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): January
28, 2015
|
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 January 28, 2015, the Company issued a press release announcing its
results for its third quarter and first nine months of 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 January 28, 2015, in addition to issuing a press release, the Company
posted on its website a shareholder letter to investors summarizing the
financial results for its third quarter and first nine months 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 gross margin, 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 January 28, 2015
|
|
Exhibit 99.2
|
Cirrus Logic, Inc. shareholder letter dated January 28, 2015
|
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:
|
January 28, 2015
|
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 January 28, 2015
|
99.2
|
Cirrus Logic, Inc. shareholder letter dated January 28, 2015
|
|
|
Exhibit 99.1
Exhibit 99.2
Exhibit 99.1
Cirrus
Logic Reports Revenue of $298.6 Million
Growth
in the December Quarter Driven by Strong Demand for Portable Audio
Products
AUSTIN, Texas--(BUSINESS WIRE)--January 28, 2015--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 third
quarter fiscal year 2015, which ended Dec. 27, 2014, as well as the
company’s current business outlook.
“Q3 was an excellent quarter for Cirrus Logic, as strength in portable
audio fueled revenue growth and operating profit expansion,” said Jason
Rhode, president and chief executive officer. “We are very excited about
the outlook for Cirrus Logic. We expect to deliver year-over-year
revenue growth in Q4 and FY16 driven by a continued strong market for
our innovative audio and voice products, a compelling lineup of new
product introductions, and significantly improved contributions from the
Wolfson acquisition.”
Reported Financial Results – Third Quarter FY15
-
Revenue of $298.6 million;
-
GAAP gross margin of 43.8 percent and non-GAAP gross margin of 46.2
percent;
-
GAAP operating expenses of $86.5 million and non-GAAP operating
expenses of $70.6 million; and
-
GAAP diluted earnings per share of $0.35 and non-GAAP diluted earnings
per share of $0.97.
A reconciliation of the non-GAAP charges is included in the tables
accompanying this press release.
Business Outlook – Fourth Quarter FY15
-
Revenue is expected to range between $220 million and $240 million;
-
GAAP gross margin is expected to be between 45 percent and 47 percent;
and
-
Combined R&D and SG&A expenses are expected to range between $88
million and $92 million, which includes approximately $8 million in
share-based compensation and $7 million in amortization of acquired
intangibles.
Cirrus Logic will host a live Q&A session at 5 p.m. EST 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: 61707935).
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, industrial
and energy-related applications. The company operates from headquarters
in Austin, Texas, with offices in the United States, United Kingdom,
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
gross margins, operating expenses, net income, operating profit and
income, 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 fourth 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 fourth 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 Wolfson are registered trademarks of Cirrus
Logic, Inc. or its subsidiaries. All other company or product names
noted herein may be trademarks of their respective holders.
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. 27,
|
|
Sep. 27,
|
|
Dec. 28,
|
|
|
Dec. 27,
|
|
Dec. 28,
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
|
|
Q3'15
|
|
Q2'15
|
|
Q3'14
|
|
|
Q3'15
|
|
Q3'14
|
Portable products
|
|
|
$
|
253,355
|
|
|
$
|
163,563
|
|
|
$
|
181,749
|
|
|
|
$
|
529,487
|
|
|
$
|
449,305
|
|
Consumer, automotive and other products
|
|
|
|
45,251
|
|
|
|
46,651
|
|
|
|
37,134
|
|
|
|
|
131,898
|
|
|
|
115,374
|
|
Net sales
|
|
|
|
298,606
|
|
|
|
210,214
|
|
|
|
218,883
|
|
|
|
|
661,385
|
|
|
|
564,679
|
|
Cost of sales
|
|
|
|
167,775
|
|
|
|
109,647
|
|
|
|
115,034
|
|
|
|
|
354,612
|
|
|
|
281,884
|
|
Gross profit
|
|
|
|
130,831
|
|
|
|
100,567
|
|
|
|
103,849
|
|
|
|
|
306,773
|
|
|
|
282,795
|
|
Gross margin
|
|
|
|
43.8
|
%
|
|
|
47.8
|
%
|
|
|
47.4
|
%
|
|
|
|
46.4
|
%
|
|
|
50.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
55,474
|
|
|
|
44,557
|
|
|
|
32,426
|
|
|
|
|
139,808
|
|
|
|
90,678
|
|
Selling, general and administrative
|
|
|
|
27,783
|
|
|
|
21,545
|
|
|
|
18,625
|
|
|
|
|
69,011
|
|
|
|
57,038
|
|
Acquisition related costs
|
|
|
|
3,200
|
|
|
|
14,937
|
|
|
|
-
|
|
|
|
|
18,137
|
|
|
|
-
|
|
Restructuring and other
|
|
|
|
-
|
|
|
|
1,455
|
|
|
|
12
|
|
|
|
|
1,455
|
|
|
|
(572
|
)
|
Patent infringement settlements, net
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
695
|
|
Total operating expenses
|
|
|
|
86,457
|
|
|
|
82,494
|
|
|
|
51,063
|
|
|
|
|
228,411
|
|
|
|
147,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
44,374
|
|
|
|
18,073
|
|
|
|
52,786
|
|
|
|
|
78,362
|
|
|
|
134,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
|
(1,042
|
)
|
|
|
(2,670
|
)
|
|
|
222
|
|
|
|
|
(4,179
|
)
|
|
|
581
|
|
Other expense
|
|
|
|
(1,071
|
)
|
|
|
(11,994
|
)
|
|
|
(45
|
)
|
|
|
|
(12,564
|
)
|
|
|
(100
|
)
|
Income before income taxes
|
|
|
|
42,261
|
|
|
|
3,409
|
|
|
|
52,963
|
|
|
|
|
61,619
|
|
|
|
135,437
|
|
Provision for income taxes
|
|
|
|
19,532
|
|
|
|
2,557
|
|
|
|
11,463
|
|
|
|
|
27,790
|
|
|
|
39,928
|
|
Net income
|
|
|
$
|
22,729
|
|
|
$
|
852
|
|
|
$
|
41,500
|
|
|
|
$
|
33,829
|
|
|
$
|
95,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
$
|
0.36
|
|
|
$
|
0.01
|
|
|
$
|
0.66
|
|
|
|
$
|
0.54
|
|
|
$
|
1.51
|
|
Diluted earnings per share:
|
|
|
$
|
0.35
|
|
|
$
|
0.01
|
|
|
$
|
0.63
|
|
|
|
$
|
0.52
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
62,885
|
|
|
|
62,241
|
|
|
|
62,854
|
|
|
|
|
62,386
|
|
|
|
63,170
|
|
Diluted
|
|
|
|
65,214
|
|
|
|
65,085
|
|
|
|
65,368
|
|
|
|
|
65,024
|
|
|
|
65,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Nine Months Ended
|
|
|
|
Dec. 27,
|
|
Sep. 27,
|
|
Dec. 28,
|
|
|
Dec. 27,
|
|
Dec. 28,
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Net Income Reconciliation
|
|
|
Q3'15
|
|
Q2'15
|
|
Q3'14
|
|
|
Q3'15
|
|
Q3'14
|
GAAP Net Income
|
|
|
$
|
22,729
|
|
|
$
|
852
|
|
|
$
|
41,500
|
|
|
|
$
|
33,829
|
|
|
$
|
95,509
|
|
Amortization of acquisition intangibles
|
|
|
|
5,151
|
|
|
|
2,524
|
|
|
|
275
|
|
|
|
|
7,921
|
|
|
|
275
|
|
Stock based compensation expense
|
|
|
|
7,815
|
|
|
|
6,496
|
|
|
|
6,016
|
|
|
|
|
19,933
|
|
|
|
17,529
|
|
Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
695
|
|
Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
1,455
|
|
|
|
12
|
|
|
|
|
1,455
|
|
|
|
(572
|
)
|
Wolfson acquisition items
|
|
|
|
9,903
|
|
|
|
30,875
|
|
|
|
-
|
|
|
|
|
43,082
|
|
|
|
-
|
|
Provision (benefit) for income taxes
|
|
|
|
17,714
|
|
|
|
1,764
|
|
|
|
10,300
|
|
|
|
|
24,704
|
|
|
|
36,839
|
|
Non-GAAP Net Income
|
|
|
$
|
63,312
|
|
|
$
|
43,966
|
|
|
$
|
58,103
|
|
|
|
$
|
130,924
|
|
|
$
|
150,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted earnings per share
|
|
|
$
|
0.35
|
|
|
$
|
0.01
|
|
|
$
|
0.63
|
|
|
|
$
|
0.52
|
|
|
$
|
1.45
|
|
Effect of Amortization of acquisition intangibles
|
|
|
|
0.08
|
|
|
|
0.04
|
|
|
|
-
|
|
|
|
|
0.12
|
|
|
|
-
|
|
Effect of Stock based compensation expense
|
|
|
|
0.12
|
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
|
0.31
|
|
|
|
0.27
|
|
Effect of Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
0.01
|
|
Effect of Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
0.03
|
|
|
|
-
|
|
|
|
|
0.02
|
|
|
|
(0.01
|
)
|
Effect of Wolfson acquisition items
|
|
|
|
0.15
|
|
|
|
0.47
|
|
|
|
-
|
|
|
|
|
0.66
|
|
|
|
-
|
|
Effect of Provision (benefit) for income taxes
|
|
|
|
0.27
|
|
|
|
0.03
|
|
|
|
0.16
|
|
|
|
|
0.38
|
|
|
|
0.56
|
|
Non-GAAP Diluted earnings per share
|
|
|
$
|
0.97
|
|
|
$
|
0.68
|
|
|
$
|
0.89
|
|
|
|
$
|
2.01
|
|
|
$
|
2.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Income
|
|
|
$
|
44,374
|
|
|
$
|
18,073
|
|
|
$
|
52,786
|
|
|
|
$
|
78,362
|
|
|
$
|
134,956
|
|
GAAP Operating Profit
|
|
|
|
15
|
%
|
|
|
9
|
%
|
|
|
24
|
%
|
|
|
|
12
|
%
|
|
|
24
|
%
|
Amortization of acquisition intangibles
|
|
|
|
5,151
|
|
|
|
2,524
|
|
|
|
275
|
|
|
|
|
7,921
|
|
|
|
275
|
|
Stock compensation expense - COGS
|
|
|
|
273
|
|
|
|
253
|
|
|
|
332
|
|
|
|
|
757
|
|
|
|
577
|
|
Stock compensation expense - R&D
|
|
|
|
2,904
|
|
|
|
2,781
|
|
|
|
2,834
|
|
|
|
|
8,228
|
|
|
|
7,846
|
|
Stock compensation expense - SG&A
|
|
|
|
4,638
|
|
|
|
3,462
|
|
|
|
2,850
|
|
|
|
|
10,948
|
|
|
|
9,106
|
|
Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
695
|
|
Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
1,455
|
|
|
|
12
|
|
|
|
|
1,455
|
|
|
|
(572
|
)
|
Wolfson acquisition items
|
|
|
|
9,903
|
|
|
|
16,547
|
|
|
|
-
|
|
|
|
|
28,642
|
|
|
|
-
|
|
Non-GAAP Operating Income
|
|
|
$
|
67,243
|
|
|
$
|
45,095
|
|
|
$
|
59,089
|
|
|
|
$
|
136,313
|
|
|
$
|
152,883
|
|
Non-GAAP Operating Profit
|
|
|
|
23
|
%
|
|
|
21
|
%
|
|
|
27
|
%
|
|
|
|
21
|
%
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Expenses
|
|
|
$
|
86,457
|
|
|
$
|
82,494
|
|
|
$
|
51,063
|
|
|
|
$
|
228,411
|
|
|
$
|
147,839
|
|
Amortization of acquisition intangibles
|
|
|
|
(5,151
|
)
|
|
|
(2,524
|
)
|
|
|
(275
|
)
|
|
|
|
(7,921
|
)
|
|
|
(275
|
)
|
Stock compensation expense - R&D
|
|
|
|
(2,904
|
)
|
|
|
(2,781
|
)
|
|
|
(2,834
|
)
|
|
|
|
(8,228
|
)
|
|
|
(7,846
|
)
|
Stock compensation expense - SG&A
|
|
|
|
(4,638
|
)
|
|
|
(3,462
|
)
|
|
|
(2,850
|
)
|
|
|
|
(10,948
|
)
|
|
|
(9,106
|
)
|
Provision for litigation expenses and settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(695
|
)
|
Restructuring and other costs, net
|
|
|
|
-
|
|
|
|
(1,455
|
)
|
|
|
(12
|
)
|
|
|
|
(1,455
|
)
|
|
|
572
|
|
Wolfson acquisition items
|
|
|
|
(3,200
|
)
|
|
|
(14,937
|
)
|
|
|
-
|
|
|
|
|
(20,329
|
)
|
|
|
-
|
|
Non-GAAP Operating Expenses
|
|
|
$
|
70,564
|
|
|
$
|
57,335
|
|
|
$
|
45,092
|
|
|
|
$
|
179,530
|
|
|
$
|
130,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin/Profit Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Gross Margin
|
|
|
$
|
130,831
|
|
|
$
|
100,567
|
|
|
$
|
103,849
|
|
|
|
$
|
306,773
|
|
|
$
|
282,795
|
|
GAAP Gross Profit
|
|
|
|
43.8
|
%
|
|
|
47.8
|
%
|
|
|
47.4
|
%
|
|
|
|
46.4
|
%
|
|
|
50.1
|
%
|
Wolfson acquisition items
|
|
|
|
6,703
|
|
|
|
1,610
|
|
|
|
-
|
|
|
|
|
8,313
|
|
|
|
-
|
|
Stock compensation expense - COGS
|
|
|
|
273
|
|
|
|
253
|
|
|
|
332
|
|
|
|
|
757
|
|
|
|
577
|
|
Non-GAAP Gross Margin
|
|
|
$
|
137,807
|
|
|
$
|
102,430
|
|
|
$
|
104,181
|
|
|
|
$
|
315,843
|
|
|
$
|
283,372
|
|
Non-GAAP Gross Profit
|
|
|
|
46.2
|
%
|
|
|
48.7
|
%
|
|
|
47.6
|
%
|
|
|
|
47.8
|
%
|
|
|
50.2
|
%
|
|
|
|
|
|
|
CIRRUS LOGIC, INC.
|
CONSOLIDATED CONDENSED BALANCE SHEET
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 27,
|
|
Mar. 29,
|
|
Dec. 28,
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
(unaudited)
|
|
|
|
(unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
66,607
|
|
|
$
|
31,850
|
|
|
$
|
74,690
|
|
Marketable securities
|
|
|
|
106,061
|
|
|
|
263,417
|
|
|
|
215,792
|
|
Accounts receivable, net
|
|
|
|
148,386
|
|
|
|
63,220
|
|
|
|
109,535
|
|
Inventories
|
|
|
|
73,896
|
|
|
|
69,743
|
|
|
|
69,985
|
|
Deferred tax asset
|
|
|
|
14,143
|
|
|
|
22,024
|
|
|
|
33,155
|
|
Other current assets
|
|
|
|
27,081
|
|
|
|
25,079
|
|
|
|
25,662
|
|
Total current Assets
|
|
|
|
436,174
|
|
|
|
475,333
|
|
|
|
528,819
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities
|
|
|
|
3,404
|
|
|
|
89,243
|
|
|
|
37,115
|
|
Property and equipment, net
|
|
|
|
137,291
|
|
|
|
103,650
|
|
|
|
102,542
|
|
Intangibles, net
|
|
|
|
181,675
|
|
|
|
11,999
|
|
|
|
13,427
|
|
Goodwill
|
|
|
|
264,879
|
|
|
|
16,367
|
|
|
|
16,335
|
|
Deferred tax asset
|
|
|
|
24,991
|
|
|
|
25,065
|
|
|
|
17,354
|
|
Other assets
|
|
|
|
16,654
|
|
|
|
3,087
|
|
|
|
6,848
|
|
Total assets
|
|
|
$
|
1,065,068
|
|
|
$
|
724,744
|
|
|
$
|
722,440
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
77,195
|
|
|
$
|
51,932
|
|
|
$
|
60,493
|
|
Accrued salaries and benefits
|
|
|
|
20,164
|
|
|
|
13,388
|
|
|
|
13,937
|
|
Deferred income
|
|
|
|
5,417
|
|
|
|
5,631
|
|
|
|
4,998
|
|
Other accrued liabilities
|
|
|
|
27,402
|
|
|
|
11,572
|
|
|
|
12,881
|
|
Total current liabilities
|
|
|
|
130,178
|
|
|
|
82,523
|
|
|
|
92,309
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
200,439
|
|
|
|
-
|
|
|
|
-
|
|
Other long-term liabilities
|
|
|
|
21,073
|
|
|
|
4,863
|
|
|
|
5,108
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
1,135,719
|
|
|
|
1,078,878
|
|
|
|
1,069,113
|
|
Accumulated deficit
|
|
|
|
(421,514
|
)
|
|
|
(440,634
|
)
|
|
|
(443,322
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(827
|
)
|
|
|
(886
|
)
|
|
|
(768
|
)
|
Total stockholders' equity
|
|
|
|
713,378
|
|
|
|
637,358
|
|
|
|
625,023
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,065,068
|
|
|
$
|
724,744
|
|
|
$
|
722,440
|
|
|
|
|
|
|
|
|
|
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
January 28 2015 Cirrus
Logic Letter to Shareholders Q3 FY15 CIRRUS LOGIC, INC. 800 WEST SIXTH
STREET, AUSTIN, TEXAS 78701
Dear Shareholders, We are
very pleased with Cirrus Logic’s financial results for the December
quarter as we delivered year-over-year and sequential revenue growth,
expanded operating profit and continued to generate cash. Revenue for
the quarter exceeded our expectations at $298.6 million due to increased
sales of our portable audio products. During the quarter, we continued
to gain traction in portable audio and remained engaged in on-going
design efforts at numerous leading smartphone and tablet manufacturers.
The company has invested a significant amount of R&D dollars and
engineering resources over the past several years to target
opportunities in the rapidly emerging audio and voice markets. We have
strengthened our relationships with existing customers and established
new relationships with key players in these markets. Furthermore,
through the acquisition of Wolfson we broadened our product lines to
include additional smart codecs, MEMS microphones, and embedded
software. With a comprehensive portfolio of custom-and general-market
products that span the complete audio signal chain from capture to
Figure A: Cirrus Logic Q3 FY15 GAAP to Non-GAAP Reconciliation GAAP
Acquisitions Other Non-GAAP Revenue Gross Margin Dollars Gross Margin
Percent Operating Expense Operating Income Operating Income Percent
Other Income/(Expense) Income Tax Benefit /(Expense) Net Income Diluted
EPS *Complete GAAP to Non-GAPP reconciliations available on page 12 $
millions, except EPS $298.6 $298.6 $130.8 $6.7 $0.3 $137.8 44% 46% $86.5
($3.2) ($12.7) $70.6 $44.3 $9.9 $13.0 $67.2 15% 23% ($2.1) ($2.1)
($19.5) $17.7 ($1.8) $22.7 $9.9 $30.7 $63.3 $0.35 $0.15 $0.47 $0.97
playback, the company is
leveraging our leadership position to expand our addressable market and
increase content per device. Revenue and Gross Margins Revenue for the
third quarter was $298.6 million, including $30.8 million of
contribution from Wolfson Microelectronics. On a standalone basis,
Cirrus Logic’s revenue increased 36 percent sequentially and 22 percent
year over year to $267.8 million, as we continued to experience strong
demand for our portable audio products. In Q3, revenue generated by
Portable Audio Products contributed approximately 85 percent of sales
and Non-Portable Audio and Other Products represented roughly 15
percent. Our largest customer contributed approximately 78 percent of
total revenue in Q3. Our relationship with this customer remains
outstanding with design activity continuing 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. In the March quarter we anticipate revenue to range from
$220 million to $240 million. Sales of our portable audio components
continue to be stronger than anticipated for FY15 and we expect our
annual revenue, excluding Wolfson, to be up significantly year over
year. In addition, we are very pleased with the progress we are making
integrating Figure B: Cirrus Logic Revenue Q1 FY12 to Q4 FY15 (M) $92
$102 $122 $111 $99 $194 $310 $207 $155 $191 $219 $150 $153 $210 $299
$230* *Mid point of guidance as of January 28, 2015 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 Q3/FY15 Q4/FY15
Wolfson. This business
should grow significantly in the March quarter on both a year-over-year
and a sequential basis as their smart codec share expands at existing
customers. GAAP gross margin for the December quarter was 43.8 percent
and non-GAAP gross margin was 46.2 percent. GAAP gross margins reflect
roughly 230 basis points of costs related to accounting requirements
associated with the fair value write up of inventory acquired through
the Wolfson transaction and a seasonally higher mix of portable
products. In the March quarter, we expect gross margin to range from 45
percent to 47 percent as the inventory related charges are essentially
behind us. Our long-term gross margin expectations remain in the mid-40
percent range. Operating Profit and Cash Operating profit in the
December quarter was 15 percent GAAP and 23 percent on a non-GAAP basis.
GAAP operating expenses were $86.5 million and non-GAAP operating
expenses were $70.6 million, inclusive of a full quarter of Wolfson
costs. GAAP operating expenses contain approximately $7.5 million in
share-based compensation and $5.2 million in amortization of acquired
intangibles. These expenses also reflect $3.2 million in costs
associated with the acquisition of Wolfson, including $2.6 million in
share-based compensation. In the March quarter R&D and SG&A expenses
should range from $88 million to $92 million, including Figure C: Cirrus
Logic GAAP R&D and SG&A Expenses/Headcount Q1 FY12 to Q4 FY15 $M 90 80
70 60 50 40 30 20 10 0 Q1/FY12 Q2/FY12 Q3/FY12 Q4/FY12 Q1/FY13 Q2/FY13
Q3/FY13 Q4/FY13 Q1/FY14 Q2/FY14 Q3/FY14 Q4/FY14 Q1/FY15 Q2/FY15 Q3/FY15
Q4/FY15 *Mid point guidance as of January 28, 2015 **Operating expense
and headcount Increase reflects acquisition of Wolfson Microelectronics
($ millions, except headcount) 594 623 635 667 698 644 637 652 665 678
735 752 739 1,099** 1,102 R&D Headcount SG&A OpEx*
$8 million in share-based
compensation and $7 million in amortization of acquired intangibles. Our
total headcount exiting Q3 was 1,102. The ending cash balance in the
December quarter was $176 million, up $33 million from the prior
quarter. Cash from operations was $61.4 million. The company’s balance
sheet reflects $200 million of debt associated with funding the
acquisition of Wolfson, down $26 million from the prior quarter.
Interest expense related to this debt is currently expected to be
approximately $1 million per quarter. In the December quarter we
utilized approximately $10.5 million to repurchase 579,633 shares of
common stock at an average price of $18.17. As of December 27, 2014, we
have roughly $51.7 million remaining in our share buyback program and we
expect to continue to evaluate opportunities to repurchase shares from
time to time. Taxes and Inventory Our GAAP tax expense during the
quarter was $19.5 million, which included $17.7 million of non-cash
charges associated with our deferred tax asset and other tax credits. We
expect our effective quarterly cash tax rate to be less than four
percent for Q4 FY15, at which time our U.S. deferred tax assets and
other tax credits should be largely depleted. We anticipate paying an
annual worldwide effective tax rate of approximately 30 percent in FY16.
Moving forward, we expect a growing portion of our revenue and income
will be generated offshore; accordingly, our worldwide effective tax
rate has the potential to be further reduced in FY17 and beyond. Q3
inventory was $73.9 million, down from $121.2 million in Q2. The
reduction in inventory was larger than anticipated as sales of certain
portable audio products exceeded expectations. Inventory in the March
quarter should decline further as we continue to experience strong
demand for many of these products.
Company Strategy Cirrus
Logic has been a premier supplier of high-fidelity audio components for
many years. Our strategy of providing innovative solutions to leaders in
fast growing markets where our technology is viewed as an important
feature in the end product has been a key factor in our success.
Recently, we have experienced a substantial increase in demand across
the mobile handset market for advanced audio and voice technology that
helps to differentiate our customers’ products. In 2012, we began
shipping devices in high volume that moved beyond the traditional
functionality found in high-fidelity audio components and incorporated
advanced signal processing in the form of active noise cancellation. As
a result, we increased the value of our products and significantly
expanded our SAM to include handsets that differentiate on voice as well
as audio use cases. We have continued to pursue a strategy of increasing
content with our customers by providing the very best hardware, software
and associated signal processing algorithms that focus on the audio and
voice experience in mobile applications. For example, our new 55nm smart
codecs integrate the functionality of several discrete components,
including codecs, audio and voice DSPs, and class-D amplifiers, into one
device with complex digital signal processing capabilities and
programmable DSPs. With a robust product roadmap that features new
audio and voice technologies such as enhanced multi-microphone
capability and always on voice activation, we believe the continued
implementation of this strategy has positioned Cirrus Logic extremely
well for growth in FY16 and subsequent years. Delivering outstanding
performance utilizing advanced audio and voice processing technology
such as active noise cancellation required a significant investment and
the sustained efforts of Cirrus Logic’s best engineers across both the
analog and digital domains. We initially developed components that
incorporated some of these advanced features in 180nm; however, this
process node limited what we could achieve in terms of signal processing
capabilities, power consumption and die size. As a result, we began a
multi year process to transition a large portion of our product
portfolio to 55nm, which required a considerable amount of effort,
including the fundamental redesign of our analog
intellectual property.
These products have been well received by customers and we expect volume
shipments to begin in FY16. We believe the additional functionality
incorporated into our smart codecs, the decrease in power consumption
and the sizeable increase in memory and digital signal processing
capability enabled by this process transition will allow the company to
command higher ASPs for these higher value next generation products
versus their 180nm counterparts. In addition to funding the transition
of our portfolio to a more capable process node, the company’s financial
performance during the past five years has also allowed us to hire a
number of very talented engineers, which further fueled the development
of audio and voice products. Despite our rapid growth, the opportunities
for our innovative technology have outpaced our ability to pursue them
organically. Through the acquisition of Acoustic Technologies in 2013
and Wolfson in 2014, the company has accelerated our strategic roadmap
and strengthened our product portfolio with additional smart codecs, as
well as MEMS microphones and best-in-class embedded software. We are
extremely pleased with these acquisitions as they play a key role in the
execution of our strategy and the Figure D: The Evolution of Flagship
Audio Codecs* Performace&Content *Reflects general market products Codec
AMP DSP Audio Codec AMP DSP Audio Voice Codec AMP DSP Audio HD Voice AoV
SP ANC HiFi Codec AMP 2010 2012 2013 2014 180nm 25 MIPS ASPs ~$1.00*
152nm 50 MIPS + Voice Processor + 24bit Playback 65nm 600 MIPS +120dB
Playback SNR + Active Noise Cancellation (ANC) + Always On Voice (AoV) +
Speaker Protection (SP) + HD Voice & Record 65nm/55nm > 600 MIPS Lower
Power Reduced PCB size Improved Codec + Sensor Hub + Enhanced
multi-microphone capability + Far-filed Voice & Record ASPs ~$2.50 -
$3.50*
realization of our growth
and profitability targets. Moreover, we believe Wolfson’s smart codecs
are poised to meaningfully expand share with their existing customers,
beginning this quarter, and will help the company engage new customers
over the next few years. We are very excited about the prospects for
Cirrus Logic going forward. Our core competency of analog and digital
signal processing is squarely centered on audio and voice applications,
a segment that we believe will grow much faster than the overall mobile
market. The introduction of new products targeting this market that have
been developed by both Cirrus Logic and Wolfson are driving the
company’s expectation for growth in FY16. We expect to benefit in FY17
and beyond from further product introductions based on the combined
companies' 55nm platform and the cross sale of components such as our
highly advanced amplifiers and MEMS microphones into existing customers.
In addition, we are investing in wearables, automotive and other
applications where voice can deliver a compelling interface to a wide
array of devices as we leverage our technology investments in handsets.
Summary and Guidance For the March quarter we expect the following
results: Revenue to range between $220 million and $240 million; GAAP
gross margin to be between 45 percent and 47 percent; and Combined R&D
and SG&A expenses to range between $88 million and $92 million,
including approximately $8 million in share-based compensation expense
and $ 7 million in amortization of acquired intangibles. In summary, Q3
was an excellent quarter for Cirrus Logic as we delivered strong revenue
growth and expanded operating profit. With an exceptional customer base
and a broad range of industry leading hardware, software algorithms,
tools and support we believe Cirrus Logic is positioned extremely well
to capitalize on the remarkable growth
opportunities for high
performance audio and voice processing solutions in the coming years.
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: 61707935). Use of Non-GAAP
Financial Information This shareholder letter and its attachments
include references to non-GAAP financial information, including gross
margins, operating expenses, net income, operating profit and income,
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, anticipated tax rates, and potential share repurchases,
along with estimates of fourth quarter fiscal year 2015 revenue, gross
margin, combined research and development and selling, general and
administrative expense levels, interest expense, 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 fourth 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
Wolfson are registered trademarks of Cirrus Logic, Inc. or its
subsidiaries. All other company or product names noted herein may be
trademarks of their respective holders. Summary financial data follows:
Dec. 27, Sep. 27, Dec. 28,
Dec. 27, Dec. 28, 2014 2014 2013 2014 2013 Q3'15 Q2'15 Q3'14 Q3'15 Q3'14
Portable products 253,355 $ 163,563 $ 181,749 $ 529,487 $ 449,305 $
Consumer, automotive and other products 45,251 46,651 37,134 131,898
115,374 CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS (unaudited) (in thousands, except per share data) Three
Months Ended Nine Months Ended Net sales 298,606 210,214 218,883 661,385
564,679 Cost of sales 167,775 109,647 115,034 354,612 281,884 Gross
profit 130,831 100,567 103,849 306,773 282,795 Gross margin 43.8% 47.8%
47.4% 46.4% 50.1% Research and development 55,474 44,557 32,426 139,808
90,678 Selling, general and administrative 27,783 21,545 18,625 69,011
57,038 Acquisition related costs 3,200 14,937 - 18,137 - Restructuring
and other - 1,455 12 1,455 (572) Patent infringement settlements, net -
- - - 695 Total operating expenses 86,457 82,494 51,063 228,411 147,839
Income from operations 44,374 18,073 52,786 78,362 134,956 Interest
income (expense), net (1,042) (2,670) 222 (4,179) 581 Other expense
(1,071) (11,994) (45) (12,564) (100) Income before income taxes 42,261
3,409 52,963 61,619 135,437 Provision for income taxes 19,532 2,557
11,463 27,790 39,928 Net income 22,729 $ 852 $ 41,500 $ 33,829 $ 95,509
$ Basic earnings per share: 0.36 $ 0.01 $ 0.66 $ 0.54 $ 1.51 $ Diluted
earnings per share: 0.35 $ 0.01 $ 0.63 $ 0.52 $ 1.45 $ Weighted average
number of shares: Basic 62,885 62,241 62,854 62,386 63,170 Diluted
65,214 65,085 65,368 65,024 65,894 Prepared in accordance with Generally
Accepted Accounting Principles 11
Dec. 27, Sep. 27, Dec. 28,
Dec. 27, Dec. 28, 2014 2014 2013 2014 2013 Net Income Reconciliation
Q3'15 Q2'15 Q3'14 Q3'15 Q3'14 GAAP Net Income 22,729 $ 852 $ 41,500 $
33,829 $ 95,509 $ Amortization of acquisition intangibles 5,151 2,524
275 7,921 275 Stock based compensation expense 7,815 6,496 6,016 19,933
17,529 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 Nine 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 - 1,455 12
1,455 (572) Wolfson acquisition items 9,903 30,875 - 43,082 - Provision
(benefit) for income taxes 17,714 1,764 10,300 24,704 36,839 Non-GAAP
Net Income 63,312 $ 43,966 $ 58,103 $ 130,924 $ 150,275 $ Earnings Per
Share Reconciliation GAAP Diluted earnings per share 0.35 $ 0.01 $ 0.63
$ 0.52 $ 1.45 $ Effect of Amortization of acquisition intangibles 0.08
0.04 - 0.12 - Effect of Stock based compensation expense 0.12 0.10 0.10
0.31 0.27 Effect of Provision for litigation expenses and settlements -
- - - 0.01 Effect of Restructuring and other costs, net - 0.03 - 0.02
(0.01) Effect of Wolfson acquisition items 0.15 0.47 - 0.66 - Effect of
Provision (benefit) for income taxes 0.27 0.03 0.16 0.38 0.56 Non-GAAP
Diluted earnings per share 0.97 $ 0.68 $ 0.89 $ 2.01 $ 2.28 $ Operating
Income Reconciliation GAAP Operating Income 44,374 $ 18,073 $ 52,786 $
78,362 $ 134,956 $ GAAP Operating Profit 15% 9% 24% 12% 24% Amortization
of acquisition intangibles 5,151 2,524 275 7,921 275 Stock compensation
expense - COGS 273 253 332 757 577 Stock compensation expense - R&D
2,904 2,781 2,834 8,228 7,846 Stock compensation expense - SG&A 4,638
3,462 2,850 10,948 9,106 Provision for litigation expenses and
settlements - - - - 695 Restructuring and other costs, net - 1,455 12
1,455 (572) Wolfson acquisition items 9,903 16,547 - 28,642 - Non-GAAP
Operating Income 67,243 $ 45,095 $ 59,089 $ 136,313 $ 152,883 $ Non-GAAP
Operating Profit 23% 21% 27% 21% 27% Operating Expense Reconciliation
GAAP Operating Expenses 86,457 $ 82,494 $ 51,063 $ 228,411 $ 147,839
$Amortization of acquisition intangibles (5,151) (2,524) (275) (7,921)
(275) Stock compensation expense - R&D (2,904) (2,781) (2,834) (8,228)
(7,846) Stock compensation expense - SG&A (4,638) (3,462) (2,850)
(10,948) (9,106) Provision for litigation expenses and settlements - - -
- (695) Restructuring and other costs, net - (1,455) (12) (1,455) 572
Wolfson acquisition items (3,200) (14,937) - (20,329) - Non-GAAP
Operating Expenses 70,564 $ 57,335 $ 45,092 $ 179,530 $ 130,489 $ Gross
Margin/Profit Reconciliation GAAP Gross Margin 130,831 $ 100,567 $
103,849 $ 306,773 $ 282,795 $ GAAP Gross Profit 43.8% 47.8% 47.4% 46.4%
50.1% Wolfson acquisition items 6,703 1,610 - 8,313 - Stock compensation
expense - COGS 273 253 332 757 577 Non-GAAP Gross Margin 137,807 $
102,430 $ 104,181 $ 315,843 $ 283,372 $ Non-GAAP Gross Profit 46.2%
48.7% 47.6% 47.8% 50.2% 12
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET Dec. 27, Mar. 29, Dec. 28, 2014
2014 2013 (unaudited) (unaudited) ASSETS Current assets Cash and cash
equivalents 66,607 $ 31,850 $ 74,690 $ (in thousands) Marketable
securities 106,061 263,417 215,792 Accounts receivable, net 148,386
63,220 109,535 Inventories 73,896 69,743 69,985 Deferred tax asset
14,143 22,024 33,155 Other current assets 27,081 25,079 25,662 Total
current Assets 436,174 475,333 528,819 Long-term marketable securities
3,404 89,243 37,115 Property and equipment, net 137,291 103,650 102,542
Intangibles, net 181,675 11,999 13,427 Goodwill 264,879 16,367 16,335
Deferred tax asset 24,991 25,065 17,354 Other assets 16,654 3,087 6,848
Total assets 1,065,068 $ 724,744 $ 722,440 $ LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable 77,195 $
51,932 $ 60,493 $ Accrued salaries and benefits 20,164 13,388 13,937
Deferred income 5,417 5,631 4,998 Other accrued liabilities 27,402
11,572 12,881 Total current liabilities 130,178 82,523 92,309 Long-term
debt 200,439 - - Other long-term liabilities 21,073 4,863 5,108
Stockholders' equity: Capital stock 1,135,719 1,078,878 1,069,113
Accumulated deficit (421,514) (440,634) (443,322) Accumulated other
comprehensive loss (827) (886) (768) Total stockholders' equity 713,378
637,358 625,023 Total liabilities and stockholders' equity 1,065,068 $
724,744 $ 722,440 $ Prepared in accordance with Generally Accepted
Accounting Principles 13 January 28 2015Dear Shareholders,We are very
pleased with Cirrus Logic’s financial results for the December quarter
as we delivered year-over-year and sequential revenue growth, expanded
operating profit and continued to generate cash. Revenue for the quarter
exceeded our expectations at $298.6 million due to increased sales of
our portable audio products. During the quarter, we continued to gain
traction in portable audio and remained engaged in on-going design
efforts at numerous leading smartphone and tablet manufacturers.The
company has invested a significant amount of R&D dollars and engineering
resources over the past several years to target opportunities in the
rapidly emerging audio and voice markets. We have strengthened our
relationships with existing customers and established new relationships
with key players in these markets. Furthermore, through the acquisition
of Wolfson we broadened our product lines to include additional smart
codecs, MEMS microphones, and embedded software. With a comprehensive
portfolio of custom-and general-market products that span the complete
audio signal chain from capture to playback, the company is leveraging
our leadership position to expand our addressable market and increase
content per device. Revenue and Gross MarginsRevenue for the third
quarter was $298.6 million, including $30.8 million of contribution from
Wolfson Microelectronics. On a standalone basis, Cirrus Logic’s revenue
increased 36 percent sequentially and 22 percent year over year to
$267.8 million, as we continued to experience strong demand for our
portable audio products. In Q3, revenue generated by Portable Audio
Products contributed approximately 85 percent of sales and Non-Portable
Audio and Other Products represented roughly 15 percent. Our largest
customer contributed approximately 78 percent of total revenue in Q3.
Our relationship with this customer remains outstanding with design
activity continuing 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. In the March
quarter we anticipate revenue to range from $220 million to $240
million. Sales of our portable audio components continue to be stronger
than anticipated for FY15 and we expect our annual revenue, excluding
Wolfson, to be up significantly year over year. In addition, we are
very pleased with the progress we are making integrating Wolfson. This
business should grow significantly in the March quarter on both a
year-over-year and a sequential basis as their smart codec share expands
at existing customers.GAAP gross margin for the December quarter was
43.8 percent and non-GAAP gross margin was 46.2 percent. GAAP gross
margins reflect roughly 230 basis points of costs related to accounting
requirements associated with the fair value write up of inventory
acquired through the Wolfson transaction and a seasonally higher mix of
portable products. In the March quarter, we expect gross margin to range
from 45 percent to 47 percent as the inventory related charges are
essentially behind us. Our long-term gross margin expectations remain in
the mid-40 percent range. Operating Profit and Cash Operating profit in
the December quarter was 15 percent GAAP and 23 percent on a non-GAAP
basis. GAAP operating expenses were $86.5 million and non-GAAP operating
expenses were $70.6 million, inclusive of a full quarter of Wolfson
costs. GAAP operating expenses contain approximately $7.5 million in
share-based compensation and $5.2 million in amortization of acquired
intangibles. These expenses also reflect $3.2 million in costs
associated with the acquisition of Wolfson, including $2.6 million in
share-based compensation. In the March quarter R&D and SG&A expenses
should range from $88 million to $92 million, including $8 million in
share-based compensation and $7 million in amortization of acquired
intangibles. Our total headcount exiting Q3 was 1,102.The ending cash
balance in the December quarter was $176 million, up $33 million from
the prior quarter. Cash from operations was $61.4 million. The company’s
balance sheet reflects $200 million of debt associated with funding the
acquisition of Wolfson, down $26 million from the prior quarter.
Interest expense related to this debt is currently expected to be
approximately $1 million per quarter. In the December quarter we
utilized approximately $10.5 million to repurchase 579,633 shares of
common stock at an average price of $18.17. As of December 27, 2014, we
have roughly $51.7 million remaining in our share buyback program and we
expect to continue to evaluate opportunities to repurchase shares from
time to time. Taxes and Inventory Our GAAP tax expense during the
quarter was $19.5 million, which included $17.7 million of non-cash
charges associated with our deferred tax asset and other tax credits. We
expect our effective quarterly cash tax rate to be roughly five percent
for Q4 FY15, at which time our U.S. deferred tax assets and other tax
credits should be largely depleted. We anticipate paying an annual
worldwide effective tax rate of approximately 30 percent in FY16. Moving
forward, we expect a growing portion of our revenue and income will be
generated offshore; accordingly, our worldwide effective tax rate has
the potential to be further reduced in FY17 and beyond.Q3 inventory was
$73.9 million, down from $121.2 million in Q2. The reduction in
inventory was larger than anticipated as sales of certain portable audio
products exceeded expectations. Inventory in the March quarter should
decline further as we continue to experience strong demand for many of
these products. Company Strategy Cirrus Logic has been a premier
supplier of high-fidelity audio components for many years. Our strategy
of providing innovative solutions to leaders in fast growing markets
where our technology is viewed as an important feature in the end
product has been a key factor in our success. Recently, we have
experienced a substantial increase in demand across the mobile handset
market for advanced audio and voice technology that helps to
differentiate our customers’ products. In 2012, we began shipping
devices in high volume that moved beyond the traditional functionality
found in high-fidelity audio components and incorporated advanced signal
processing in the form of active noise cancellation. As a result, we
increased the value of our products and significantly expanded our SAM
to include handsets that differentiate on voice as well as audio use
cases. We have continued to pursue a strategy of increasing content with
our customers by providing the very best hardware, software and
associated signal processing algorithms that focus on the audio and
voice experience in mobile applications. For example, our new 55nm smart
codecs integrate the functionality of several discrete components,
including codecs, audio and voice DSPs, and class-D amplifiers, into one
device with complex digital signal processing capabilities and
programmable DSPs. With a robust product roadmap that features new
audio and voice technologies such as enhanced multi-microphone
capability and always on voice activation, we believe the continued
implementation of this strategy has positioned Cirrus Logic extremely
well for growth in FY16 and subsequent years.Delivering outstanding
performance utilizing advanced audio and voice processing technology
such as active noise cancellation required a significant investment and
the sustained efforts of Cirrus Logic’s best engineers across both the
analog and digital domains. We initially developed components that
incorporated some of these advanced features in 180nm; however, this
process node limited what we could achieve in terms of signal processing
capabilities, power consumption and die size. As a result, we began a
multi year process to transition a large portion of our product
portfolio to 55nm, which required a considerable amount of effort,
including the fundamental redesign of our analog intellectual property.
These products have been well received by customers and we expect volume
shipments to begin in FY16. We believe the additional functionality
incorporated into our smart codecs, the decrease in power consumption
and the sizeable increase in memory and digital signal processing
capability enabled by this process transition will allow the company to
command higher ASPs for these higher value next generation products
versus their 180nm counterparts. In addition to funding the transition
of our portfolio to a more capable process node, the company’s financial
performance during the past five years has also allowed us to hire a
number of very talented engineers, which further fueled the development
of audio and voice products. Despite our rapid growth, the opportunities
for our innovative technology have outpaced our ability to pursue them
organically. Through the acquisition of Acoustic Technologies in 2013
and Wolfson in 2014, the company has accelerated our strategic roadmap
and strengthened our product portfolio with additional smart codecs, as
well as MEMS microphones and best-in-class embedded software. We are
extremely pleased with these acquisitions as they play a key role in the
execution of our strategy and the realization of our growth and
profitability targets. Moreover, we believe Wolfson’s smart codecs are
poised to meaningfully expand share with their existing customers,
beginning this quarter, and will help the company engage new customers
over the next few years. We are very excited about the prospects for
Cirrus Logic going forward. Our core competency of analog and digital
signal processing is squarely centered on audio and voice applications,
a segment that we believe will grow much faster than the overall mobile
market. The introduction of new products targeting this market that have
been developed by both Cirrus Logic and Wolfson are driving the
company’s expectation for growth in FY16. We expect to benefit in FY17
and beyond from further product introductions based on the combined
companies' 55nm platform and the cross sale of components such as our
highly advanced amplifiers and MEMS microphones into existing customers.
In addition, we are investing in wearables, automotive and other
applications where voice can deliver a compelling interface to a wide
array of devices as we leverage our technology investments in handsets.
Summary and Guidance For the March quarter we expect the following
results:Revenue to range between $220 million and $240 million; GAAP
gross margin to be between 45 percent and 47 percent; and Combined R&D
and SG&A expenses to range between $88 million and $92 million,
including approximately $8 million in share-based compensation expense
and $ 7 million in amortization of acquired intangibles.In summary, Q3
was an excellent quarter for Cirrus Logic as we delivered strong revenue
growth and expanded operating profit. With an exceptional customer base
and a broad range of industry leading hardware, software algorithms,
tools and support we believe Cirrus Logic is positioned extremely well
to capitalize on the remarkable growth opportunities for high
performance audio and voice processing solutions in the coming years.
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 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:
61707935).Use of Non-GAAP Financial InformationThis shareholder letter
and its attachments include references to non-GAAP financial
information, including gross margins, operating expenses, net income,
operating profit and income, 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
StatementExcept for historical information contained herein, the matters
set forth in this news release contain forward-looking statements,
including our future growth expectations, anticipated tax rates, and
potential share repurchases, along with estimates of fourth quarter
fiscal year 2015 revenue, gross margin, combined research and
development and selling, general and administrative expense levels,
interest expense, 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 fourth 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
Wolfson are registered trademarks of Cirrus Logic, Inc. or its
subsidiaries. All other company or product names noted herein may be
trademarks of their respective holders.
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