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SYS-CON MEDIA Authors: Mike Kavis, Elizabeth White, John Treadway, SmartBear Blog, Liz McMillan

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Cirrus Logic Reports Q1 Revenue of $152.6 Million

Cirrus Logic, Inc. (Nasdaq: CRUS), a leader in high-precision analog and digital signal processing components, today posted on its investor relations website at http://investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the first quarter fiscal year 2015, which ended June 28, 2014, as well as the company’s current business outlook.

“We are pleased with our Q1 financial results as we experienced strong demand for our custom and general market portable audio products across our customer base,” said Jason Rhode, president and chief executive officer. “With a robust pipeline of innovative products and the pending acquisition of Wolfson, we are strengthening the company’s position as a market leader in audio with a comprehensive product portfolio, differentiated software capabilities and a top-tier customer base.”

Reported Financial Results – First Quarter FY15

  • Revenue of $152.6 million;
  • Gross margin of 49 percent;
  • GAAP operating expenses of $59.5 million and non-GAAP operating expenses of $51.6 million; and
  • GAAP diluted earnings per share of $0.16 and non-GAAP diluted earnings per share of $0.37.

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

Business Outlook – Second Quarter FY15

Guidance for the September quarter excludes any potential financial contributions or expenses associated with the Wolfson acquisition.

  • Revenue is expected to range between $175 million and $195 million;
  • Gross margin is expected to be between 47 percent and 49 percent; and
  • Combined R&D and SG&A expenses are expected to range between $58 million and $62 million, which includes approximately $7 million in share-based compensation and amortization of acquired intangibles.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website. Participants who would like to submit a question to be addressed during the call are requested to email [email protected]. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion, or by calling (404) 537-3406, or toll-free at (855) 859-2056 (Access Code: 66089509).

Cirrus Logic, Inc.

Cirrus Logic develops high-precision, analog and mixed-signal integrated circuits for a broad range of innovative customers. Building on its diverse analog and signal-processing patent portfolio, Cirrus Logic delivers highly optimized products for a variety of audio and energy-related applications. The company operates from headquarters in Austin, Texas, with offices in Phoenix, Ariz., Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus has provided non-GAAP financial information, including operating expenses, net income, operating profit and diluted earnings per share. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements, including our estimates of second quarter fiscal year 2015 revenue, gross margin, combined research and development and selling, general and administrative expense levels, share-based compensation expense and amortization of acquired intangibles. In some cases, forward-looking statements are identified by words such as “expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the following: the level of orders and shipments during the second quarter of fiscal year 2015, as well as customer cancellations of orders, or the failure to place orders consistent with forecasts; and the risk factors listed in our Form 10-K for the year ended March 29, 2014, and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Cirrus Logic, Cirrus and SoundClear are registered trademarks of Cirrus Logic, Inc.

Summary financial data follows:

       
 
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except per share data)
 
Three Months Ended
Jun. 28, Mar. 29, Jun. 29,
2014 2014 2013
Q1'15 Q4'14 Q1'14
Audio products $ 141,161 $ 137,773 $ 143,666
Energy products   11,404     11,886     11,459  
Net revenue   152,565     149,659     155,125  
Cost of sales   77,190     76,291     75,627  
Gross Profit 75,375 73,368 79,498
Gross Margin 49.4 % 49.0 % 51.2 %
 
Research and development 39,777 35,511 28,530
Selling, general and administrative 19,683 17,823 19,198
Restructuring and other costs - (26 ) (430 )
Patent infringement settlements, net   -     -     695  
Total operating expenses   59,460     53,308     47,993  
 
Operating income 15,915 20,060 31,505
 
Interest income, net (467 ) 267 158
Other income (expense), net   501     (27 )   (17 )
Income before income taxes 15,949 20,300 31,646
Provision (benefit) for income taxes   5,701     7,698     11,004  
Net income $ 10,248   $ 12,602   $ 20,642  
 
Basic earnings per share: $ 0.17 $ 0.20 $ 0.33
Diluted earnings per share: $ 0.16 $ 0.20 $ 0.31
 
Weighted average number of shares:
Basic 62,032 62,215 63,363
Diluted 64,688 64,545 66,188
 
Prepared in accordance with Generally Accepted Accounting Principles

 
 
CIRRUS LOGIC, INC.
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share data)
(not prepared in accordance with GAAP)
 
Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. Certain modifications to prior year non-GAAP presentation has been made and had no material effect on the results of operations.
     
Three Months Ended
Jun. 28,   Mar. 29, Jun. 29,
2014 2014 2013
Net Income Reconciliation Q1'15 Q4'14 Q1'14
GAAP Net Income $ 10,248 $ 12,602 $ 20,642
Amortization of acquisition intangibles 246 217 -
Stock based compensation expense 5,622 5,545 5,774
Provision for litigation expenses and settlements - - 695
Restructuring and other costs, net - (26 ) (430 )
Wolfson acquisition items 2,304 - -
Provision (benefit) for income taxes   5,226     7,808     10,161  
Non-GAAP Net Income $ 23,646   $ 26,146   $ 36,842  
 
Earnings Per Share Reconciliation
GAAP Diluted earnings per share $ 0.16 $ 0.20 $ 0.31
Effect of Stock based compensation expense 0.09 0.09 0.09
Effect of Provision for litigation expenses and settlements - - 0.01
Effect of Wolfson acquisition items 0.04 - -
Effect of Provision (benefit) for income taxes   0.08     0.12     0.15  
Non-GAAP Diluted earnings per share $ 0.37   $ 0.41   $ 0.56  
 
Operating Income Reconciliation
GAAP Operating Income $ 15,915 $ 20,060 $ 31,505
GAAP Operating Profit 10 % 13 % 20 %
Amortization of acquisition intangibles 246 217 -
Stock compensation expense - COGS 231 287 6
Stock compensation expense - R&D 2,543 2,546 2,854
Stock compensation expense - SG&A 2,848 2,712 2,914
Provision for litigation expenses and settlements - - 695
Restructuring and other costs, net - (26 ) (430 )
Wolfson acquisition items   2,192     -     -  
Non-GAAP Operating Income $ 23,975   $ 25,796   $ 37,544  
Non-GAAP Operating Profit 16 % 17 % 24 %
 
Operating Expense Reconciliation
GAAP Operating Expenses $ 59,460 $ 53,308 $ 47,993
Amortization of acquisition intangibles (246 ) (217 ) -
Stock compensation expense - R&D (2,543 ) (2,546 ) (2,854 )
Stock compensation expense - SG&A (2,848 ) (2,712 ) (2,914 )
Provision for litigation expenses and settlements - - (695 )
Restructuring and other costs, net - 26 430
Wolfson acquisition items   (2,192 )   -     -  
Non-GAAP Operating Expenses $ 51,631   $ 47,859   $ 41,960  

       
 
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
 
Jun. 28, Mar. 29, Jun. 29,
2014 2014 2013
(unaudited) (unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 268,544 $ 31,850 $ 67,170
Restricted investments - - -
Marketable securities 75,198 263,417 165,540
Accounts receivable, net 77,219 63,220 63,642
Inventories 92,002 69,743 110,624
Deferred tax asset 19,921 22,024 54,774
Other current assets   40,469     25,079     20,810  
Total Current Assets 573,353 475,333 482,560
 
Long-term marketable securities 39,952 89,243 39,408
Property and equipment, net 102,765 103,650 99,169
Intangibles, net 11,341 11,999 4,714
Goodwill 16,367 16,367 6,027
Deferred tax asset 25,034 25,065 16,732
Other assets   1,007     3,087     11,289  
Total Assets $ 769,819   $ 724,744   $ 659,899  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 75,695 $ 51,932 $ 47,341
Accrued salaries and benefits 11,598 13,388 13,476
Other accrued liabilities 14,080 11,572 9,532
Deferred income on shipments to distributors   7,398     5,631     4,419  
Total Current Liabilities 108,771 82,523 74,768
 
Other long-term obligations 4,039 4,863 9,706
 
Stockholders' equity:
Capital stock 1,088,493 1,078,878 1,048,497
Accumulated deficit (430,663 ) (440,634 ) (472,180 )
Accumulated other comprehensive loss   (821 )   (886 )   (892 )
Total Stockholders' Equity   657,009     637,358     575,425  
Total Liabilities and Stockholders' Equity $ 769,819   $ 724,744   $ 659,899  
 
Prepared in accordance with Generally Accepted Accounting Principles

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