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 | ||||||
October 2015 Program | |||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||
Stock repurchase program, authorized amount | $ 450,000,000 | ||||||||||||||||||||
Repurchases of common shares | $ 239,200,000 | ||||||||||||||||||||
Repurchases of common shares (in shares) | 29.5 | ||||||||||||||||||||
Average repurchase price (in usd per share) | $ 8.11 | ||||||||||||||||||||
September 2011 Program | |||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||
Repurchases of common shares | $ 327,400,000 | ||||||||||||||||||||
Repurchases of common shares (in shares) | 24.4 | ||||||||||||||||||||
Average repurchase price (in usd per share) | $ 13.40 | ||||||||||||||||||||
Subsequent Event | |||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||
Payment of dividends | $ 35,500,000 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
|
Related Party Transactions [Abstract] | ||
Total revenues | $ 2,965 | $ 1,684 |
Total purchases | 6,694 | 3,963 |
Total receivable balance | 2,900 | 5,000 |
Total payable balance | $ 200 | $ 800 |
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. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Earnings Per Share [Abstract] | |||
Net income (loss) attributable to Cypress for basic computation | $ (686,251) | $ (378,867) | $ 17,936 |
Weighted-average common shares for basic computation (in shares) | 319,522 | 302,036 | 159,031 |
Net income (loss) per share—basic (in usd per share) | $ (2.15) | $ (1.25) | $ 0.11 |
Stock options, restricted stock units, restricted stock awards and other | 0 | 0 | 10,091 |
Weighted-average common shares for diluted computation | 319,522 | 302,036 | 169,122 |
Net income (loss) per share—diluted (in usd per share) | $ (2.15) | $ (1.25) | $ 0.11 |
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. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
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 | 7,519 | 6,828 | 8,708 |
INCOME TAXES - Summary of Geographic Distribution of Income (Loss) Before Income Taxes Components of Income Tax Benefit Provision (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Income Tax Disclosure [Abstract] | |||
United States loss | $ (789,627) | $ (476,014) | $ (109,307) |
Foreign income | 105,992 | 111,836 | 124,652 |
Income (loss) before income taxes | (683,635) | (364,178) | 15,345 |
Current tax benefit (expense): | |||
Federal | (1,144) | 219 | 5,551 |
State | 204 | 55 | (49) |
Foreign | (926) | (17,189) | (4,732) |
Total current tax benefit (expense) | (1,866) | (16,915) | 770 |
Federal | (556) | (610) | 0 |
State | (31) | (155) | 0 |
Foreign | (163) | 720 | 403 |
Total deferred tax benefit (expense) | (750) | (45) | 403 |
Income tax benefit (provision) | $ (2,616) | $ (16,960) | $ 1,173 |
INCOME TAXES - Income Tax Benefit (Provision) Differs from Statutory United States Federal Income Tax Rate (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Benefit (provision) at U.S. statutory rate of 35% | $ 239,272 | $ 127,462 | $ (5,371) |
Foreign income at other than U.S. rates | (36,552) | (22,385) | 37,477 |
Future benefits not recognized | (30,263) | (126,846) | (35,107) |
Goodwill impairment | (181,987) | 0 | 0 |
Reversal of previously accrued taxes | 13,371 | 10,939 | 8,286 |
Tax impact of acquisitions | 0 | (6,457) | (2,538) |
Foreign withholding taxes | (2,018) | (243) | (1,195) |
State income taxes, net of federal benefit | (87) | (138) | (49) |
Other, net | (4,352) | 708 | (330) |
Income tax benefit (provision) | $ (2,616) | $ (16,960) | $ 1,173 |
INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Deferred tax assets: | ||
Credits and net operating loss carryovers | $ 493,879 | $ 624,086 |
Reserves and accruals | 133,614 | 160,804 |
Excess of book over tax depreciation | 35,886 | 12,463 |
Deferred income | 26,457 | 20,059 |
Total deferred tax assets | 689,836 | 817,412 |
Less valuation allowance | (458,674) | (525,021) |
Deferred tax assets, net | 231,162 | 292,391 |
Deferred tax liabilities: | ||
Foreign earnings | (160,862) | (184,671) |
Intangible assets arising from acquisitions | (71,960) | (108,784) |
Total deferred tax liabilities | (232,822) | (293,455) |
Net deferred tax (liability) | $ (1,660) | $ (1,064) |
INCOME TAXES - Summary of Tax Loss and Credit Carryforwards Available to Offset Future Income Tax Liabilities (Details) $ in Thousands |
Jan. 01, 2017
USD ($)
|
---|---|
Federal | |
Tax Credit Carryforward [Line Items] | |
Net operating loss carryforward | $ 1,533,094 |
Credit carryforward | 142,229 |
International | |
Tax Credit Carryforward [Line Items] | |
Credit carryforward | 13,297 |
State | |
Tax Credit Carryforward [Line Items] | |
Net operating loss carryforward | 789,407 |
Credit carryforward | $ 93,571 |
INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning balance | $ 114,843 | $ 11,607 | $ 18,613 |
Decrease related to settlements with taxing authorities | (838) | (6,361) | |
Increase based on tax positions related to current year | 5,639 | 6,487 | 993 |
Decrease based on tax positions related to prior year | 0 | (10,272) | |
Decrease related to lapsing of statute of limitation | (7,190) | (818) | (1,638) |
Increases in balances related to tax positions taken during prior periods (including those related to acquisitions made during the year) | 33,032 | 108,677 | |
Unrecognized tax benefits, ending balance | $ 146,300 | $ 114,843 | $ 11,607 |
COMMITMENTS AND CONTINGENCIES - Schedule of Warranty Reserve Activities (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |||
Beginning balance | $ 4,096 | $ 2,370 | $ 2,628 |
Warranties assumed as part of the merger | 0 | 1,254 | 0 |
Provisions | 5,261 | 2,820 | 1,449 |
Settlements made | (5,361) | (2,348) | (1,707) |
Ending balance | $ 3,996 | $ 4,096 | $ 2,370 |
COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments Under Non-Cancelable Operating Leases (Detail) $ in Thousands |
Jan. 01, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 18,935 |
2018 | 13,445 |
2019 | 9,177 |
2020 | 7,915 |
2021 | 6,030 |
2022 and Thereafter | 21,820 |
Total | $ 77,322 |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Narrative (Detail) - Customer Concentration Risk |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Distributor 1 | Accounts Receivable | |||
Segment Reporting Information [Line Items] | |||
Concentration risk (percent) | 24.00% | 42.00% | |
Distributor 1 | Sales Revenue, Net | |||
Segment Reporting Information [Line Items] | |||
Concentration risk (percent) | 23.00% | 25.00% | 13.00% |
Distributor 2 | Accounts Receivable | |||
Segment Reporting Information [Line Items] | |||
Concentration risk (percent) | 11.00% | ||
Distributor 2 | Sales Revenue, Net | |||
Segment Reporting Information [Line Items] | |||
Concentration risk (percent) | 10.00% | 10.00% | |
Distributor 3 | Sales Revenue, Net | |||
Segment Reporting Information [Line Items] | |||
Concentration risk (percent) | 10.00% |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Revenue (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Segment Reporting Information [Line Items] | |||
Total revenues | $ 1,923,108 | $ 1,607,853 | $ 725,497 |
Memory Products Division | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 928,626 | 876,574 | 356,497 |
MCD | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 994,482 | $ 731,279 | $ 369,000 |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Total Revenues by Geographical Locations (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Segment Reporting Information [Line Items] | |||
Revenue, Net | $ 1,923,108 | $ 1,607,853 | $ 725,497 |
United States | |||
Segment Reporting Information [Line Items] | |||
Revenue, Net | 199,294 | 199,527 | 96,082 |
Europe | |||
Segment Reporting Information [Line Items] | |||
Revenue, Net | 255,604 | 208,525 | 94,481 |
Greater China | |||
Segment Reporting Information [Line Items] | |||
Revenue, Net | 819,200 | 525,274 | 292,338 |
Japan | |||
Segment Reporting Information [Line Items] | |||
Revenue, Net | 420,869 | 464,673 | 64,635 |
Rest of the World | |||
Segment Reporting Information [Line Items] | |||
Revenue, Net | $ 228,141 | $ 209,854 | $ 177,961 |
SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION - Property, Plant and Equipment, Net, by Geographic Locations (Detail) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Jan. 03, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 297,266 | $ 425,003 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 189,912 | 269,304 |
Philippines | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 37,790 | 90,356 |
Thailand | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 32,547 | 34,233 |
Japan | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 14,898 | 9,537 |
Other | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 22,119 | $ 21,573 |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
Allowance for doubtful accounts receivable: | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 1,189 | $ 738 | $ 719 |
Charges (Releases) to Expenses/Revenues | 490 | 576 | 39 |
Deductions | (651) | (125) | (20) |
Balance at End of Period | 1,028 | 1,189 | 738 |
Deferred tax valuation allowance | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 525,021 | 358,424 | 334,671 |
Charges (Releases) to Expenses/Revenues | (66,347) | 166,597 | 23,753 |
Deductions | 0 | 0 | 0 |
Balance at End of Period | $ 458,674 | $ 525,021 | $ 358,424 |
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