CRUS Cirrus Logic Inc

Cirrus Logic Inc. (NASDAQ:CRUS), a leader in high-precision analog, mixed-signal and embedded products for audio and industrial markets, today announced financial results for the fourth quarter and fiscal year 2007, which ended March 31, 2007. The company reported fourth quarter fiscal year 2007 revenue of $43.6 million, compared with $42.2 million of total revenue during the fourth quarter of fiscal year 2006. Fourth quarter gross margin was 60.2 percent compared to 58.1 percent for the fourth quarter of fiscal year 2006. Combined research and development (R&D) and selling, general and administrative (SG&A) expenses for the fourth fiscal quarter of 2007 were $25.8 million. R&D and SG&A expenses included $1.0 million in stock-based compensation expense due to the adoption of SFAS 123(R) at the beginning of this fiscal year, as well as $1.6 million in expenses associated with the company�s recently concluded stock-option review. R&D and SG&A expenses also included $1.0 million in facility-related charges, and a $0.4 million charge related to an executive termination agreement. Excluding these charges, combined non-GAAP R&D and SG&A expenses were $21.8 million. Fourth fiscal quarter net income was $7.3 million, or $0.08 per share based on 89.3 million diluted shares outstanding. These results include a $4.3 million impairment charge to our investment in Magnum Semiconductor, as well as a $0.5 million restructuring charge and an $8.2 million tax benefit. The non-GAAP net income for the quarter, excluding the items mentioned above, was $7.9 million or $0.09 per diluted share. Total cash and marketable securities at the end of the fourth fiscal quarter was $271.7 million, compared with $264.2 million at the end of the prior fiscal quarter, an increase of $7.5 million. �I�m pleased that our March quarter revenue came in at the high end of our expectations, with continued profitability highlighted by strong gross margins,� said Mike Hackworth, Cirrus Logic�s chairman and acting chief executive officer. �For the June quarter, we expect softer demand for legacy products as we transition to anticipated revenue growth for newer consumer products.� Outlook for First Quarter FY 2008 (ending June 30, 2007): Revenue is expected to range between $40 million and $44 million; Gross margin is expected to be between 58 percent and 60 percent; and Combined GAAP R&D and SG&A expenses are expected to range between $23 million and $25 million, including share-based compensation expense of approximately $1.1 million. Use of Non-GAAP Financial Information Cirrus Logic has included in this release certain financial information that has not been prepared in accordance with GAAP. A reconciliation of such non-GAAP financial information to the most comparable GAAP information is included in the financial statements portion of this release, as well as on our Web site in the Investors section at www.cirrus.com. This non-GAAP financial information is not meant as a substitute for the company�s GAAP results, but is included solely for informational and comparative purposes. Cirrus Logic management believes that certain non-GAAP financial information is useful to investors because it may enhance their understanding of the results and trends in the company�s business. Cirrus Logic also uses certain non-GAAP financial information internally to evaluate and manage the company�s operations. The non-GAAP financial information that the company uses may differ from that used by other companies. This non-GAAP financial information should be considered in addition to, and not as a substitute for, the company�s results that were prepared in accordance with GAAP. Conference Call Cirrus Logic management will hold a conference call to discuss the company�s results for the fourth quarter of fiscal year 2007, on May 9, 2007, at 5:00 p.m. EDT. Those wishing to join should call 303-262-2131 (passcode: Cirrus Logic) at approximately 4:50 p.m. EDT. A replay of the conference call will also be available beginning one hour after the completion of the call, until May 16, 2007. To access the recording, call 303-590-3000 (passcode: 11088085 #). A live and an archived webcast of the conference call will also be available via the company�s Web site at www.cirrus.com. Cirrus Logic, Inc. Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of consumer and industrial markets. Building on its diverse analog mixed-signal patent portfolio, Cirrus Logic delivers highly optimized products for consumer and commercial audio, automotive entertainment and industrial applications. The company operates from headquarters in Austin, Texas, with offices in Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com. Safe Harbor Statement Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements, including our estimates of first quarter fiscal year 2008 revenue, gross margin, combined research and development and selling, general and administrative expense levels, and share-based compensation expense. In some cases, forward-looking statements are identified by words such as we �expect,� �anticipate,� �target,� �project,� �believe,� �goals,� �estimates,� and �intend,� variations of these types of words and similar expressions are intended to identify these forward-looking statements. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the following: overall conditions in the semiconductor market; our ability to introduce new products on a timely basis and to deliver products that perform as anticipated; risks associated with international sales and international operations; the level of orders and shipments during the first quarter of fiscal year 2008, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; overall economic pressures; pricing pressures; hardware or software deficiencies; our dependence on subcontractors for assembly, manufacturing, packaging and testing functions; our ability to make continued sufficient investments in research and development; foreign currency fluctuations; the retention of key employees; expenses associated with the Company�s stock option investigation, and related on-going litigation and administrative proceedings; and the risk factors listed in our Form 10-K/A for the year ended March 25, 2006, and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise. Cirrus Logic and Cirrus are trademarks of Cirrus Logic Inc. Summary financial data follows: CIRRUS LOGIC, INC.CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS(unaudited)(in thousands, except per share data) � Quarter Ended � Mar. 31,2007 Dec. 30,2006 Mar. 25,2006 � Net revenue $ 43,647� $ 45,297� $ 42,158� Cost of sales 17,369� 17,886� 17,683� Gross Margin 26,278� 27,411� 24,475� Gross Margin Percentage 60.2% 60.5% 58.1% � Operating expenses: Research and development 10,998� 11,190� 10,570� Selling, general and administrative 14,797� 13,478� 9,731� Restructuring and other costs 521� 1,013� -� Impairment of goodwill and other intangibles 4,290� -� -� Acquired in process R&D -� 1,925� -� License agreement -� -� (7,000) Total operating expenses 30,606� 27,606� 13,301� � Income (loss) from operations (4,328) (195) 11,174� � Realized gain on marketable equity securities -� -� -� Interest income, net 3,412� 3,615� 2,510� Other income, net 71� 76� 21� Income (loss) before income taxes (845) 3,496� 13,705� Provision (benefit) for income taxes (8,124) 32� (1,241) Net income $ 7,279� $ 3,464� $ 14,946� � Basic income per share: $ 0.08� $ 0.04� $ 0.17� Diluted income per share: $ 0.08� $ 0.04� $ 0.17� � Basic weighted average common shares outstanding 88,076� 87,756� 86,718� Diluted weighted average common shares outstanding 89,333� 88,725� 88,924� � Prepared in accordance with Generally Accepted Accounting Principles CIRRUS LOGIC, INC.RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION(unaudited, in thousands, except per share data)(not prepared in accordance with GAAP) � We use these non-GAAP financial numbers to assist us in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges. � Quarter Ended � Mar. 31,2007 � GAAP net income $ 7,279� Non-GAAP adjustments: Add: Stock compensation expense 975� Stock compensation review expense 1,630� Impairment of Magnum investment 4,290� Restructuring charges 521� Facility-related charges 1,017� Executive termination agreement 378� Benefit for income taxes (8,154) Non-GAAP net income $ 7,936� � � GAAP diluted earnings per share $ 0.08� Non-GAAP adjustments: Effect of the stock compensation expense 0.01� Effect of stock compensation review expense 0.02� Effect of impairment of Magnum investment 0.05� Effect of restructuring charges 0.01� Effect of facility-related charges 0.01� Effect of termination agreement 0.00� Effect of benefit for income taxes (0.09) Non-GAAP diluted earnings per share $ 0.09� � CIRRUS LOGIC, INC.CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS(in thousands, except per share data) � Twelve Months Ended � Mar. 31,2007 Mar. 25,2006 � Net revenue $ 182,304� $ 193,694� Cost of sales 73,290� 88,502� Gross Margin 109,014� 105,192� Gross Margin Percentage 59.8% 54.3% � Operating expenses: Research and development 43,961� 45,772� Selling, general and administrative 51,755� 51,271� Restructuring and other costs 1,106� 2,311� Impairment of goodwill and other intangibles 4,290� -� Acquired in process R&D 1,925� -� Litigation settlement, net -� (24,758) License agreement -� (7,000) Total operating expenses 103,037� 67,596� � Income from operations 5,977� 37,596� � Realized gain on marketable equity securities 193� 388� Interest income, net 13,146� 7,461� Other income (expense), net 177� (54) Income before income taxes 19,493� 45,391� Benefit for income taxes (8,402) (7,035) Net income $ 27,895� $ 52,426� � � Basic income per share: $ 0.32� $ 0.61� � Diluted income per share: $ 0.31� $ 0.60� � � Basic weighted average common shares outstanding 87,643� 86,036� Diluted weighted average common shares outstanding 88,805� 87,775� � Prepared in accordance with Generally Accepted Accounting Principles CIRRUS LOGIC, INC.CONSOLIDATED CONDENSED BALANCE SHEET(in thousands) � Mar. 31,2007 Dec. 30,2006 Mar. 25,2006 ASSETS (unaudited) Current assets Cash and cash equivalents $ 87,960� $ 81,885� $ 116,675� Restricted investments 5,755� 5,755� 5,755� Marketable securities 178,000� 176,527� 102,335� Accounts receivable, net 19,127� 16,585� 20,937� Inventories 16,496� 20,331� 18,708� Other current assets 13,699� 6,654� 7,747� Total Current Assets 321,037� 307,737� 272,157� � Long-term marketable securities -� -� 18,703� Property and equipment, net 11,407� 12,324� 14,051� Intangibles, net 8,550� 9,039� 2,966� Goodwill 6,461� 6,146� -� Investment in Magnum Semiconductor 3,657� 7,947� 7,947� Other assets 1,948� 3,253� 3,217� Total Assets $ 353,060� $ 346,446� $ 319,041� � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 10,434� $ 12,142� $ 14,129� Accrued salaries and benefits 7,816� 6,349� 6,460� Other accrued liabilities 10,519� 12,425� 10,053� Deferred income on shipments to distributors 4,290� 4,907� 7,098� Income taxes payable 1,561� 2,091� 2,228� Total Current Liabilities 34,620� 37,914� 39,968� � Long-term restructuring accrual 3,418� 3,367� 4,694� Other long-term obligations 10,085� 9,763� 10,109� � Stockholders' equity: Capital stock 926,900� 924,665� 914,235� Accumulated deficit (621,180) (628,459) (649,075) Accumulated other comprehensive loss (783) (804) (890) Total Stockholders' Equity 304,937� 295,402� 264,270� Total Liabilities and Stockholders' Equity $ 353,060� $ 346,446� $ 319,041� � Prepared in accordance with Generally Accepted Accounting Principles