CRUS Cirrus Logic Inc

Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing components, today announced financial results for the third quarter of fiscal year 2010, which ended Dec. 26, 2009.

Revenue for the quarter was $65.2 million, up 49 percent compared to $43.8 million during the third quarter of fiscal year 2009 and $55.7 million in the previous quarter. Gross margin for the quarter was 54 percent, down from 55 percent in the quarter a year ago and up sequentially from 52 percent for the previous quarter.

Total GAAP operating expenses for the quarter were approximately $24.0 million, up from $22.5 million in the previous quarter. GAAP operating expenses in the third quarter included a net benefit of $500,000 in proceeds from the sale of non-marketable securities that had been previously written off, as well as an additional $289,000 in net facility related credits. GAAP operating expenses also include charges of $1,342,000 for stock-based compensation, $404,000 in acquisition-related amortization of intangibles, and $135,000 related to a litigation settlement taken during the quarter. Non-GAAP operating expenses for the quarter were approximately $22.9 million, compared to $22.4 million for the September quarter.

Income from operations on a GAAP basis was approximately $10.9 million or 17 percent operating margin. Excluding the items noted above, non-GAAP income from operations was $12.1 million, or 19 percent operating margin.

Cirrus Logic reported third quarter GAAP net income of approximately $11.1 million, or $0.17 per share based on 65.6 million average diluted shares outstanding. Excluding the items noted above, on a non-GAAP basis the company reported net income of $12.2 million, or $0.19 per diluted share.

“We are extremely pleased with our Q3 results. Continued market share gains in portable audio drove our overall year-over-year growth, and strength across many of our product lines allowed revenue to exceed our initial projections for the quarter. We shipped more than a million units of our newest power meter family for the first time, and a general recovery of our traditional industrial business contributed to our improved margins,” said Jason Rhode, president and chief executive officer, Cirrus Logic. “We expect this progress to continue through FY11, and we are now focusing on our plans to drive growth in FY12 and beyond.”

Outlook for Fourth Quarter FY 2010 (ending March 27, 2010):

• Revenue is expected to range between $55 million and $59 million;
• Gross margin is expected to be between 54 percent and 56 percent; and
• Combined R&D and SG&A expenses are expected to range between $24 million and $26 million, which include approximately $1.5 million in share-based compensation and amortization of acquisition-related intangibles expenses.

Conference Call

Cirrus Logic management will hold a conference call to discuss the company’s results for the third quarter of fiscal year 2010, on Jan. 28, 2010 at 10:30 a.m. EST. Those wishing to join should call 480-629-9866, or 877-549-7750 (Conference ID: 4198207) at approximately 10:20 a.m. EST. A replay of the conference call will also be available beginning one hour after the completion of the call, until Feb. 4, 2010. To access the recording, dial 303-590-3030, or toll-free at 800-406-7325 (Conference ID: 4198207). A live and an archived webcast of the conference call will also be available via the Investor section of the company’s website at www.cirrus.com.

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in Tucson, Ariz., Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including non-GAAP operating expenses, non-GAAP net income, non-GAAP net income from operations, and non-GAAP diluted earnings per share. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

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 fourth quarter fiscal year 2010 revenue, year-over-year revenue growth, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense, and amortization of acquired intangible expenses. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. 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 economic pressures and general market and economic conditions; overall conditions in the semiconductor market; the level of orders and shipments during the fourth quarter of fiscal year 2010, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; the loss of a key customer; pricing pressures; and the risk factors listed in our Form 10-K for the year ended March 28, 2009, 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)        

Three Months Ended

Nine Months Ended

  Dec. 26, Sep. 26, Dec. 27, Dec. 26, Dec. 27, 2009 2009 2008 2009 2008 Q3'10 Q2'10 Q3'09 Q3'10 Q3'09 Audio products $ 47,063 $ 41,271 $ 25,870 $ 113,121 $ 78,504 Energy products   18,099     14,403     17,963   45,229     62,618 Net revenue   65,162     55,674     43,833   158,350     141,122 Cost of sales   30,276     26,700     19,755   74,903     62,407 Gross Profit 34,886 28,974 24,078 83,447 78,715   Operating expenses: Research and development 12,834 12,355 10,896 37,697 33,365 Selling, general and administrative 11,428 11,746 11,055 33,245 34,655 Restructuring and other costs 86 (165 ) - (79 ) - Proceeds from non-marketable securities (500 ) - - (500 ) - Provision for litigation expenses and settlements 135 - - (2,610 ) 1,771 Patent agreement, net   -     (1,400 )   -   (1,400 )   - Total operating expenses   23,983     22,536     21,951   66,353     69,791   Operating income (loss) 10,903 6,438 2,127 17,094 8,924   Interest income, net 269 376 679 1,108 2,252 Other income (expense), net   (7 )   (21 )   10   (46 )   153 Income (loss) before income taxes 11,165 6,793 2,816 18,156 11,329 Provision (benefit) for income taxes   110     29     66   116     86 Net income (loss) $ 11,055   $ 6,764   $ 2,750 $ 18,040   $ 11,243

 

Basic income (loss) per share: $ 0.17 $ 0.10 $ 0.04 $ 0.28 $ 0.17 Diluted income (loss) per share: $ 0.17 $ 0.10 $ 0.04 $ 0.28 $ 0.17   Weighted average number of shares: Basic 65,302 65,281 65,172 65,279 65,588 Diluted 65,632 65,473 65,274 65,452 65,927  

 

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.       Three Months Ended

Nine Months Ended

  Dec. 26, Sep. 26, Dec. 27, Dec. 26, Dec. 27, 2009 2009 2008 2009 2008

Net Income Reconciliation

Q3'10 Q2'10 Q3'09 Q3'10 Q3'09 GAAP Net Income $ 11,055 $ 6,764 $ 2,750 $ 18,040 $ 11,243 Acquisition related items 404 404 364 1,212 400 Stock based compensation expense 1,397 1,383 1,310 4,133 4,210 Facility and other related adjustments (375) - (36) (397) 180 Provision for litigation expenses and settlements 135 - - (2,610) 1,771

Restructuring and other costs, net

86 (165) - (79) -

Proceeds from non-marketable securities and other

(500) - - (500) 11 Patent agreement, net - (1,400) - (1,400) - Non-GAAP Net Income (Loss) $ 12,202 $ 6,986 $ 4,388 $ 18,399 $ 17,815   Earnings Per Share reconciliation GAAP Diluted income per share $ 0.17 $ 0.10 $ 0.04 $ 0.28 $ 0.17 Effect of Acquisition related items 0.01 0.01 0.01 0.02 0.01 Effect of Stock based compensation expense 0.02 0.02 0.02 0.06 0.06 Effect of Facility and other related adjustments - - - (0.01) - Effect of Provision for litigation expenses and settlements - - - (0.04) 0.03

Effect of Restructuring and other costs, net

- - - - -

Effect of Proceeds from non-marketable securities and other

(0.01) - - (0.01) - Effect of Patent agreement, net - (0.02) - (0.02) - Non-GAAP Net income (loss) per share $ 0.19 $ 0.11 $ 0.07 $ 0.28 $ 0.27   Operating Income Reconciliation GAAP Operating Income (Loss) $ 10,903 $ 6,438 $ 2,127 $ 17,094 $ 8,924 Stock compensation expense - COGS 55 43 55 150 300 Stock compensation expense - R&D 438 428 522 1,380 1,545 Stock compensation expense - SG&A 904 912 733 2,603 2,365 Acquisition related intangibles and other 404 404 364 1,212 400 Facility and other related adjustments (375) - (36) (397) 180 Provision for litigation expenses and settlements 135 - - (2,610) 1,771

Restructuring and other costs, net

86 (165) - (79) -

Proceeds from non-marketable securities and other

(500) - - (500) 11 Patent agreement, net - (1,400) - (1,400) - Non-GAAP Operating Income (Loss) $ 12,050 $ 6,660 $ 3,765 $ 17,453 $ 15,496   Operating Expense Reconciliation GAAP Operating Expenses $ 23,983 $ 22,536 $ 21,951 $ 66,353 $ 69,791 Stock compensation expense - R&D (438) (428) (522) (1,380) (1,545) Stock compensation expense - SG&A (904) (912) (733) (2,603) (2,365) Amortization of acquisition intangibles (404) (404) (364) (1,212) (1,092) Facility and other related adjustments 375 - 36 397 (180) Provision for litigation expenses and settlements (135) - - 2,610 (1,771)

Restructuring and other costs, net

(86) 165 - 79 -

Proceeds from non-marketable securities and other

500 - - 500 (11)

Patent agreement, net

- 1,400 - 1,400 - Non-GAAP Operating Expenses $ 22,891 $ 22,357 $ 20,368 $ 66,144 $ 62,827 CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEET (in thousands)         Dec. 26,   Mar. 28,   Dec. 27, 2009 2009 2008 (unaudited) (unaudited) ASSETS Current assets Cash and cash equivalents $ 24,831 $ 31,504 $ 28,134 Restricted investments 5,755 5,755 5,755 Marketable securities 77,636 79,346 83,647 Accounts receivable, net 25,131 10,814 15,638 Inventories 30,408 19,878 23,409 Other current assets 6,318 5,359 8,395 Total Current Assets 170,079 152,656 164,978   Long-term marketable securities 25,235 3,627 - Property and equipment, net 18,499 19,367 20,063 Intangibles, net 22,654 23,309 24,573 Goodwill 6,027 6,027 6,027 Other assets 1,906 2,018 2,114 Total Assets $ 244,400 $ 207,004 $ 217,755   LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 25,172 $ 9,886 $ 8,295 Accrued salaries and benefits 7,609 6,432 6,183 Other accrued liabilities 5,047 6,004 7,391 Deferred income on shipments to distributors 4,033 3,426 8,038 Total Current Liabilities 41,861 25,748 29,907   Long-term restructuring accrual 492 931 1,011 Other long-term obligations 6,555 7,397 6,912   Stockholders' equity: Capital stock 950,023 945,455 944,369 Accumulated deficit (753,911) (771,951) (764,183) Accumulated other comprehensive loss (620) (576) (261) Total Stockholders' Equity 195,492 172,928 179,925 Total Liabilities and Stockholders' Equity $ 244,400 $ 207,004 $ 217,755   Prepared in accordance with Generally Accepted Accounting Principles