CRUS Cirrus Logic Inc

Strong Demand for Portable Audio Products Drives Revenue Above Expectations

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 fourth quarter and full fiscal year 2015, which ended March 28, 2015, as well as the company’s current business outlook.

“FY15 was a tremendous year for Cirrus Logic. We are extremely pleased to have delivered strong revenue growth, achieved our long-term non-GAAP operating profit target of 20 percent, significantly expanded our product portfolio, and strengthened our business through the acquisition of Wolfson Microelectronics,” said Jason Rhode, president and chief executive officer. “As we move into FY16, we expect revenue to grow year-over-year as shipments of products designed for audio and voice applications in mobile devices accelerate.”

Reported Financial Results – Fourth Quarter FY15

• Revenue of $255.2 million;
• GAAP and non-GAAP gross margin of 46.6 percent;
• GAAP operating expenses of $88.6 million and non-GAAP operating expenses of $73.7 million; and
• GAAP diluted earnings per share of $0.32 and non-GAAP diluted earnings per share of $0.66.

Reported Financial Results – Full Year FY15

• Revenue of $916.6 million;
• GAAP gross margin of 46.5 percent and non-GAAP gross margin of 47.4 percent;
• GAAP operating expenses of $317 million and non-GAAP operating expenses of $253.2 million; and
• GAAP diluted earnings per share of $0.85 and non-GAAP diluted earnings per share of $2.67.

A reconciliation of the non-GAAP charges is included in the tables accompanying this press release.

Business Outlook – First Quarter FY16

• Revenue is expected to range between $260 million and $280 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 $93 million and $97 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: 21372109).

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, Australia, 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 expectations for growth in fiscal year 2016 and our estimates of first quarter fiscal year 2016 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 first quarter of fiscal year 2016, 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 Twelve Months Ended

 

  Mar. 28, Dec. 27, Mar. 29, Mar. 28, Mar. 29, 2015 2014 2014 2015 2014 Q4'15 Q3'15 Q4'14 Q4'15 Q4'14 Portable audio products $ 210,814 $ 253,355 $ 113,413 $ 740,301 $ 562,718 Non-portable audio and other products 44,369 45,251 36,246 176,267 151,620 Net sales 255,183 298,606 149,659 916,568 714,338 Cost of sales 136,208 167,775 76,291 490,820 358,175 Gross profit 118,975 130,831 73,368 425,748 356,163 Gross margin 46.6% 43.8% 49.0% 46.5% 49.9%   Research and development 58,070 55,474 35,511 197,878 126,189 Selling, general and administrative 30,498 27,783 17,823 99,509 74,861 Acquisition related costs - 3,200 - 18,137 - Restructuring and other - - (26) 1,455 (598) Patent infringement settlements, net - - - - 695 Total operating expenses 88,568 86,457 53,308 316,979 201,147   Income from operations 30,407 44,374 20,060 108,769 155,016   Interest income (expense), net (869) (1,042) 267 (5,048) 848 Other expense 392 (1,071) (27) (12,172) (127) Income before income taxes 29,930 42,261 20,300 91,549 155,737 Provision for income taxes 8,581 19,532 7,698 36,371 47,626 Net income $ 21,349 $ 22,729 $ 12,602 $ 55,178 $ 108,111   Basic earnings per share: $ 0.34 $ 0.36 $ 0.20 $ 0.88 $ 1.72 Diluted earnings per share: $ 0.32 $ 0.35 $ 0.20 $ 0.85 $ 1.65   Weighted average number of shares: Basic 62,852 62,885 62,215 62,503 62,926 Diluted 65,815 65,214 64,545 65,235 65,535   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 Twelve Months Ended   Mar. 28, Dec. 27, Mar. 29, Mar. 28, Mar. 29,   2015     2014     2014     2015     2014   Net Income Reconciliation Q4'15 Q3'15 Q4'14 Q4'15 Q4'14 GAAP Net Income $ 21,349 $ 22,729 $ 12,602 $ 55,178 $ 108,111 Amortization of acquisition intangibles 7,141 5,151 217 15,062 492 Stock based compensation expense 7,735 7,815 5,545 27,668 23,074 Provision for litigation expenses and settlements - - - - 695 Restructuring and other costs, net - - (26 ) 1,455 (598 ) Wolfson acquisition items - 9,903 - 43,082 - Provision (benefit) for income taxes   7,230     17,714     7,808     31,934     44,647   Non-GAAP Net Income $ 43,455   $ 63,312   $ 26,146   $ 174,379   $ 176,421     Earnings Per Share Reconciliation GAAP Diluted earnings per share $ 0.32 $ 0.35 $ 0.20 $ 0.85 $ 1.65 Effect of Amortization of acquisition intangibles 0.11 0.08 - 0.23 0.01 Effect of Stock based compensation expense 0.12 0.12 0.09 0.42 0.35 Effect of Provision for litigation expenses and settlements - - - - 0.01 Effect of Restructuring and other costs, net - - - 0.02 (0.01 ) Effect of Wolfson acquisition items - 0.15 - 0.66 - Effect of Provision (benefit) for income taxes 0.11 0.27 0.12 0.49 0.68           Non-GAAP Diluted earnings per share $ 0.66   $ 0.97   $ 0.41   $ 2.67   $ 2.69     Operating Income Reconciliation GAAP Operating Income $ 30,407 $ 44,374 $ 20,060 $ 108,769 $ 155,016 GAAP Operating Profit 12 % 15 % 13 % 12 % 22 % Amortization of acquisition intangibles 7,141 5,151 217 15,062 492 Stock compensation expense - COGS (10 ) 273 287 747 864 Stock compensation expense - R&D 2,994 2,904 2,546 11,222 10,392 Stock compensation expense - SG&A 4,751 4,638 2,712 15,699 11,818 Provision for litigation expenses and settlements - - - - 695 Restructuring and other costs, net - - (26 ) 1,455 (598 ) Wolfson acquisition items   -     9,903     -     28,642     -   Non-GAAP Operating Income $ 45,283   $ 67,243   $ 25,796   $ 181,596   $ 178,679   Non-GAAP Operating Profit 18 % 23 % 17 % 20 % 25 %   Operating Expense Reconciliation GAAP Operating Expenses $ 88,568 $ 86,457 $ 53,308 $ 316,979 $ 201,147 Amortization of acquisition intangibles (7,141 ) (5,151 ) (217 ) (15,062 ) (492 ) Stock compensation expense - R&D (2,994 ) (2,904 ) (2,546 ) (11,222 ) (10,392 ) Stock compensation expense - SG&A (4,751 ) (4,638 ) (2,712 ) (15,699 ) (11,818 ) Provision for litigation expenses and settlements - - - - (695 ) Restructuring and other costs, net - - 26 (1,455 ) 598 Wolfson acquisition items   -     (3,200 )   -     (20,329 )   -   Non-GAAP Operating Expenses $ 73,682   $ 70,564   $ 47,859   $ 253,212   $ 178,348     Gross Margin/Profit Reconciliation GAAP Gross Margin $ 118,975 $ 130,831 $ 73,368 $ 425,748 $ 356,163 GAAP Gross Profit 46.6 % 43.8 % 49.0 % 46.5 % 49.9 % Wolfson acquisition items - 6,703 - 8,313 - Stock compensation expense - COGS   (10 )   273     287     747     864   Non-GAAP Gross Margin $ 118,965   $ 137,807   $ 73,655   $ 434,808   $ 357,027   Non-GAAP Gross Profit 46.6 % 46.2 % 49.2 % 47.4 % 50.0 %   CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEET unaudited; in thousands     Mar. 28,   Dec. 27,   Mar. 29,   2015       2014       2014   ASSETS     Current assets Cash and cash equivalents $ 76,401 $ 66,607 $ 31,850 Marketable securities 124,246 106,061 263,417 Accounts receivable, net 112,608 148,386 63,220 Inventories 84,196 73,896 69,743 Deferred tax asset 18,559 14,143 22,024 Other current assets   35,903     27,081     25,079   Total current Assets 451,913 436,174 475,333   Long-term marketable securities 60,072 3,404 89,243 Property and equipment, net 144,346 137,291 103,650 Intangibles, net 175,743 181,675 11,999 Goodwill 263,115 264,879 16,367 Deferred tax asset 25,593 24,991 25,065 Other assets   27,996     16,654     3,087   Total assets $ 1,148,778   $ 1,065,068   $ 724,744     LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 112,213 $ 77,195 $ 51,932 Accrued salaries and benefits 24,132 20,164 13,388 Deferred income 6,105 5,417 5,631 Other accrued liabilities   34,128     27,402     11,572   Total current liabilities 176,578 130,178 82,523   Long-term debt 180,439 200,439 - Other long-term liabilities 34,990 21,073 4,863   Stockholders' equity: Capital stock 1,159,494 1,135,719 1,078,878 Accumulated deficit (400,613 ) (421,514 ) (440,634 ) Accumulated other comprehensive loss   (2,110 )   (827 )   (886 ) Total stockholders' equity   756,771     713,378     637,358   Total liabilities and stockholders' equity $ 1,148,778   $ 1,065,068   $ 724,744     Prepared in accordance with Generally Accepted Accounting Principles  

Cirrus Logic, Inc.Thurman K. Case, 512-851-4125Chief Financial OfficerInvestor.Relations@cirrus.com