SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported): July
23, 2014
|
CIRRUS
LOGIC, INC.
|
|
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
|
0-17795
|
|
77-0024818
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification No.)
|
|
800 West 6th Street, Austin, TX
|
|
|
78701
|
|
(Address
of Principal Executive Offices)
|
|
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (512)
851-4000
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
⃞
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
⃞
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
⃞
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On July 23, 2014, the Company issued a press release announcing its
results for its first quarter fiscal year 2015. The full text of the
press release is furnished as Exhibit No. 99.1 to this Current Report on
Form 8-K.
Item 7.01 Regulation FD.
On July 23, 2014, in addition to issuing a press release, the Company
posted on its website a shareholder letter to investors summarizing the
financial results for its first quarter of fiscal year 2015. The full
text of the shareholder letter is furnished as Exhibit No. 99.2 to this
Current Report on Form 8-K.
Use of Non-GAAP Financial Information
To supplement Cirrus Logic's financial statements presented on a GAAP
basis, Cirrus has provided certain non-GAAP financial information,
including operating expenses, net income, income from operations,
operating margin and diluted earnings per share. A reconciliation of the
adjustments to GAAP results is included in the tables to the press
release furnished as Exhibit No. 99.1 to this Current Report on Form
8-K. 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.
The information contained in Items 2.02, 7.01, and 9.01 in this Current
Report on Form 8-K and the exhibits furnished hereto contain
forward-looking statements regarding the Company and cautionary
statements identifying important factors that could cause actual results
to differ materially from those anticipated. In addition, this
information shall not be deemed “filed” for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
otherwise subject to the liabilities of that section, nor shall they be
deemed incorporated by reference in any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except as expressly set forth
by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Exhibit
99.1 Cirrus Logic, Inc. press release dated July 23, 2014
Exhibit
99.2 Cirrus Logic, Inc. shareholder letter dated July 23,
2014
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, Registrant has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
|
|
CIRRUS LOGIC, INC.
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
July 23, 2014
|
By:
|
/s/ Thurman K. Case
|
|
|
|
|
Name: Thurman K. Case
|
|
|
|
|
Title: Chief Financial Officer
|
|
EXHIBIT INDEX
Exhibit No.
|
Description
|
|
|
|
|
99.1
|
Registrant's press release dated July 23, 2014
|
|
99.2
|
Cirrus Logic, Inc. shareholder letter dated July 23, 2014
|
|
|
|
|
|
|
|
Exhibit 99.1
|
|
Exhibit 99.2
|
|
Exhibit 99.1
Cirrus
Logic Reports Q1 Revenue of $152.6 Million
Expects
to Close Wolfson Microelectronics Acquisition in September Quarter
AUSTIN, Texas--(BUSINESS WIRE)--July 23, 2014--Cirrus Logic, Inc.
(Nasdaq: CRUS), a leader in high-precision analog and digital
signal processing components, today posted on its investor relations
website at http://investor.cirrus.com the quarterly Shareholder
Letter that contains the complete financial results for the first
quarter fiscal year 2015, which ended June 28, 2014, as well as the
company’s current business outlook.
“We are pleased with our Q1 financial results as we experienced strong
demand for our custom and general market portable audio products across
our customer base,” said Jason Rhode, president and chief executive
officer. “With a robust pipeline of innovative products and the pending
acquisition of Wolfson, we are strengthening the company’s position as a
market leader in audio with a comprehensive product portfolio,
differentiated software capabilities and a top-tier customer base.”
Reported Financial Results – First Quarter FY15
-
Revenue of $152.6 million;
-
Gross margin of 49 percent;
-
GAAP operating expenses of $59.5 million and non-GAAP operating
expenses of $51.6 million; and
-
GAAP diluted earnings per share of $0.16 and non-GAAP diluted earnings
per share of $0.37.
A reconciliation of the non-GAAP charges is included in the tables
accompanying this press release.
Business Outlook – Second Quarter FY15
Guidance for the September quarter excludes any potential financial
contributions or expenses associated with the Wolfson acquisition.
-
Revenue is expected to range between $175 million and $195 million;
-
Gross margin is expected to be between 47 percent and 49 percent; and
-
Combined R&D and SG&A expenses are expected to range between $58
million and $62 million, which includes approximately $7 million in
share-based compensation and amortization of acquired intangibles.
Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to answer
questions related to its financial results and business outlook.
Participants may listen to the conference call on the Cirrus Logic
website. Participants who would like to submit a question to be
addressed during the call are requested to email investor.relations@cirrus.com.
A replay of the webcast can be accessed on the Cirrus Logic website
approximately two hours following its completion, or by calling (404)
537-3406, or toll-free at (855) 859-2056 (Access Code: 66089509).
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 Phoenix, 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
operating expenses, net income, operating profit and 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. 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 second quarter fiscal year 2015 revenue, gross margin,
combined research and development and selling, general and
administrative expense levels, share-based compensation expense and
amortization of acquired intangibles. 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 second quarter of fiscal year 2015, as well as customer
cancellations of orders, or the failure to place orders consistent with
forecasts; and the risk factors listed in our Form 10-K for the year
ended March 29, 2014, 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, Cirrus and SoundClear are registered 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
|
|
|
|
Jun. 28,
|
|
Mar. 29,
|
|
Jun. 29,
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
Q1'15
|
|
Q4'14
|
|
Q1'14
|
Audio products
|
|
|
$
|
141,161
|
|
|
$
|
137,773
|
|
|
$
|
143,666
|
|
Energy products
|
|
|
|
11,404
|
|
|
|
11,886
|
|
|
|
11,459
|
|
Net revenue
|
|
|
|
152,565
|
|
|
|
149,659
|
|
|
|
155,125
|
|
Cost of sales
|
|
|
|
77,190
|
|
|
|
76,291
|
|
|
|
75,627
|
|
Gross Profit
|
|
|
|
75,375
|
|
|
|
73,368
|
|
|
|
79,498
|
|
Gross Margin
|
|
|
|
49.4
|
%
|
|
|
49.0
|
%
|
|
|
51.2
|
%
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
39,777
|
|
|
|
35,511
|
|
|
|
28,530
|
|
Selling, general and administrative
|
|
|
|
19,683
|
|
|
|
17,823
|
|
|
|
19,198
|
|
Restructuring and other costs
|
|
|
|
-
|
|
|
|
(26
|
)
|
|
|
(430
|
)
|
Patent infringement settlements, net
|
|
|
|
-
|
|
|
|
-
|
|
|
|
695
|
|
Total operating expenses
|
|
|
|
59,460
|
|
|
|
53,308
|
|
|
|
47,993
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
15,915
|
|
|
|
20,060
|
|
|
|
31,505
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
|
(467
|
)
|
|
|
267
|
|
|
|
158
|
|
Other income (expense), net
|
|
|
|
501
|
|
|
|
(27
|
)
|
|
|
(17
|
)
|
Income before income taxes
|
|
|
|
15,949
|
|
|
|
20,300
|
|
|
|
31,646
|
|
Provision (benefit) for income taxes
|
|
|
|
5,701
|
|
|
|
7,698
|
|
|
|
11,004
|
|
Net income
|
|
|
$
|
10,248
|
|
|
$
|
12,602
|
|
|
$
|
20,642
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
$
|
0.33
|
|
Diluted earnings per share:
|
|
|
$
|
0.16
|
|
|
$
|
0.20
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
62,032
|
|
|
|
62,215
|
|
|
|
63,363
|
|
Diluted
|
|
|
|
64,688
|
|
|
|
64,545
|
|
|
|
66,188
|
|
|
|
|
|
|
|
|
|
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.
Certain modifications to prior year non-GAAP presentation has been
made and had no material effect on the results of operations.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Jun. 28,
|
|
Mar. 29,
|
|
Jun. 29,
|
|
|
|
2014
|
|
2014
|
|
2013
|
Net Income Reconciliation
|
|
|
Q1'15
|
|
Q4'14
|
|
Q1'14
|
GAAP Net Income
|
|
|
$
|
10,248
|
|
|
$
|
12,602
|
|
|
$
|
20,642
|
|
Amortization of acquisition intangibles
|
|
|
|
246
|
|
|
|
217
|
|
|
|
-
|
|
Stock based compensation expense
|
|
|
|
5,622
|
|
|
|
5,545
|
|
|
|
5,774
|
|
Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
695
|
|
Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
(26
|
)
|
|
|
(430
|
)
|
Wolfson acquisition items
|
|
|
|
2,304
|
|
|
|
-
|
|
|
|
-
|
|
Provision (benefit) for income taxes
|
|
|
|
5,226
|
|
|
|
7,808
|
|
|
|
10,161
|
|
Non-GAAP Net Income
|
|
|
$
|
23,646
|
|
|
$
|
26,146
|
|
|
$
|
36,842
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Reconciliation
|
|
|
|
|
|
|
|
GAAP Diluted earnings per share
|
|
|
$
|
0.16
|
|
|
$
|
0.20
|
|
|
$
|
0.31
|
|
Effect of Stock based compensation expense
|
|
|
|
0.09
|
|
|
|
0.09
|
|
|
|
0.09
|
|
Effect of Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
Effect of Wolfson acquisition items
|
|
|
|
0.04
|
|
|
|
-
|
|
|
|
-
|
|
Effect of Provision (benefit) for income taxes
|
|
|
|
0.08
|
|
|
|
0.12
|
|
|
|
0.15
|
|
Non-GAAP Diluted earnings per share
|
|
|
$
|
0.37
|
|
|
$
|
0.41
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
Operating Income Reconciliation
|
|
|
|
|
|
|
|
GAAP Operating Income
|
|
|
$
|
15,915
|
|
|
$
|
20,060
|
|
|
$
|
31,505
|
|
GAAP Operating Profit
|
|
|
|
10
|
%
|
|
|
13
|
%
|
|
|
20
|
%
|
Amortization of acquisition intangibles
|
|
|
|
246
|
|
|
|
217
|
|
|
|
-
|
|
Stock compensation expense - COGS
|
|
|
|
231
|
|
|
|
287
|
|
|
|
6
|
|
Stock compensation expense - R&D
|
|
|
|
2,543
|
|
|
|
2,546
|
|
|
|
2,854
|
|
Stock compensation expense - SG&A
|
|
|
|
2,848
|
|
|
|
2,712
|
|
|
|
2,914
|
|
Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
695
|
|
Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
(26
|
)
|
|
|
(430
|
)
|
Wolfson acquisition items
|
|
|
|
2,192
|
|
|
|
-
|
|
|
|
-
|
|
Non-GAAP Operating Income
|
|
|
$
|
23,975
|
|
|
$
|
25,796
|
|
|
$
|
37,544
|
|
Non-GAAP Operating Profit
|
|
|
|
16
|
%
|
|
|
17
|
%
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
Operating Expense Reconciliation
|
|
|
|
|
|
|
|
GAAP Operating Expenses
|
|
|
$
|
59,460
|
|
|
$
|
53,308
|
|
|
$
|
47,993
|
|
Amortization of acquisition intangibles
|
|
|
|
(246
|
)
|
|
|
(217
|
)
|
|
|
-
|
|
Stock compensation expense - R&D
|
|
|
|
(2,543
|
)
|
|
|
(2,546
|
)
|
|
|
(2,854
|
)
|
Stock compensation expense - SG&A
|
|
|
|
(2,848
|
)
|
|
|
(2,712
|
)
|
|
|
(2,914
|
)
|
Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(695
|
)
|
Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
26
|
|
|
|
430
|
|
Wolfson acquisition items
|
|
|
|
(2,192
|
)
|
|
|
-
|
|
|
|
-
|
|
Non-GAAP Operating Expenses
|
|
|
$
|
51,631
|
|
|
$
|
47,859
|
|
|
$
|
41,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIRRUS LOGIC, INC.
|
CONSOLIDATED CONDENSED BALANCE SHEET
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Jun. 28,
|
|
Mar. 29,
|
|
Jun. 29,
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
(unaudited)
|
|
|
|
(unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
268,544
|
|
|
$
|
31,850
|
|
|
$
|
67,170
|
|
Restricted investments
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Marketable securities
|
|
|
|
75,198
|
|
|
|
263,417
|
|
|
|
165,540
|
|
Accounts receivable, net
|
|
|
|
77,219
|
|
|
|
63,220
|
|
|
|
63,642
|
|
Inventories
|
|
|
|
92,002
|
|
|
|
69,743
|
|
|
|
110,624
|
|
Deferred tax asset
|
|
|
|
19,921
|
|
|
|
22,024
|
|
|
|
54,774
|
|
Other current assets
|
|
|
|
40,469
|
|
|
|
25,079
|
|
|
|
20,810
|
|
Total Current Assets
|
|
|
|
573,353
|
|
|
|
475,333
|
|
|
|
482,560
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities
|
|
|
|
39,952
|
|
|
|
89,243
|
|
|
|
39,408
|
|
Property and equipment, net
|
|
|
|
102,765
|
|
|
|
103,650
|
|
|
|
99,169
|
|
Intangibles, net
|
|
|
|
11,341
|
|
|
|
11,999
|
|
|
|
4,714
|
|
Goodwill
|
|
|
|
16,367
|
|
|
|
16,367
|
|
|
|
6,027
|
|
Deferred tax asset
|
|
|
|
25,034
|
|
|
|
25,065
|
|
|
|
16,732
|
|
Other assets
|
|
|
|
1,007
|
|
|
|
3,087
|
|
|
|
11,289
|
|
Total Assets
|
|
|
$
|
769,819
|
|
|
$
|
724,744
|
|
|
$
|
659,899
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
75,695
|
|
|
$
|
51,932
|
|
|
$
|
47,341
|
|
Accrued salaries and benefits
|
|
|
|
11,598
|
|
|
|
13,388
|
|
|
|
13,476
|
|
Other accrued liabilities
|
|
|
|
14,080
|
|
|
|
11,572
|
|
|
|
9,532
|
|
Deferred income on shipments to distributors
|
|
|
|
7,398
|
|
|
|
5,631
|
|
|
|
4,419
|
|
Total Current Liabilities
|
|
|
|
108,771
|
|
|
|
82,523
|
|
|
|
74,768
|
|
|
|
|
|
|
|
|
|
Other long-term obligations
|
|
|
|
4,039
|
|
|
|
4,863
|
|
|
|
9,706
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
1,088,493
|
|
|
|
1,078,878
|
|
|
|
1,048,497
|
|
Accumulated deficit
|
|
|
|
(430,663
|
)
|
|
|
(440,634
|
)
|
|
|
(472,180
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(821
|
)
|
|
|
(886
|
)
|
|
|
(892
|
)
|
Total Stockholders' Equity
|
|
|
|
657,009
|
|
|
|
637,358
|
|
|
|
575,425
|
|
Total Liabilities and Stockholders' Equity
|
|
|
$
|
769,819
|
|
|
$
|
724,744
|
|
|
$
|
659,899
|
|
|
|
|
|
|
|
|
|
Prepared in accordance with Generally Accepted Accounting
Principles
|
CONTACT:
Cirrus Logic, Inc.
Thurman K. Case, 512-851-4125
Chief
Financial Officer
Investor.Relations@cirrus.com
Exhibit 99.2
July 23, 2014 Letter to
Shareholders Q1 FY15 CIRRUS LOGIC, INC.
Dear Shareholders, Our
financial results for the June quarter were at the high end of guidance
as we delivered GAAP EPS of $0.16 and non-GAAP EPS of $0.37 on revenue
of $152.6 million. Sales of our portable audio products accelerated in
Q1, as we continued to experience robust demand for higher performance
audio solutions across our customer base. Sales in our energy division
remained relatively unchanged from the prior quarter. In the June
quarter, we began sampling several new audio products in advanced
geometries and are encouraged by the initial feedback from key
customers. Cirrus Logic announced its intention on April 29, 2014 to
acquire Wolfson Microelectronics for an enterprise value of
approximately $467 million. This acquisition augments the company’s core
audio signal processing product portfolio, provides differentiated
software capabilities, particularly in the Android ecosystem, and adds
new product categories such as MEMS microphones. With a diverse customer
base and an end-to-end audio solution consisting of a broad selection of
custom-and general-market products, the combination of the two companies
reinforces Cirrus Logic’s position as a market leader. The additional
resources will enable the company to better address the substantial
opportunities driving future revenue growth in the portable audio
market. During the quarter, we made progress toward meeting the
necessary UK regulatory approvals for the acquisition of Wolfson and
expect to complete the transaction during our second fiscal quarter. As
we do not have an exact close date, please note that all forecasts that
we are providing for the second quarter do not include any potential
contribution or expenses associated with the Wolfson acquisition.
Revenue and Gross Margins
Revenue for the first quarter was $152.6 million, up two percent
sequentially and down two percent from the prior year, as broad based
unit growth in our portable audio business offset a shift in mix to
products with lower average selling prices. Sales in energy were down
slightly sequentially and flat year over year. Our relationship with our
largest customer remains outstanding with ongoing design activity on
various products. While we understand there is intense interest in this
customer, in accordance with our policy, we do not discuss specifics
about our business relationship. Accurately predicting the timing of
revenue between quarters can be challenging as orders may fluctuate,
especially in the September and December quarters when steep product
ramps for the holiday season occur. Taking this into consideration,
revenue in the September quarter is forecast to range from $175 to $195
million, with the midpoint up 21 percent quarter over quarter and down
three percent year over year. Sequentially, the forecasted increase in
revenue is primarily attributable to strength in portable audio driven
by expected new product ramps in the second half of CY14. On a
year-over-year basis, strong demand for our general market portable
audio codecs, amplifiers and converters is offsetting some of the
previously discussed impact from the shift in mix toward products with
lower average selling prices. Figure A: Cirrus Logic Revenue Q1 FY12 to
Q2 FY15 (M) *Midpoint)of)guidance)as)of)July)23,)2014) Q1/FY12' Q2/FY12'
Q3/FY12' Q4/FY12' Q1/FY13' Q2/FY13' Q3/FY13' Q4/FY13' Q1/FY14' Q2/FY14'
Q3/FY14' Q4/FY14' Q1/FY15' Q2/FY15' $92'' $102'' $122'' $111'' $99''
$194'' $310'' $207'' $155'' $191'' $219'' $150'' $153'' $185*''
Gross margins for the June
quarter were 49.4 percent, reflecting increased shipments of certain
higher margin, general-market audio products. In the September quarter,
we expect gross margin to range from 47 percent to 49 percent. Our
long-term gross margin expectations remain in the mid-40 percent
range. Operating Profit and Earnings Operating profit in the June
quarter was 10 percent GAAP and 16 percent non-GAAP. Operating expenses
on a GAAP basis were $59.5 million, including $5.4 million in
share-based compensation. The sequential increase of $6.2 million
includes costs associated with tape outs and product development. The
year-over-year increase in operating expenses of $11.5 million was
largely due to additional headcount, product development expenses and
tape outs. Operating expenses for the September quarter should range
from $58 million to $62 million, including $7 million in share-based
compensation and amortization of acquired intangibles. Our total
headcount in Q1 was 739, down 12 employees from the March quarter.
Cirrus Logic’s business model requires a substantial investment in R&D
for the development of innovative products that are essential for future
growth. Over the past six months the company has taped out numerous
custom-and general-market products in 55, 65, and 180 nanometers
designed for the rapidly growing audio and voice markets. We expect
development activity to accelerate in the September quarter as we
continue to tape out new mixed-signal products in advanced
geometries. Figure B: Cirrus Logic GAAP R&D and SG&A Expenses/Headcount
Q1 FY12 to Q2 FY15 *Midpoint of guidance as of July 23, 2014 ($
millions, except headcount) 594 623 635 667 698 644 637 652 665 678 735
751 739 0 10 20 30 40 50 60 Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13
Q2/FY13 Q3/FY13 Q4/FY13 Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15
OpEx*SG&A R&D Headcount $M
The ending cash balance in
the June quarter was $383.7 million, relatively flat from the prior
quarter, due in part to expenditures associated with the Wolfson
acquisition. This transaction will be financed through a combination of
existing cash on the balance sheet and $225 million in debt funding.
Cash from operations in Q1 was $13 million. Taxes and Inventory Our GAAP
tax expense during the quarter was $5.7 million, which included $5.2
million of non-cash expense associated with our deferred tax asset and
other tax credits. We have approximately $48.9 million remaining of
deferred tax assets and other tax credits. We continue to actively
evaluate various long-term operating structures that could result in a
reduction of our overall corporate tax rate, including opportunities
associated with the acquisition of Wolfson. At this time, we expect our
effective quarterly cash tax rate to be less than four percent in Q2 and
we expect it to remain at that rate until we have depleted our remaining
deferred tax assets and other tax credits. Q1 inventory was $92
million, up from $69.7 million from the prior quarter, as we expect
increased product demand in the back half of the calendar year. We also
expect inventory growth in the September quarter to support customer
demand. Company Strategy Recently, we have seen a significant
transformation in the audio market as a wide range of OEMs developing
mobile consumer products have begun to view audio and voice as a way to
deliver highly differentiated consumer experiences, driving a
substantial increase in customers looking for devices with higher
performance, more features and more processing power. There is also
growing consumer demand in emerging markets for smartphones that deliver
high fidelity audio playback experiences that rival high-end consumer
audio/video equipment. Our broad portfolio of high performance audio
converters provide OEMs addressing these markets the ability to deliver
a best in class user experience, thus driving additional demand for
these products.
With a robust long-term
roadmap, Cirrus Logic is focused on strengthening our leadership
position in audio, organically and through the acquisition of Wolfson.
Our engineers are developing an innovative portfolio of custom-and
general-market products targeting audio and voice applications that fuse
our expertise in complex analog and mixed-signal processing with our
SoundClear® embedded software suite. We are excited to be sampling
several of our new, advanced geometry, high-performance products and are
actively engaged with customers on future designs. Further, the desire
for innovation in mobile accessories is expanding as new intelligent
products emerge and OEMs participate in and fuel the development of this
ecosystem. With an extensive range of advanced codecs, DSPs and
amplifiers, coupled with our SoundClear® noise suppression and echo
cancellation software, Cirrus Logic is well positioned to capitalize on
this emerging market. In the June quarter, we gained momentum in our
portable audio business. We are now shipping general market products
into multiple mobile handsets on seven unique customer platforms. During
the quarter, we ramped shipments of our boosted amplifier with speaker
protection and sound quality enhancement software to support the product
launch of a recently added top tier smartphone customer. Reviews of the
smartphone have been positive, contributing to increased interest for
this product. Although the amplifier market is highly competitive, we
are encouraged by our success with these products and expect to see
year-over-year unit growth in FY15. As the portable market evolves we
believe the requirements for advanced processing functionality in
amplifiers will increase considerably, enhancing Cirrus Logic’s
competitive advantage given our expertise in sophisticated analog and
mixed signal processing. Cirrus Logic introduced its first amplifier for
the portable market several years ago, and while we do not expect to win
every socket in the business, we are extremely pleased to have built a
highly profitable and growing business in a few short years.
As we highlighted in the
March quarter, a wide range of opportunities in audio and voice
applications have emerged that we believe will fuel future revenue
growth and diversification. As such, over the past few quarters we have
increased the percentage of company resources dedicated to audio. We
expect this focus to accelerate following the close of the Wolfson
acquisition. While the company is expanding its developments in audio,
we will continue to support retrofit LED lighting with existing products
as our team explores alternative markets where customers are willing to
pay a premium for higher performance products. With a strong
intellectual property portfolio and differentiating technology in the
LED lighting market we are evaluating various options to best capitalize
on our investment. Summary and Guidance For the September quarter,
excluding any potential financial contributions or expenses associated
with the Wolfson acquisition, we expect the following results: Revenue
to range between $175 million and $195 million; Gross margin to be
between 47 percent and 49 percent; and Combined R&D and SG&A expenses to
range between $58 million and $62 million, including approximately $7
million in share-based compensation expense and amortization of acquired
intangibles. In summary, we are pleased with our progress in Q1 as we
delivered strong financial results and gained momentum across our
portable audio products. We believe the portable audio market is in the
initial stages of the next wave of growth, driven by the desire to
differentiate products through the audio and voice experience. With a
strong pipeline of compelling products and the pending acquisition of
Wolfson, we are strengthening the company’s position as a market leader
in audio with a comprehensive custom-and general-market product
portfolio, differentiated software capabilities and a top-tier customer
base.
Sincerely, Jason Rhode
Thurman Case President and Chief Executive Officer Chief Financial
Officer Conference Call Q&A Session Cirrus Logic will host a live Q&A
session at 5 p.m. EDT today to answer questions related to its financial
results and business outlook. Participants may listen to the conference
call on the Cirrus Logic website. Participants who would like to submit
a question to be addressed during the call are requested to email
investor.relations@cirrus.com. A replay of the webcast can be accessed
on the Cirrus Logic website approximately two hours following its
completion, or by calling (404) 537-3406, or toll-free at (855)
859-2056 (Access Code: 66089509). Use of Non-GAAP Financial Information
This shareholder letter and its attachments include references to
non-GAAP financial information, including operating expenses, net
income, operating profit and 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 future growth expectations and our estimates of second quarter
fiscal year 2015 revenue, gross margin, combined research and
development and selling, general and administrative expense levels,
share-based compensation expense and amortization of acquired
intangibles. 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 level
of orders and shipments during the second quarter fiscal year 2015, as
well as customer cancellations of orders, or the failure to place orders
consistent with forecasts; and the risk factors listed in our Form 10-K
for the year ended March 29, 2014, 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, Cirrus and
SoundClear are registered trademarks of Cirrus Logic, Inc. All other
product names noted herein may be trademarks of their respective
holders. Summary financial data follows:
Jun. 28, Mar. 29, Jun. 29,
2014 2014 2013 Q1'15 Q4'14 Q1'14 Audio products 141,161 $ 137,773 $
143,666 $ Energy products 11,404 11,886 11,459 CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (unaudited) (in
thousands, except per share data) Three Months Ended Net revenue 152,565
149,659 155,125 Cost of sales 77,190 76,291 75,627 Gross Profit 75,375
73,368 79,498 Gross Margin 49.4% 49.0% 51.2% Research and development
39,777 35,511 28,530 Selling, general and administrative 19,683 17,823
19,198 Restructuring and other costs - (26) (430) Patent infringement
settlements, net - - 695 Total operating expenses 59,460 53,308 47,993
Operating income 15,915 20,060 31,505 Interest income, net (467) 267 158
Other income (expense), net 501 (27) (17) Income before income taxes
15,949 20,300 31,646 Provision (benefit) for income taxes 5,701 7,698
11,004 Net income 10,248 $ 12,602 $ 20,642 $ Basic earnings per share:
0.17 $ 0.20 $ 0.33 $ Diluted earnings per share: 0.16 $ 0.20 $ 0.31 $
Weighted average number of shares: Basic 62,032 62,215 63,363 Diluted
64,688 64,545 66,188 See notes to Consolidated Condensed Statement of
Operations Prepared in accordance with Generally Accepted Accounting
Principles
Jun. 28, Mar. 29, Jun. 29,
2014 2014 2013 Net Income Reconciliation Q1'15 Q4'14 Q1'14 GAAP Net
Income 10,248 $ 12,602 $ 20,642 $ Amortization of acquisition
intangibles 246 217 - Stock based compensation expense 5,622 5,545 5,774
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. Certain modifications to prior year non-GAAP
presentation have been made and had no material effect on the results of
operations. Three Months Ended (not prepared in accordance with GAAP)
CIRRUS LOGIC, INC. RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL
INFORMATION (unaudited, in thousands, except per share data) Provision
for litigation expenses and settlements - - 695 Restructuring and other
costs, net - (26) (430) Wolfson acquisition items 2,304 - - Provision
(benefit) for income taxes 5,226 7,808 10,161 Non-GAAP Net Income 23,646
$ 26,146 $ 36,842 $ Earnings Per Share Reconciliation GAAP Diluted
earnings per share 0.16 $ 0.20 $ 0.31 $ Effect of Stock based
compensation expense 0.09 0.09 0.09 Effect of Provision for litigation
expenses and settlements - - 0.01 Effect of Wolfson acquisition items
0.04 - - Effect of Provision (benefit) for income taxes 0.08 0.12 0.15
Non-GAAP Diluted earnings per share 0.37 $ 0.41 $ 0.56 $ Operating
Income Reconciliation GAAP Operating Income 15,915 $ 20,060 $ 31,505 $
GAAP Operating Profit 10% 13% 20% Amortization of acquisition
intangibles 246 217 - Stock compensation expense - COGS 231 287 6 Stock
compensation expense - R&D 2,543 2,546 2,854 Stock compensation expense
- SG&A 2,848 2,712 2,914 Provision for litigation expenses and
settlements - - 695 Restructuring and other costs, net - (26) (430)
Wolfson acquisition items 2,192 - - Non-GAAP Operating Income 23,975 $
25,796 $ 37,544 $ Non-GAAP Operating Profit 16% 17% 24% Operating
Expense Reconciliation GAAP Operating Expenses 59,460 $ 53,308 $ 47,993
$ Amortization of acquisition intangibles (246) (217) - Stock
compensation expense - R&D (2,543) (2,546) (2,854) Stock compensation
expense - SG&A (2,848) (2,712) (2,914) Provision for litigation expenses
and settlements - - (695) Restructuring and other costs, net - 26 430
Wolfson acquisition items (2,192) - -Non-GAAP Operating Expenses 51,631
$ 47,859 $ 41,960 $
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET Jun. 28, Mar. 29, Jun. 29, 2014
2014 2013 (unaudited) (unaudited) ASSETS Current assets Cash and cash
equivalents 268,544 $ 31,850 $ 67,170 $ Restricted investments - - -
Marketable securities 75,198 263,417 165,540 Accounts receivable, net
77,219 63,220 63,642 Inventories 92,002 69,743 110,624 Deferred tax
asset 19,921 22,024 54,774 Other current assets 40,469 25,079 20,810
Total Current Assets 573,353 475,333 482,560 Long-term marketable
securities 39,952 89,243 39,408 Property and equipment, net 102,765
103,650 99,169 Intangibles, net 11,341 11,999 4,714 Goodwill 16,367
16,367 6,027 (in thousands) Deferred tax asset 25,034 25,065 16,732
Other assets 1,007 3,087 11,289 Total Assets 769,819 $ 724,744 $ 659,899
$ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts
payable 75,695 $ 51,932 $ 47,341 $ Accrued salaries and benefits 11,598
13,388 13,476 Other accrued liabilities 14,080 11,572 9,532 Deferred
income on shipments to distributors 7,398 5,631 4,419 Total Current
Liabilities 108,771 82,523 74,768 Other long-term obligations 4,039
4,863 9,706 Stockholders' equity: Capital stock 1,088,493 1,078,878
1,048,497 Accumulated deficit (430,663) (440,634) (472,180) Accumulated
other comprehensive loss (821) (886) (892) Total Stockholders' Equity
657,009 637,358 575,425 Total Liabilities and Stockholders' Equity
769,819 $ 724,744 $ 659,899 $ Prepared in accordance with Generally
Accepted Accounting Principles
Cirrus Logic (NASDAQ:CRUS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cirrus Logic (NASDAQ:CRUS)
Historical Stock Chart
From Jul 2023 to Jul 2024