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 2011, which ended Dec. 25, 2010.

Revenue for the quarter was $95.6 million, up 47 percent compared to the same quarter a year ago, and down five percent sequentially from the previous quarter. Gross margin for the quarter was 55 percent, up slightly from 54 percent in the third quarter a year ago, and down slightly from 56 percent for the previous quarter.

Total GAAP operating expenses for the quarter were approximately $29.4 million, compared to $27.7 million in the previous quarter. Non-GAAP operating expenses for the quarter were approximately $28.0 million compared to $27.6 million in the previous quarter.

Income from operations on a GAAP basis was approximately $23.1 million, representing an operating margin of 24 percent. Income from operations on a non-GAAP basis was $24.5 million, representing a non-GAAP operating margin of 26 percent

GAAP net income for the quarter was approximately $24.6 million, or $0.34 per share, based on 71.7 million average diluted shares outstanding. Non-GAAP net income was $24.2 million, or $0.34 per diluted share.

A reconciliation of the non-GAAP charges is included in a table below.

“Revenue from portable audio products exceeded our expectations, helping to drive overall Q3 revenue growth of 47 percent year over year,” said Jason Rhode, president and chief executive officer, Cirrus Logic. “Looking at both the fourth quarter and the next fiscal year, we believe we will continue to grow revenue at a faster rate than the semiconductor industry as a whole. With the production ramps continuing this next year in portable audio, new design wins in other audio markets, and ongoing design activity with our strategic energy initiatives, we are very excited about the opportunities ahead.”

Outlook for Fourth Quarter FY 2011 (ending Mar. 26, 2011):

• Revenue is expected to range between $88 million and $94 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 $31 million and $33 million, which include approximately $2.5 million in share-based compensation and amortization of acquisition-related intangibles expenses.

Other Highlights and Company News

• The company repurchased and retired approximately 1.76 million shares during the quarter, at an average price of $12.94, while cash and cash equivalents grew by approximately $8 million during the quarter.
• Total employee headcount during the quarter increased to 549 employees, a net increase of 15 employees.
• In January, the company began construction on its new headquarters facility at 800 W. Sixth Street in downtown Austin that is expected to be completed in the summer of 2012.
• Thurman Case, chief financial officer, will be presenting at the Stifel Nicolaus Technology Conference in San Francisco on February 11, at 11:00 a.m. ET. A live webcast will be available in the investor relations section of cirrus website.

Conference Call

Cirrus Logic management will hold a conference call to discuss the company’s results for the third quarter fiscal year 2011, on January 27, at 10:30 a.m. ET. The conference call will be simulcast over the internet in the investor relations section of the company website at http://investor.cirrus.com. A replay of the conference call will be available on the website listed above beginning one hour following the completion of the call, or by calling (303) 590-3030, or toll-free at (800) 406-7325 (Access Code: 4398706).

Shareholders who would like to submit a question to be addressed during the call are requested to email investor.relations@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 income from operations, non-GAAP operating margin 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 2011 revenue, our future growth rate, 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: the level of orders and shipments during the fourth quarter of fiscal year 2011, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; the loss of a key customer; and the risk factors listed in our Form 10-K for the year ended March 27, 2010, 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.

CRUS-F

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. 25, Sep. 25, Dec. 26, Dec. 25, Dec. 26, 2010 2010 2009 2010 2009 Q3'11 Q2'11 Q3'10 Q3'11 Q3'10 Audio products $ 72,716 $ 71,171 $ 47,063 $ 197,875 $ 113,121 Energy products   22,909     29,427     18,099     80,263     45,229   Net revenue   95,625     100,598     65,162     278,138     158,350   Cost of sales   43,163     43,818     30,276     122,161     74,903   Gross Profit 52,462 56,780 34,886 155,977 83,447   Operating expenses: Research and development 16,348 15,450 12,834 46,890 37,697 Selling, general and administrative 13,431 15,372 11,428 42,814 33,245 Restructuring and other costs, net (395 ) 401 86 6 (79 ) Charge (proceeds) from non-marketable securities - 500 (500 ) 500 (500 ) Provision for (proceeds from) litigation expenses and settlements (30 ) - 135 105 (2,610 ) Patent purchase agreement, net   -     (4,000 )   -     (4,000 )   (1,400 ) Total operating expenses   29,354     27,723     23,983     86,315     66,353     Operating income 23,108 29,057 10,903 69,662 17,094   Interest income, net 212 233 269 673 1,108 Other expense, net   (31 )   (14 )   (7 )   (13 )   (46 ) Income before income taxes 23,289 29,276 11,165 70,322 18,156 Provision (benefit) for income taxes   (1,332 )   (1,598 )   110     (2,775 )   116   Net income $ 24,621   $ 30,874   $ 11,055   $ 73,097   $ 18,040     Basic income per share: $ 0.36 $ 0.45 $ 0.17 $ 1.08 $ 0.28 Diluted income per share: $ 0.34 $ 0.42 $ 0.17 $ 1.02 $ 0.28   Weighted average number of shares: Basic 68,074 68,513 65,302 67,731 65,279 Diluted 71,695 72,878 65,632 71,868 65,452   Prepared in accordance with Generally Accepted Accounting Principles   CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEET (in thousands)     Dec. 25,   Mar. 27,   Dec. 26, 2010 2010 2009 (unaudited) (unaudited) ASSETS Current assets Cash and cash equivalents $ 28,491 $ 16,109 $ 24,831 Restricted investments 5,755 5,855 5,755 Marketable securities 156,052 85,384 77,636 Accounts receivable, net 37,266 23,963 25,131 Inventories 40,196 35,396 30,408 Other current assets   22,612     18,148     6,318   Total Current Assets 290,372 184,855 170,079   Long-term marketable securities - 34,278 25,235 Property and equipment, net 32,919 18,674 18,499 Intangibles, net 20,688 21,896 22,654 Goodwill 6,027 6,027 6,027 Other assets   1,978     1,880     1,906   Total Assets $ 351,984   $ 267,610   $ 244,400     LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 25,371 $ 20,340 $ 25,172 Accrued salaries and benefits 9,509 9,962 7,609 Other accrued liabilities 5,034 5,100 5,047 Deferred income on shipments to distributors   7,108     6,488     4,033  

Total Current Liabilities

47,022 41,890 41,861   Long-term restructuring accrual 179 596 492 Other long-term obligations 6,113 6,523 6,555   Stockholders' equity: Capital stock 982,610 952,803 950,023 Accumulated deficit (683,220 ) (733,553 ) (753,911 ) Accumulated other comprehensive loss   (720 )   (649 )   (620 ) Total Stockholders' Equity   298,670     218,601     195,492   Total Liabilities and Stockholders' Equity $ 351,984   $ 267,610   $ 244,400     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)

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.

         

 

Three Months Ended

Nine Months Ended

  Dec. 25, Sep. 25, Dec. 26, Dec. 25, Dec. 26, 2010 2010 2009 2010 2009 Net Income Reconciliation Q3'11 Q2'11 Q3'10 Q3'11 Q3'10 GAAP Net Income $ 24,621 $ 30,874 $ 11,055 $ 73,097 $ 18,040 Amortization of acquisition intangibles 353 353 404 1,076 1,212 Stock based compensation expense 1,467 3,025 1,397 5,848 4,133 Facility Related adjustments - (100 ) (375 ) (96 ) (397 ) International sales reorganization charges - - - 790 - Provision for (proceeds from) litigation expenses and settlements (30 ) - 135 105 (2,610 ) Restructuring and other costs, net (395 ) 401 86 6 (79 ) Charge (proceeds) from non-marketable securities - 500 (500 ) 500 (500 ) Patent purchase agreement, net - (4,000 ) - (4,000 ) (1,400 ) Provision (benefit) for income taxes   (1,847 )   (2,229 )   -     (4,076 )   -   Non-GAAP Net Income $ 24,169   $ 28,824   $ 12,202   $ 73,250   $ 18,399     Earnings Per Share Reconciliation GAAP Diluted income per share $ 0.34 $ 0.42 $ 0.17 $ 1.02 $ 0.28 Effect of Amortization of acquisition intangibles - - 0.01 0.02 0.02 Effect of Stock based compensation expense 0.02 0.04 0.02 0.08 0.06 Effect of Facility Related adjustments - - - - (0.01 ) Effect of International sales reorganization charges - - - 0.01 - Effect of Provision for (proceeds from) litigation expenses and settlements - - - - (0.04 ) Effect of Restructuring and other costs, net - 0.01 - - - Effect of Charge (proceeds) from non-marketable securities - 0.01 (0.01 ) 0.01 (0.01 ) Effect of Patent purchase agreement, net - (0.05 ) - (0.06 ) (0.02 ) Effect of Provision (benefit) for income taxes (0.02 ) (0.03 ) - (0.06 ) -           Non-GAAP Diluted income per share $ 0.34   $ 0.40   $ 0.19   $ 1.02   $ 0.28     Operating Income Reconciliation GAAP Operating Income (Loss) $ 23,108 $ 29,057 $ 10,903 $ 69,662 $ 17,094 GAAP Operating Margin 24 % 29 % 17 % 25 % 11 % Amortization of acquisition intangibles 353 353 404 1,076 1,212 Stock compensation expense - COGS 46 64 55 165 150 Stock compensation expense - R&D 579 617 438 1,717 1,380 Stock compensation expense - SG&A 842 2,344 904 3,966 2,603 Facility Related adjustments - (100 ) (375 ) (96 ) (397 ) International sales reorganization charges - - - 790 - Provision for (proceeds from) litigation expenses and settlements (30 ) - 135 105 (2,610 ) Restructuring and other costs, net (395 ) 401 86 6 (79 ) Charge (proceeds) from non-marketable securities - 500 (500 ) 500 (500 ) Patent purchase agreement, net   -     (4,000 )   -     (4,000 )   (1,400 ) Non-GAAP Operating Income (Loss) $ 24,503   $ 29,236   $ 12,050   $ 73,891   $ 17,453   Non-GAAP Operating Margin 26 % 29 % 18 % 27 % 11 %   Operating Expense Reconciliation GAAP Operating Expenses $ 29,354 $ 27,723 $ 23,983 $ 86,315 $ 66,353 Amortization of acquisition intangibles (353 ) (353 ) (404 ) (1,076 ) (1,212 ) Stock compensation expense - R&D (579 ) (617 ) (438 ) (1,717 ) (1,380 ) Stock compensation expense - SG&A (842 ) (2,344 ) (904 ) (3,966 ) (2,603 ) Facility Related adjustments - 100 375 96 397 International sales reorganization charges - - - (790 ) - Provision for (proceeds from) litigation expenses and settlements 30 - (135 ) (105 ) 2,610 Restructuring and other costs, net 395 (401 ) (86 ) (6 ) 79 Charge (proceeds) from non-marketable securities - (500 ) 500 (500 ) 500 Patent purchase agreement, net   -     4,000     -     4,000     1,400   Non-GAAP Operating Expenses $ 28,005   $ 27,608   $ 22,891   $ 82,251   $ 66,144