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
22, 2015
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CIRRUS
LOGIC, INC.
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(Exact
name of Registrant as specified in its charter)
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Delaware
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0-17795
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77-0024818
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(State or Other Jurisdiction of
Incorporation or Organization)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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800 West 6th Street, Austin, TX
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78701
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(Address
of Principal Executive Offices)
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(Zip
Code)
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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 22, 2015, the Company issued a press release announcing its
results for its first quarter fiscal year 2016. 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 22, 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 first quarter of fiscal year 2016. 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.
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Exhibit
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Description
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Exhibit 99.1
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Cirrus Logic, Inc. press release dated July 22, 2015
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Exhibit 99.2
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Cirrus Logic, Inc. shareholder letter dated July 22, 2015
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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.
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CIRRUS LOGIC, INC.
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Date:
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July 22, 2015
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By:
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/s/ Thurman K. Case
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Name: Thurman K. Case
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Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
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Description
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99.1
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Registrant’s press release dated July 22, 2015
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99.2
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Cirrus Logic, Inc. shareholder letter dated July 22, 2015
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Exhibit 99.1
Cirrus
Logic Reports Q1 Revenue of $282.6 Million
Demand
for Portable Audio Products Drives Strong September Guidance
AUSTIN, Texas--(BUSINESS WIRE)--July 22, 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 first
quarter fiscal year 2016, which ended June 27, 2015, as well as the
company’s current business outlook.
“Q1 was a great quarter for Cirrus Logic. We delivered solid financial
results as demand for our smart codecs and amplifiers pushed revenue
above the high end of our guidance,” said Jason Rhode, president and
chief executive officer. “FY16 looks to be an outstanding year with a
significant increase in revenue being driven by new products. We expect
strong demand for our audio and voice solutions to fuel additional
growth in FY17.”
Reported Financial Results – First Quarter FY16
-
Revenue of $282.6 million;
-
GAAP and non-GAAP gross margin of approximately 47 percent;
-
GAAP operating expenses of $82.5 million, which included a one-time
$12.5 million benefit from the sale of certain LED patents; non-GAAP
operating expenses of $79.9 million; and
-
GAAP diluted earnings per share of $0.50 and non-GAAP diluted earnings
per share of $0.54.
A reconciliation of the non-GAAP charges is included in the tables
accompanying this press release.
Business Outlook – Second Quarter FY16
-
Revenue is expected to range between $290 million and $310 million;
-
GAAP gross margin is expected to be between 45 percent and 47 percent;
and
-
Combined GAAP R&D and SG&A expenses are expected to range between $96
million and $100 million, which includes approximately $9 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: 75505782).
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, effective tax rate 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
future growth opportunities and our estimates of second 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 second 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 28, 2015, and in our
other filings with the Securities and Exchange Commission, which are
available at www.sec.gov. The foregoing information concerning our
business outlook represents our outlook as of the date of this news
release, and we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new developments or
otherwise.
Cirrus Logic and Cirrus are registered trademarks of Cirrus Logic, Inc.
All other company or product names noted herein may be trademarks of
their respective holders.
Summary financial data follows:
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CIRRUS LOGIC, INC.
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CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
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(unaudited)
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(in thousands, except per share data)
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Three Months Ended
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Jun. 27,
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Mar. 28,
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Jun. 28,
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2015
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2015
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2014
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Q1'16
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Q4'15
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Q1'15
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Portable audio products
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$
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235,866
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$
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210,814
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$
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112,570
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Non-portable audio and other products
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46,767
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44,369
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39,995
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Net sales
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282,633
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255,183
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152,565
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Cost of sales
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150,179
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136,208
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77,190
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Gross profit
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132,454
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118,975
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75,375
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Gross margin
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46.9
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%
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46.6
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%
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49.4
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%
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Research and development
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65,835
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58,070
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39,777
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Selling, general and administrative
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29,119
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30,498
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19,683
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Patent agreement, net
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(12,500
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)
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-
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-
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Total operating expenses
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82,454
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88,568
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59,460
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Income from operations
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50,000
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30,407
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15,915
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Interest expense, net
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(638
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)
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(869
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)
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(467
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)
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Other expense
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136
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392
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501
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Income before income taxes
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49,498
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29,930
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15,949
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Provision for income taxes
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16,144
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8,581
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5,701
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Net income
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$
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33,354
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$
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21,349
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$
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10,248
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Basic earnings per share:
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$
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0.53
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$
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0.34
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$
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0.17
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Diluted earnings per share:
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$
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0.50
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$
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0.32
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$
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0.16
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Weighted average number of shares:
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Basic
|
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63,274
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62,852
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62,032
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Diluted
|
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66,410
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65,815
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64,688
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Prepared in accordance with Generally Accepted Accounting
Principles
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CIRRUS LOGIC, INC.
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RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
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(unaudited, in thousands, except per share data)
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(not prepared in accordance with GAAP)
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|
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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.
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Three Months Ended
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Jun. 27,
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Mar. 28,
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Jun. 28,
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2015
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2015
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2014
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Net Income Reconciliation
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Q1'16
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Q4'15
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Q1'15
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GAAP Net Income
|
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$
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33,354
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$
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21,349
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|
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$
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10,248
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Amortization of acquisition intangibles
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|
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7,141
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7,141
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|
|
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246
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Stock based compensation expense
|
|
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8,271
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|
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7,735
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|
|
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5,622
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Patent agreement, net
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|
|
(12,500
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)
|
|
|
-
|
|
|
|
-
|
|
Wolfson acquisition items
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|
-
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|
-
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|
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2,304
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Provision (benefit) for income taxes
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|
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(175
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)
|
|
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7,230
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|
|
|
5,226
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Non-GAAP Net Income
|
|
$
|
36,091
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|
|
$
|
43,455
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|
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$
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23,646
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Earnings Per Share Reconciliation
|
|
|
|
|
|
|
GAAP Diluted earnings per share
|
|
$
|
0.50
|
|
|
$
|
0.32
|
|
|
$
|
0.16
|
|
Effect of Amortization of acquisition intangibles
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|
|
0.11
|
|
|
|
0.11
|
|
|
|
-
|
|
Effect of Stock based compensation expense
|
|
|
0.12
|
|
|
|
0.12
|
|
|
|
0.09
|
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Effect of Patent agreement, net
|
|
|
(0.19
|
)
|
|
|
-
|
|
|
|
-
|
|
Effect of Wolfson acquisition items
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|
|
-
|
|
|
|
-
|
|
|
|
0.04
|
|
Effect of Provision (benefit) for income taxes
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|
|
-
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|
|
|
0.11
|
|
|
|
0.08
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|
Non-GAAP Diluted earnings per share
|
|
$
|
0.54
|
|
|
$
|
0.66
|
|
|
$
|
0.37
|
|
|
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|
|
|
|
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Operating Income Reconciliation
|
|
|
|
|
|
|
GAAP Operating Income
|
|
$
|
50,000
|
|
|
$
|
30,407
|
|
|
$
|
15,915
|
|
GAAP Operating Profit
|
|
|
18
|
%
|
|
|
12
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%
|
|
|
10
|
%
|
Amortization of acquisition intangibles
|
|
|
7,141
|
|
|
|
7,141
|
|
|
|
246
|
|
Stock compensation expense - COGS
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|
|
325
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|
|
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(10
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)
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|
|
231
|
|
Stock compensation expense - R&D
|
|
|
3,868
|
|
|
|
2,994
|
|
|
|
2,543
|
|
Stock compensation expense - SG&A
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|
|
4,078
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|
|
|
4,751
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|
|
|
2,848
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Patent agreement, net
|
|
|
(12,500
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)
|
|
|
-
|
|
|
|
-
|
|
Wolfson acquisition items
|
|
|
-
|
|
|
|
-
|
|
|
|
2,192
|
|
Non-GAAP Operating Income
|
|
$
|
52,912
|
|
|
$
|
45,283
|
|
|
$
|
23,975
|
|
Non-GAAP Operating Profit
|
|
|
19
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%
|
|
|
18
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%
|
|
|
16
|
%
|
|
|
|
|
|
|
|
Operating Expense Reconciliation
|
|
|
|
|
|
|
GAAP Operating Expenses
|
|
$
|
82,454
|
|
|
$
|
88,568
|
|
|
$
|
59,460
|
|
Amortization of acquisition intangibles
|
|
|
(7,141
|
)
|
|
|
(7,141
|
)
|
|
|
(246
|
)
|
Stock compensation expense - R&D
|
|
|
(3,868
|
)
|
|
|
(2,994
|
)
|
|
|
(2,543
|
)
|
Stock compensation expense - SG&A
|
|
|
(4,078
|
)
|
|
|
(4,751
|
)
|
|
|
(2,848
|
)
|
Patent agreement, net
|
|
|
12,500
|
|
|
|
-
|
|
|
|
-
|
|
Wolfson acquisition items
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,192
|
)
|
Non-GAAP Operating Expenses
|
|
$
|
79,867
|
|
|
$
|
73,682
|
|
|
$
|
51,631
|
|
|
|
|
|
|
|
|
Gross Margin/Profit Reconciliation
|
|
|
|
|
|
|
GAAP Gross Margin
|
|
$
|
132,454
|
|
|
$
|
118,975
|
|
|
$
|
75,375
|
|
GAAP Gross Profit
|
|
|
46.9
|
%
|
|
|
46.6
|
%
|
|
|
49.4
|
%
|
Stock compensation expense - COGS
|
|
|
325
|
|
|
|
(10
|
)
|
|
|
231
|
|
Non-GAAP Gross Margin
|
|
$
|
132,779
|
|
|
$
|
118,965
|
|
|
$
|
75,606
|
|
Non-GAAP Gross Profit
|
|
|
47.0
|
%
|
|
|
46.6
|
%
|
|
|
49.6
|
%
|
|
|
|
|
|
|
|
Effective Tax Rate Reconciliation
|
|
|
|
|
|
|
GAAP Tax Expense
|
|
$
|
16,144
|
|
|
$
|
8,581
|
|
|
$
|
5,701
|
|
GAAP Effective Tax Rate
|
|
|
32.6
|
%
|
|
|
28.7
|
%
|
|
|
35.7
|
%
|
Adjustments to income taxes
|
|
|
175
|
|
|
|
(7,230
|
)
|
|
|
(5,226
|
)
|
Non-GAAP Tax Expense
|
|
$
|
16,319
|
|
|
$
|
1,351
|
|
|
$
|
475
|
|
Non-GAAP Effective Tax Rate
|
|
|
31.1
|
%
|
|
|
3.0
|
%
|
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIRRUS LOGIC, INC.
|
CONSOLIDATED CONDENSED BALANCE SHEET
|
(in thousands)
|
|
|
Jun. 27,
|
|
|
Mar. 28,
|
|
|
Jun. 28,
|
|
|
|
2015
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
ASSETS
|
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
102,531
|
|
|
|
$
|
76,401
|
|
|
|
$
|
268,544
|
|
Marketable securities
|
|
|
120,226
|
|
|
|
|
124,246
|
|
|
|
|
75,198
|
|
Accounts receivable, net
|
|
|
120,838
|
|
|
|
|
112,608
|
|
|
|
|
77,219
|
|
Inventories
|
|
|
126,195
|
|
|
|
|
84,196
|
|
|
|
|
92,002
|
|
Deferred tax asset
|
|
|
5,276
|
|
|
|
|
18,559
|
|
|
|
|
19,921
|
|
Other current assets
|
|
|
32,982
|
|
|
|
|
35,903
|
|
|
|
|
40,469
|
|
Total current Assets
|
|
|
508,048
|
|
|
|
|
451,913
|
|
|
|
|
573,353
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities
|
|
|
50,629
|
|
|
|
|
60,072
|
|
|
|
|
39,952
|
|
Property and equipment, net
|
|
|
152,018
|
|
|
|
|
144,346
|
|
|
|
|
102,765
|
|
Intangibles, net
|
|
|
169,158
|
|
|
|
|
175,743
|
|
|
|
|
11,341
|
|
Goodwill
|
|
|
263,583
|
|
|
|
|
263,115
|
|
|
|
|
16,367
|
|
Deferred tax asset
|
|
|
25,639
|
|
|
|
|
25,593
|
|
|
|
|
25,034
|
|
Other assets
|
|
|
24,578
|
|
|
|
|
27,996
|
|
|
|
|
1,007
|
|
Total assets
|
|
$
|
1,193,653
|
|
|
|
$
|
1,148,778
|
|
|
|
$
|
769,819
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
146,370
|
|
|
|
$
|
112,213
|
|
|
|
$
|
75,695
|
|
Accrued salaries and benefits
|
|
|
21,380
|
|
|
|
|
24,132
|
|
|
|
|
11,598
|
|
Deferred income
|
|
|
4,736
|
|
|
|
|
6,105
|
|
|
|
|
7,398
|
|
Other accrued liabilities
|
|
|
30,636
|
|
|
|
|
34,128
|
|
|
|
|
14,080
|
|
Total current liabilities
|
|
|
203,122
|
|
|
|
|
176,578
|
|
|
|
|
108,771
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
160,439
|
|
|
|
|
180,439
|
|
|
|
|
-
|
|
Other long-term liabilities
|
|
|
30,320
|
|
|
|
|
34,990
|
|
|
|
|
4,039
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
1,170,436
|
|
|
|
|
1,159,494
|
|
|
|
|
1,088,493
|
|
Accumulated deficit
|
|
|
(367,691
|
)
|
|
|
|
(400,613
|
)
|
|
|
|
(430,663
|
)
|
Accumulated other comprehensive loss
|
|
|
(2,973
|
)
|
|
|
|
(2,110
|
)
|
|
|
|
(821
|
)
|
Total stockholders' equity
|
|
|
799,772
|
|
|
|
|
756,771
|
|
|
|
|
657,009
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,193,653
|
|
|
|
$
|
1,148,778
|
|
|
|
$
|
769,819
|
|
|
|
|
|
|
|
|
|
|
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
1 July 22, 2015 Letter to
Shareholders Q1 FY16 FY13 CIRRUS LOGIC, INC. 800 WEST SIXTH STREET,
AUSTIN, TEXAS 78701
Page 2 July 22, 2015 Dear
Shareholders, Cirrus Logic delivered solid revenue, operating profit and
earnings per share results for the June quarter. Revenue exceeded the
high end of our guidance at $282.6 million as a result of strong demand
from multiple customers for portable audio products. The sequential and
year-‐over-‐year increases in revenue were largely due to shipments of
our smart codecs and amplifiers. During the quarter, our engineering and
technical marketing teams remained heavily engaged in design activity
and product definition discussions as the value customers place on audio
and voice continued to increase. FY16 is expected to be an excellent
year for Cirrus Logic as content expansion and share gains with existing
customers drives meaningful revenue growth. Customer interest in our
ultra low-‐power components is gaining momentum as the ability to
differentiate end products with innovative audio and voice features
becomes more essential. With a robust portfolio of sophisticated
products that are coupled with the essential tools, software and
algorithms and a compelling strategic roadmap, we are poised to
capitalize on the fast growing flagship and mid-‐tier mobile device
markets and other emerging segments including wearables, smart
accessories and the connected home. We believe these opportunities will
enable the company to deliver revenue growth in the years beyond FY16. 2
3 Revenue and Gross Margins
Revenue for the first quarter was $282.6 million, up 11 percent
sequentially. While sales increased across a variety of audio product
lines, quarter--‐over--‐quarter growth was predominately fueled by
strong demand for our smart codecs and amplifiers. The substantial
increase in revenue year over year was due to organic growth of our
portable audio business and a sizeable contribution from our new
65--‐nanometer smart codec. Two customers each contributed more than 10
percent of total revenue in the June quarter, representing 62 percent
and 18 percent of sales. Our relationship with our largest 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. Accurately predicting the timing of revenue
between the September and December quarters can be challenging as orders
may fluctuate, especially as customers introduce new products and
prepare for the holiday season. Taking this into consideration, revenue
for the September quarter is expected to range from $290 million to $310
million, representing a 6 percent increase sequentially at the midpoint
and a 43 percent increase year over year. This increase is primarily due
to strength in portable audio ahead of new products ramping in the
second half of the calendar year. We continue to anticipate significant
growth for the company in FY16.
Q1/FY14'Q2/FY14'Q3/FY14'Q4/FY14'Q1/FY15'Q2/FY15'Q3/FY15'Q4/FY15'Q1/FY16'Q2/FY16'
$155'' $191'' $219'' $150'' $153'' $210'' $299'' $255' $283'' $300*'
*Midpoint of guidance as of July 22, 2015 Figure B: Cirrus Logic Revenue
Q1 FY14 to Q2 FY16 (M)
4 GAAP and non--‐GAAP gross
margin for the June quarter were approximately 47 percent. In the
September quarter, we expect gross margin to range from 45 percent to 47
percent. Operating Profit and Cash Operating margin in the June quarter
was approximately 18 percent GAAP and 19 percent on a non--‐GAAP basis.
GAAP operating expenses were $82.5 million and non--‐GAAP operating
expenses were $79.9 million. GAAP operating expenses contain
approximately $7.9 million in share--‐based compensation, $7.1 million
in amortization of acquired intangibles and a one--‐time $12.5 million
benefit from the sale of certain LED patents. The sequential increase in
operating expense primarily reflects product development expenses and
tape outs. On an annual basis, the increase is largely associated with
higher product development costs, additional headcount and employee
expenses. In the September quarter GAAP R&D and SG&A expenses should
range from $96 million to $100 million, including roughly $9 million in
share--‐based compensation and $7 million in amortization of acquired
intangibles. This estimate includes higher product development costs and
employee expenses versus the prior quarter. Our total headcount exiting
Q1 was 1,125. Figure C: Revenue by Product and Customer 62% 18% 20%
Revenue by Customer Q1/FY16 Customer A Customer B Other 83% 17% Revenue
by Product Q1/FY16 Portable Audio Non-Portable Audio & Other
5 The ending cash balance
in the June quarter was $273.4 million, up from $260.7 million the prior
quarter. Cash from operations was roughly $43.2 million. The company’s
balance sheet reflects $160.4 million of debt, down $20 million from the
prior quarter. Interest expense related to this debt is currently
expected to be approximately $1 million in the September quarter. Since
announcing our $200 million share repurchase program in November 2012,
we have reduced our diluted shares outstanding by roughly 6.2 million
shares. As of June 27, 2015, we had 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 for the June quarter was $16.1 million
and non-‐GAAP tax expense was $16.3 million. We anticipate a worldwide
GAAP and non-‐GAAP effective tax rate of approximately 30 percent for
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 reduced in FY17 and beyond. Q1
inventory was $126.2 million, up $42 million from $84.2 million in Q4.
Inventory in the September quarter is expected to increase as we
continue to ramp new products ahead of customer demand in the back half
of the calendar year. Figure D: Cirrus Logic GAAP R&D and SG&A
Expenses/Headcount Q1 FY14 to Q2 FY16 $M# 665# 678# 735# 751# 739#
1,099**# 1,102# 1,104# 1,125# 0# 10# 20# 30# 40# 50# 60# 70# 80# 90#
100# Q1/FY14# Q2/FY14# Q3/FY14# Q4/FY14# Q1/FY15# Q2/FY15# Q3/FY15#
Q4/FY15# Q1/FY16# Q2/FY16# OpEx*# SG&A# R&D# Headcount# !
*Reflects!midpoint!of!combined!R&D!and!SG&A!guidance!as!of!July!22,!2015!
**OperaCng!expense!and!headcount!increase!reflects!acquisiCon!of!Wolfson!Microelectronics!
($!millions,!except!headcount)!
6 Company Strategy As a
leading supplier of a complete end-‐to-‐end audio solution that
includes smart codecs, boosted amplifiers with speaker protection and
microphones, Cirrus Logic is capitalizing on the rapidly expanding audio
and voice market. We are delighted with the progress we have made in the
past six months. While this market is still in the early stages of
development, content increases with our new smart codecs as well as
substantial share gains with existing customers are expected to fuel
significant revenue growth in FY16. Earlier this year we successfully
began shipping a new 65-‐nanometer smart codec in volume and we are on
track to ramp our new 55-‐nanometer smart codec in the second half of
the calendar year. More importantly, as a key enabler of audio and voice
technology, our strategy and robust product roadmap have positioned the
company for sustained growth in FY17. Our first priority is to further
strengthen our relationships with our existing customers and increase
content, including cross-‐selling boosted amplifiers, smart codecs and
ultimately microphones. Secondly, building on this momentum, we are
working to expand our market share in smartphone OEMs three through ten,
while driving a subset of the audio and voice features in flagship
devices into the mid-‐tier. Longer term, our strategy is to leverage
the technology we have developed for mobile devices into adjacent
markets including wearables, smart accessories, the connected home and
automotive. Cirrus Logic introduced its first boosted amplifier in 2012
and has shipped over 750 million units in the past three years, making
it one of our most successful product lines. Although this market
remains highly competitive, we plan to continue to heavily invest in
product development as we view amplifiers as a crucial component in the
audio signal chain – and one that has a natural synergy with our smart
codecs. OEM’s increasingly view amplifiers as a key differentiator for
mobile devices. The ability to provide louder sound with less distortion
can vastly improve the user experience when consuming multimedia content
or making calls on speakerphones. We believe our ability to offer
best-‐in-‐class amplifiers, which include speaker
protection/enhancement software, with our smart codecs and MEMS
microphones is a meaningful competitive advantage. Our solutions
optimize performance at very low power levels and simplify our
customers’ design process.
7 With a strong portfolio
of components on the market today and an innovative product roadmap, we
expect our amplifier business to continue to grow as we cross-‐sell
into existing customers and gain traction with smartphone OEMs three
through ten. Over the next few years there are several opportunities
that we anticipate will contribute to the diversification of our
customer base and revenue growth beyond FY16. We are working to further
increase content with our top smartphone customers, while our team is
pushing to expand our foothold in OEMs three through ten and to drive a
subset of flagship features into mid-‐tier devices. We are very
encouraged by the progress we have made with these initiatives. We are
particularly excited to be ramping a smart codec over the next two
quarters in another top Android smartphone OEM. This win validates our
vision of the audio and voice market and our business model of focusing
on strategic customers where we can leverage our relationships to grow
content. In the case of mid-‐tier handsets, we are actively engaged in
discussions with customers regarding the features, functionality and
price points that meet the technical specifications and challenges of
this market. We are sampling our first smart codec targeting mid-‐tier
devices and the initial feedback from customers has been positive. In
the near-‐to-‐mid term, the opportunities with many of the other top
OEMs will be more opportunistic and largely associated with augmenting
existing platforms through the sale of amplifiers and converters. In the
coming years, we believe that the leaders in the Android handset market
will continue to push the envelope with audio and voice acting as a
catalyst for broad-‐market adoption of the functions we enable, such as
Always-‐on Voice. As consumers begin to view these features as “must
have,” flagship and mid-‐tier smartphones without these functions will
be at a considerable disadvantage in the marketplace. As a key supplier
of this disruptive technology we help smartphone manufacturers
meaningfully differentiate the audio and voice experience on mobile
devices. Cirrus Logic is well placed to benefit from this expanding
market as OEMs adopt these features across a wider range of devices. The
introduction of voice as an alternative user interface is transforming
mobile devices and driving these solutions into emerging products such
as wearables, smart accessories and the connected home. While these
markets will take time to mature, we
8 believe voice control
will be a critical component. We have already seen many leading OEMs
begin to target these areas with products that range from networking the
home to new devices capable of managing your home environment and
tracking health statistics. As these markets evolve Cirrus Logic is in a
unique position to leverage the hardware and software technology we have
developed for mobile applications as well our deep-‐rooted
relationships with many of the industry leaders. With an outstanding
portfolio of products on the market today and an innovative roadmap that
targets the rapidly growing audio and voice market, we are very
confident in our future success. Summary and Guidance For the September
quarter we expect the following results: • Revenue to range between $290
million and $310 million; • GAAP gross margin to be between 45 percent
and 47 percent; and • Combined GAAP R&D and SG&A expenses to range
between $96 million and $100 million, including approximately $9 million
in share-‐based compensation expense and $7 million in amortization of
acquired intangibles. In summary, Q1 was another great quarter for
Cirrus Logic. We are extremely pleased with our financial results as
strong demand for our smart codecs and amplifiers drove revenue above
the high end of our guidance. With a comprehensive portfolio of
products, a compelling strategic roadmap and outstanding customers, we
are excited about our outlook for growth in FY16 and FY17. Sincerely,
9 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: 75505782). 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, effective tax rate 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 and product ramps in the second quarter and
fiscal year 2016 and beyond, and our estimates of second quarter fiscal
year 2016 revenue, gross margin, combined research and development and
selling, general and administrative
10 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 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 28, 2015, 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. Summary financial data follows:
11 Jun. 27, Mar. 28, Jun.
28, 2015 2015 2014 Q1'16 Q4'15 Q1'15 Portable audio products $ 235,866 $
210,814 $ 112,570 Non-portable audio and other products 46,767 44,369
39,995 CIRRUS LOGIC, INC. CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited) (in thousands, except per share data) Three Months Ended Net
sales 282,633 255,183 152,565 Cost of sales 150,179 136,208 77,190 Gross
profit 132,454 118,975 75,375 Gross margin 46.9% 46.6% 49.4% Research
and development 65,835 58,070 39,777 Selling, general and administrative
29,119 30,498 19,683 Patent agreement, net (12,500) - - Total operating
expenses 82,454 88,568 59,460 Income from operations 50,000 30,407
15,915 Interest expense, net (638) (869) (467) Other expense 136 392 501
Income before income taxes 49,498 29,930 15,949 Provision for income
taxes 16,144 8,581 5,701 Net income $ 33,354 $ 21,349 $ 10,248 Basic
earnings per share: $ 0.53 $ 0.34 $ 0.17 Diluted earnings per share: $
0.50 $ 0.32 $ 0.16 Weighted average number of shares: Basic 63,274
62,852 62,032 Diluted 66,410 65,815 64,688 Prepared in accordance with
Generally Accepted Accounting Principles
12 Jun. 27, Mar. 28, Jun.
28, 2015 2015 2014 Net Income Reconciliation Q1'16 Q4'15 Q1'15 GAAP Net
Income $ 33,354 $ 21,349 $ 10,248 Amortization of acquisition
intangibles 7,141 7,141 246 Stock based compensation expense 8,271 7,735
5,622 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 (not prepared in accordance
with GAAP) CIRRUS LOGIC, INC. RECONCILIATION BETWEEN GAAP AND NON-GAAP
FINANCIAL INFORMATION (unaudited, in thousands, except per share data)
Patent agreement, net (12,500) - - Wolfson acquisition items - - 2,304
Provision (benefit) for income taxes (175) 7,230 5,226 Non-GAAP Net
Income $ 36,091 $ 43,455 $ 23,646 Earnings Per Share Reconciliation GAAP
Diluted earnings per share $ 0.50 $ 0.32 $ 0.16 Effect of Amortization
of acquisition intangibles 0.11 0.11 - Effect of Stock based
compensation expense 0.12 0.12 0.09 Effect of Patent agreement, net
(0.19) - - Effect of Wolfson acquisition items - - 0.04 Effect of
Provision (benefit) for income taxes - 0.11 0.08 Non-GAAP Diluted
earnings per share $ 0.54 $ 0.66 $ 0.37 Operating Income Reconciliation
GAAP Operating Income $ 50,000 $ 30,407 $ 15,915 GAAP Operating Profit
18% 12% 10% Amortization of acquisition intangibles 7,141 7,141 246
Stock compensation expense - COGS 325 (10) 231 Stock compensation
expense - R&D 3,868 2,994 2,543 Stock compensation expense - SG&A 4,078
4,751 2,848 Patent agreement, net (12,500) - - Wolfson acquisition items
- - 2,192 Non-GAAP Operating Income $ 52,912 $ 45,283 $ 23,975 Non-GAAP
Operating Profit 19% 18% 16% Operating Expense Reconciliation GAAP
Operating Expenses $ 82,454 $ 88,568 $ 59,460 Amortization of
acquisition intangibles (7,141) (7,141) (246) Stock compensation expense
- R&D (3,868) (2,994) (2,543) Stock compensation expense - SG&A (4,078)
(4,751) (2,848) Patent agreement, net 12,500 - - Wolfson acquisition
items - - (2,192) Non-GAAP Operating Expenses $ 79,867 $ 73,682 $ 51,631
Gross Margin/Profit Reconciliation GAAP Gross Margin $ 132,454 $ 118,975
$ 75,375 GAAP Gross Profit 46.9% 46.6% 49.4% Wolfson acquisition items -
- - Stock compensation expense - COGS 325 (10) 231 Non-GAAP Gross Margin
$ 132,779 $ 118,965 $ 75,606 Non-GAAP Gross Profit 47.0% 46.6% 49.6%
Effective Tax Rate Reconciliation GAAP Tax Expense $ 16,144 $ 8,581 $
5,701 GAAP Effective Tax Rate 32.6% 28.7% 35.7% Adjustments to income
taxes 175 (7,230) (5,226) Non-GAAP Tax Expense $ 16,319 $ 1,351 $ 475
Non-GAAP Effective Tax Rate 31.1% 3.0% 2.0%
13 CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET Jun. 27, Mar. 28, Jun. 28, 2015
2015 2014 (in thousands) ASSETS (unaudited) (unaudited) Current assets
Cash and cash equivalents $ 102,531 $ 76,401 $ 268,544 Marketable
securities 120,226 124,246 75,198 Accounts receivable, net 120,838
112,608 77,219 Inventories 126,195 84,196 92,002 Deferred tax asset
5,276 18,559 19,921 Other current assets 32,982 35,903 40,469 Total
current Assets 508,048 451,913 573,353 Long-term marketable securities
50,629 60,072 39,952 Property and equipment, net 152,018 144,346 102,765
Intangibles, net 169,158 175,743 11,341 Goodwill 263,583 263,115 16,367
Deferred tax asset 25,639 25,593 25,034 Other assets 24,578 27,996 1,007
Total assets $ 1,193,653 $ 1,148,778 $ 769,819 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 146,370 $
112,213 $ 75,695 Accrued salaries and benefits 21,380 24,132 11,598
Deferred income 4,736 6,105 7,398 Other accrued liabilities 30,636
34,128 14,080 Total current liabilities 203,122 176,578 108,771
Long-term debt 160,439 180,439 - Other long-term liabilities 30,320
34,990 4,039 Stockholders' equity: Capital stock 1,170,436 1,159,494
1,088,493 Accumulated deficit (367,691) (400,613) (430,663) Accumulated
other comprehensive loss (2,973) (2,110) (821) Total stockholders'
equity 799,772 756,771 657,009 Total liabilities and stockholders'
equity $ 1,193,653 $ 1,148,778 $ 769,819 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